If the amount spent on TV, radio, internet and outdoor advertising by providers of superfast broadband is any gauge, then it’s safe to say a lot of bets are being placed on the success of such services.
Here in the IT channel, there’s a significant emerging opportunity for resellers to grab a piece of the action, in terms of both offering superfast broadband connections from various providers, plus the myriad products and services that run across them – for businesses and consumers.
The most recent significant deal in the UK channel came in March, when Virgin Media Business confirmed DMSL and Daisy Distribution as the initial distribution partners for its product portfolio, including a 300Mbps broadband bundle aimed at small businesses.
DMSL saw more than 100 resellers sign up to the Virgin Media Business offering in its first few weeks of availability, a response the company described at the time as its ‘best ever launch’. Two months on and DMSL managing director John Carter attributes rising demand for high speed broadband to the growing maturity of the services it enables.
“Customers want to do more with their broadband connections now,” says Carter. “There is much greater awareness and willingness to adopt hosted and cloud- based services. For example, we are seeing tremendous uptake of hosted VoIP – and that’s something all dealers and retailers need to exploit to the full. To run apps and services efficiently, you need fast, secure, stable connectivity. That’s what customers are demanding now.”
And it’s not just Virgin Media Business, of course. The likes of BT and Plusnet are investing just as heavily into the space, creating the same opportunities in the channel.
There is also the ever- accelerating availability of ‘always on’ services and a migration towards mobile working in business, as cited by GfK supply chain director Carl West.
“The challenge is meeting the clamour for services quickly enough. There are some areas that don’t have any coverage at the moment.”
John Carter, DMSL
“When looking at reseller system administration, there has been growth in VPN, VoIP, remote hosting and, of course, cloud, which continues to change the game,” says West. “Services such as CRM, finance and billing, ERP and network management reduce the demands for on premise, as well as the traditional need for fixed IP.
“VOIP, teleconferencing, digital PBX, messenger services and social media means the always connected customer needs greater speeds and bandwidth. There has also been an increase in MSPs (Managed Service Providers) since the recession. This is due to resellers changing from break fix to managed services and the number of new resellers that are cloud- focused, but need their client base always connected.”
There are challenges, however. Simon Meredith, lead consultant at Channelstar Media, highlights that there’s been talk about adding value and moving more towards services since the 1980s.
“While the technology industry is fast-paced in terms of product development, change has been relatively slow in terms of how business is transacted,” says Meredith. “The channel is still worried about being cut out of the equation and margin erosion.
“The shift to online sales and the cloud has started to change the dynamics of the channel now and the big change really – the catalyst for it all – has been the wider availability of faster, higher bandwidth connectivity and 4G. That has really changed everything.
It’s made mobility the central theme of the industry and now that it’s possible to do more, we expect to do more. The good news, I think, is that there is no sign of technology development slowing down.” However, the necessary expansion of the UK’s superfast broadband infrastructure is an ongoing issue. Entanet recently published five ‘key truths’ about the rollout of superfast broadband in the UK – it was heavily critical of the Government and highlighted the variables that can impact service availability, such as geography, distance, ISP commercial considerations and the role played by Openreach.
The Government is trying to help – property developers are being urged to ensure there are fibre connections to new-build homes as part of a co-funded initiative with the Home Builders Federation. But will it be enough?
“The main challenge is meeting the clamour for services quickly enough,” comments Carter. “The major players are working hard to roll-out ultra-fast services and a lot of businesses can get access already. But there will be some areas that don’t have any coverage at the moment. Obviously, it takes time to build infrastructure. But superfast broadband will come to all of the UK eventually, and the faster the major players can move on their roll-outs the better.”
The pace of infrastructure rollout is something that GfK also builds into its market modelling.
“There is no denying that the network, whilst improving, is still not up to requirements based on the regional spread of enterprise and consumers,” adds West. “Much discussed rural limitations, copper networks, cost and the legacy of traditional broadband business models all limit a clean marketing message of agile business.”
There’s potential here for wireless and the arrival of 5G connectivity in 2017 to be a short-term disruptor, though West points out that the broadband market in the UK is vast and heavily indexed in legacy infrastructure, thus the change from landline to 100 per cent wireless is a scenario that’s ‘many years away’.
“The business model will change to ‘pay as you use’ – resellers will switch a customer on and bill based on packaged services and bandwidth used.”
Carl West, GfK
In the here and now, DMSL is working with its reseller partners in terms of how they can layer up their broadband offering with a customer once a connectivity contract is sold.
“The first opportunity is to meet the demand for ultra- fast broadband and following on from that, to deliver IP telephony services to customers,” says Carter. “Hosted VoIP is the perfect service to get customers started on consumption of hosted services. It is very easy to sell and to manage. It also offers great profit for the reseller and drives customer loyalty, so everybody wins. Resellers can then use the VoIP service as a platform to build their sales of more hosted and cloud-based services.
“There is a tremendously high level of demand for fast broadband and hosted VoIP in the market and it will continue to be a massive opportunity for the rest of this year and well beyond.”
Predicting the future, particularly where technology is concerned, can be a tricky business. But in the case of superfast broadband, there is a sizable target for resellers to aim for – not only does it allow them to explore a new product segment, it raises the prospect of recurring income from associated services.
“Broadband should be a utility and the conduit to a plethora of services which excite, create efficiency and develop opportunity,” says West. “Collaboration, peer-to- peer, managed services and growth in unified communications are trends to watch. As cloud and the Internet of Things (IoT) matures, and as we understand more about the growing interest in decentralised services such as Blockchain, we will see the business model change over time to ‘pay as you use’ – resellers will switch a customer on and then bill based on packaged services and bandwidth used.
“Ultimately, big data, cloud, unified comms and associated analytics are great vehicles to engage with the customers rather than posturing a hypothetical need for speed.”