Cbeyond Web Hosting Move Illustrates Trend

Cbeyond has announced a new "Enhanced Web Hosting" service for small businesses. The service package includes a design- it-yourself tool, marketing capabilities and an e-commerce solution.

The enhanced service is an example of an important trend: retailers of communication services to small and mid-sized businesses ultimately will be in the managed services businesses in a broader way than simply supplying voice and broadband access.

The math is simple enough: about 25 percent of SMB spend is for communications; about 75 percent for applications and hardware to support applications. To get more of the wallet, retailers of SMB services have to address applications, not just voice and broadband access.

Cbeyond's Enhanced Web Hosting package offers small businesses the essential tools to launch and manage their online Web presence. With this package, Cbeyond can host a company's website, configure their domain or transfer an existing domain to the company's Cbeyond account. Further, the design-it-yourself Web application available with this package enables small businesses to build and customize their own website by choosing from more than 200 pre-configured, easily customizable templates. The package also supports flash and video files to create a rich user experience.

International LD Gets More Mobile

At least where it comes to international long distance, sometime in 2009 it is conceivable that more calls will terminate on mobiles than on fixed lines, according to researchers at TeleGeography.

That doesn't mean most international calls will originate on mobiles, though. One of the dominant patterns will be landline origination, mobile termination.

The reason users and service providers will care about such trends is that retail prices and intercarrier compensation rates are based at least in part on what sort of network terminates a call. So changes in termination patterns directly will affect revenues that accrue to various providers of terminating service.

If You Build Will They Come?

Though it now is apparent communications service providers will have to become managed service providers over the long term, the way the need for viable applications is discovered, thrid party applications can be developed and sold remains a thorny problem. 

And the problem is measurably harder on the mobile side of the business, if only because applications have be tweaked for every handset the apps are supposed to run on. For this reason, some developers may well find it is easier to work with fixed line providers, as crazy as that might sound. 

Nor is it going to be especially easy for independent developers to get business deals done. "For two guys in a garage to make five different code applications, it's very hard," says Mark Kvamme, Sequoia Capital principal. 

The dream is to have any application run on any device and over any network. Ideally that allows developers to concentrate on what engages end users, instead of how to develop and deliver the apps. Platforms with large user  bases will help. The Apple iPhone is the best current example, though many have hopes for Google's Android OS as well. 

But business models remain a challenge as well, as it is doutbtful advertising will support most of the new apps developers expect to make available. That means subscriptions, which in turns means a really-compelling value proposition and serious willingness to pay. Few apps so far have that sort of status. 

For that reason along, a focus on business apps would seem to make sense, though the thought probably is unappetizing for many developers. 

All of which suggests the managed services business has a rather large opportunity before it, if some of these obstacles can be surmounted. Namely, make the process of aggregating demand, then authoring and delivering services--with huge scale--and simply. 

How Should VARs Sell Carrier Services?

Many solution providers these days would at least consider adding carrier sales to their product mix, providing the business case makes sense. But the actual sales model any particular solution provider should—or can—take will depend on several factors, say executives at Level 3 Communications, including:

• The current size of a solution provider’s customer base

• Rate of new customer growth

• Typical customer requirement for support at one or multiple locations

• Geographic scope of a solution provider’s operations

• Alignment to current solution provider strategy and focus

In broad outline, the “go to market” strategy will have smaller local VARs profiting from a “referral” or “assisted sale” fee arrangement. Some solution providers will consider becoming sub-agents. Solution providers serving multi-location enterprises will become carrier sales agencies

The new sales operations to sell carrier services can take several forms, Level 3 says.  If the agency route is selected, smaller organizations will train existing staff. Larger organizations may hire personnel with carrier sales experience. 

If a solution provider decides to take a less-extensive role, solution providers may choose simply to make referrals. In a more-substantial role, solution providers might become sub-agencies affiliated with a master agency.

There is no single business arrangement that makes equal sense for every solution provider. The typical smaller value added reseller with perhaps a dozen employees or less, working in a single metropolitan market, may not generally find that a feasible route, and might well opt for a referral fees model.

Broadband Stimulus Coming?

The Telecommunications Industry Association and Communications Workers of America have sent U.S. congressional leaders the outlines of a broadband deployment incentives program which they suggest be made part of any economic stimulus package passed by Congress early in the new year.

The proposal emphasizes tax incentives and direct grant. Specifically, the groups suggest allowing wireless broadband deployments to expense 75 percent of investments. Alternatively, the groups suggest a 15 percent investment tax credit for networks capable of 1.5 Mbps downstream/384 kbps upstream.

They suggest and 100 percent expensing or a 20 percent investment tax credit for new infrastructure capable of 3 Mbps downstream/1 Mbps upstream. the groups also recommend a 40 percent investment credit for a network providing 5 Mbps downstream/1 Mbps upstream.

For fixed broadband infrastructure, the groups suggest 50 percent expensing or a 10 percent investment tax credit for networks capable of 3 Mbps downstream/1 Mbps upstream, 75 percent expensing or a 15 percent tax credit for 25 Mbps downstream/5 Mbps upstream, or 100 percent expensing or a 20 percent tax credit for 50 Mbps downstream/20 Mbps upstream infrastructure.

They further propose a 40 percent investment tax credit for a network providing 100 Mbps downstream/20 Mbps upstream.

For satellite broadband infrastructure, which plays a special role in national broadband deployment, tax benefits associated with particular service capabilities remain to be determined, the groups now say.

The groups argue for investment in four segments: fixed broadband, wireless broadband, satellite broadband and broadband core and backbone transport.

The proposal also suggests “direct grants” for rural broadband deployments. TIA suggests a $25 billion grant program for deployment of broadband infrastructure in unserved areas.

Consumer Recession Behavior Still Consistent

In some ways, consumer behavior is similar to past behavior in recessions, a Parks Associates survey finds. What is similar is the greater--not lesser--reliance on multi-channel video services.

What is different is the bigger role for video on demand, especially of the "free" or "subscription" variety.

One suspects, though data is not yet available, that roughly the same sort of trend will be seen in the mobile and broadband access areas as well. People aren't going to disconnect. But they might shift buying a bit, delaying upgrades or purchases of advanced features and services.

Viral Works

Social media marketing might be more effective than just putting ads on social networks, according to SheSpeaks. The reason? Though women are active social networkers, a substantial percentage ignore ads or are annoyed by them. About 26 percent of respondents to a recent SheSpeaks-sponsored survey actively ignored most online ads and 20 percent were annoyed by ads on social networking sites.

For that reason, SheSpeaks argues that social media marketing—not just ads on social networks—could be especially effective among women for spreading word-of-mouth information.

About 46 percent of all women surveyed by SheSpeaks now use social networks. And since most observers note that Internet use and social networking are more common among younger users than older users, it probably is noteworthy tht more than 40 percent of women in their 40s have a social networking profile, and women with children seem to be active social networkers.

More than 70 percent of women with children ages 13 to 17 had talked about products on social networks, compared with 62 percent of all responding women.

“40-somethings are active users and members of online social networks,” says Aliza Freud, CEO of SheSpeaks, in a statement. “These women have started to use the Web and social networks in ways that mirror the rest of their lives—from finding out about a product to shopping or monitoring their children’s activities.”

Female Internet users ages 45 to 54 are a larger audience than male Internet users of the same age, according to comScore Media Metrix. There are also far more female Internet users ages 45 to 54 than there are ages 55 to 64.