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DSL Business Services

Arab Regional Office. Arab Centre of Excellence. DSL Business Services. ITU/BDT Arab Regional Workshop on “DSL Technologies and Services” Cairo - Egypt, 4-6 March 2003. DSL business - an incremental evolution Grow the market in 3 major waves.

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DSL Business Services

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  1. Arab Regional Office Arab Centre of Excellence DSL Business Services ITU/BDT Arab Regional Workshop on “DSL Technologies and Services” Cairo - Egypt, 4-6 March 2003

  2. DSL business - an incremental evolutionGrow the market in 3 major waves • High Speed Internet access (HSI): increase ARPU from existing PC customer • Business access: start with underserved SoHo segment with same infrastructure • Residential entertainment: gaming/video/entertainment to everybody $ TV Broadband Entertainment Address new audiences Game console PC Business Access Build on existing infrastructure High Speed Internet Access TIME

  3. Stream 2:Adressing SOHO/SME market with Business Access Solutions

  4. STEP 2Create Margins on Business Access Services • Business Access ADSL is ideal to address underserved SME market • Incremental cost on residential ADSL installed base is small • Major revenue opportunity with limited investments • Same footprint provides increased ARPU $ Business Access High Speed Internet Access TIME

  5. Segmentation 0 to 9 : micro Size 10 to 49 : small 50 to 249 : medium SME and SOHO segmentation principles SMEand SOHO DSL market Industry and Energy Construction Sector Trade … Needs

  6. 3 major service bundles have been identified to target SOHOs and SMEs Type 1 Networkers 30% Type 2 Full hosting seekers 45% Type 3 Conservatives 25% A real service bundle around networking solutions: Home working, IP VPN and Internet/extranet A stronger interest than other types in turn-key solutions such as web hosting Average needs with no real leading service • One consensual VAS: Security/Firewall Source : TNS for Alcatel 2001, A..T. Kearney analysis

  7. Revenues • Differentiate services/margins • Keep focus: one step at a time • Cost • Leverage investments: Universal DSLAM • Get provisioning/operations right • Residential • Get the volume • Speed the activation • Helpdesk process • Make sure you will upsell • Business • Start with new services • Let others help you sell • Move legacy and bundle • CapEx • Stable footprint • “Blade” upgrades • Network convergence • OpEx • Simple for volume • User provisioning • Targeted experts Build Profitable DSL Networks • Cash Flow • Ensure a sound business model • Sell the infrastructure over and over

  8. TeleworkingDSL Business Market Segments $ per month Corporate 10,000 0.01% Mediumbusiness 0.2% 1,000 Business Small business 1% 500 250 SOHO office 10% 100 Households 89% Consumer 40

  9. France SME internet forecast(in ‘000 of SMEs) Source: Morgan Stanley Dean Witter, 06/2001

  10. SDSL vs. Leased Line Prices

  11. Service Migration Activation Operational cost Savings Standard margin 700 600 500 Legacy services with G.SHDSL can generate significant cost savings 400 € per month 300 200 100 0 Leased line G.SHDSL

  12. Addressing the SME Market with xDSL:Address Complete Spectrum Service Provider Market Segmentation Service Segmentation Service migration Corporate Leased lines Existing customer base Cost savings ME DSL Upsell existing customers “Option selling” Packaging SE NB dial New customer segmentAttractive packages New service categories SOHO “Off” line

  13. Carrier Feedback • Develop premium DSL offers • security • reliability • differentiation • activation • Keep the offer simple • SOHOs and SMEs want “pay and use” services and predictable expenses • Develop a strong promotion and distribution strategy • develop a multi-channel communication strategy • licensed systems integrators and partners that act as an indirect communications channel • Achieve operational excellence (end-to-end provisioning) • provide excellent customer service • improve the provisioning and activation process Source: A.T. Kearney carrier interviews

  14. Finance X X Systems integrators ME Automotive SE ITservices Insurance SOHO X X Medical Channels to Market: Indirect — Vertical Segment • 54 percent of SOHOs and SMEs use indirect channels to buy telecom/IT equipment and services • 62 percent of SOHOs and SMEs cite indirect channels as key influence Serviceproviders

  15. Business Model Structure Value Solution Conclusion Overview Market Challenges Access package Wholesale market revenues • 2 ADSL-based offers • 2 G.shdsl-based offers Teleworking Retail service packages revenues Intranet/extranet package Total value creation Hosting • Supported by: • Carrier interviews • SME survey • Market reports Security/firewall E2E provisioning Savings Leased line replacement VoDSL

  16. A Complete Solution Addressing All the Needs of the SMEs • Use a single network to offer on top of residential: • business Internet access • VAS: firewall, security, web hosting, ... • multiple voice lines: VoDSL • multisite teleworking • leased line replacement • Provide service assurance (SLAs) and QoS mechanisms for all these services

  17. Data Center E-mail intranet, extranet NOC Firewall DNS Firewall Server Business Internet AccessSingle Site VAS Hosting pack SLA pack IP pack Business CO ATM G.shdslor ADSL Router ISP/Internet 7300 ASAM BAS Security pack • IP pack • Managed router • IP addressing • DNS service SLA pack • SLA monitoring tools • Self care Security pack • Managed firewall • Firewall monitoring • Virus check Hosting pack • Internet hosting • E-mail hosting

  18. SME/SOHO: A Unique Opportunity to Increase Service Offering • Willingness to pay for broadband access and services (Customer survey in USA and Italy) Home Working ARPU potential from additional services 85€ per month Web hosting Security Self provisioning Intranet and Extranet IP VPN Broadband access ARPU from basic access service 58€ per month Source: Alcatel survey: Italy/USA

  19. Business Access Components • Successful product offering is composed of different elements • J.P. Morgan suggests a rise in NPV for DSL business users from 14,000€ to 53,000€ based on these components: • IP • Managed router • IP addressing • DNS service Security • VPN • Firewall • Virus check • SLA • SLA monitoring and reporting tools • Self care Hosting • Internet hosting • E-mail hosting • Connectivity • Bandwidth • (A)-symmetric • Back-up • Multiple PC

  20. Example: Belgacom ADSL Source: Belgacom website dd. 25-10-2001

  21. British Telecom (BT Openworld)

  22. Success Stories in Europe : Unbundling

  23. Example: COLT www.colt-telecom.fr

  24. Example: COLT G.shdsl COLT and Alcatel deliver DSL broadband business access Joint press release dd 8-11-2001 Source: Data news 21-09-2001and COLT website

  25. www.alcatel.com

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