From the Desk of Jim Rogers

Communications Today, March 4, 2003

SBC's Shift in Strategy Helps Small Businesses

Let's give SBC Communications a round of applause.

After all that noise the Texas-based Baby Bell made about the Federal Communications Commission's decision on so-called "unbundled network elements," the company on Monday unveiled an entirely new strategy for attracting and retaining small business customers.

Indeed, SBC's revamped approach to the small business market appears focused on delivering enhanced customer service and support, fully customizable service options, and substantially discounted pricing to a group of potential customers heretofore largely ignored by the nation's major telecom service providers.

At the center of SBC's new strategy is what the company calls its "Connections" service offerings. Simply put, these new SBC options are intended to provide smaller companies with the flexibility to meet specific telecom needs. The offerings include things like providing one bill for all telecom services as well as personalized customer service and support via a single point of contact. With SBC's new service, small business customers can literally build their own "bundles," selecting from local service, long-distance (where available), call management services, broadband options, Cingular wireless plans and Web hosting.

Now, if you're the owner/operator of a big business, this latest announcement from SBC probably doesn't mean much to you. But if you're a small business owner/operator, SBC's announcement is definitely worth investigating. The ability to tailor communications services based on customer needs and budgets is a significant departure from the "one-size-fits-all" menu that most of the large telecom service providers offer small businesses. Additionally, because of SBC's change in strategy, small businesses now can benefit from much deeper discounts typically offered only to larger companies which tend to buy in greater volume.

Based on the sample pricing numbers SBC is making available to the media, it appears that smaller companies will be able to save an average of about 25 percent on costs associated with the industry standard "a la carte" retail pricing for telecom services. In certain cases, SBC's discounts to small business customers could reach as high as 40 percent for some options.

Ray Wilkins, who heads up SBC's marketing and sales force, has hit the nail on the head. "Small business fuels the economic growth engine of our country, but it is also a sector with widely varying challenges and needs," he says. "What every small business wants is the discounted pricing and personalized service that a Fortune 1000 company may receive. But at the same time, these companies also need to be in control--to choose the service options that best meet their specific, individual needs."

As part of SBC's initiative, the company's sales and support resources have been substantially realigned to better meet the needs of small business customers. In fact, the effort has resulted in the assignment of personal account managers for many small business customers, as well as supplementation of SBC's in-house sales force with outside service professionals.

So, what's going on at SBC? Apparently, there's been an awakening of sorts. One can only guess why it has taken so long. There exists a great deal of industry research showing that businesses--large and small--select telecommunications service providers primarily based on price and customer service. The same research is replete with examples of businesses seeking flexible telecom service offerings and the ability to customize those offerings, as opposed to fixed service offerings.

The problem is that most small businesses--because they are in fact small--are forced to obtain a variety of telecom services from a variety of service providers The big players in the telecom services arena--including SBC--have long recognized this phenomenon. Because of escalating operational costs, they've just never been able to do much about it. Now, SBC appears to have found a way to deal with those operational challenges.

Let's make no mistake. This is a significant first step for SBC. This company's move to court the small business community, among other things, puts a great deal of pressure on SBC's sister Bell companies. At the very least, the other Bells--Verizon, BellSouth and Qwest--will have to keep pace with SBC's small business initiative. Failing to do so will leave SBC well positioned to dominate a rapidly changing competitive telecom landscape.

Is it possible? Could this be the beginning of some serious intra-Bell competition - something that the telecom industry has long awaited to see?

Editor's Note: Jim Rogers, a veteran journalist and long-time telecom policy analyst, is Senior Managing Editor for Communications Today publisher PBI Media. The views expressed in the preceding column are solely his own and do not necessarily reflect those of PBI Media and/or any of its affiliates. Readers can email Mr. Rogers at jrogers@pbimedia.com.