UK SMEs commit to converged services but hold back from single telco suppliers

British SMEs are strongly committing to converged telecommunications, such as combined mobile, fixed and internet services, according to independent research published today for Orange by the Bathwick Group. But while the majority agree that a single supplier is the best long term move, most are holding back from consolidating suppliers.

82 per cent of SMEs use VPNs today and 57 per cent use VoIP, according to the report, Small and Medium Enterprise Business Communications in the UK: Unified communications and the demand for new products and services. Handheld computers, mobile phones and broadband top the list of investment priorities for 2007, alongside VPNs and VoIP.

Only 22 per cent of respondents cite saving money as their prime objective when investing in advanced communications, while a third (33 per cent) are focused on new applications and services. In total over half (55 per cent) want improved communications management, new services or are considering a single supplier solution.

Although 51 per cent of SMEs say that a single supplier would be more cost effective, or easier to manage, there is doubt as to whether the market can meet their needs today. 57 per cent routinely minimise the number of communications suppliers they use, but also claim that there is not a simple or cost effective solution for combined mobile, Internet and telephony services.

“It's clear that SMEs are the vanguard of IP based adoption, which many thought the preserve of large business,” said Jason Ellis, Head of Convergence, Orange Business Services UK. “But there's a clear gap between the demands for converged services and for single service providers. SMEs want to put more of their eggs in one basket, but operators must do more to make their integrated offers simpler and more cost effective.”

The research also showed that 17 per cent of respondents thought it worth paying more for a single supplier, with the smallest companies most willing to pay more in order to enjoy easier management. Predictable expenses are also a major motivator, with 31 per cent of SMEs wanting to improve the predictability of expenses.

“The smallest businesses would seem to gain most from single suppliers, given their limited management resources,” said Jason Ellis, Head of Convergence, Orange Business Services UK. “That a minority are prepared to pay a premium to do so indicates a trend in that direction. But few operators provide integrated mobile voice and data, broadband and fixed line services today and for Orange and those of us who do, there's a simple message: we must also focus on simplicity, predictable pricing and value added services if SMEs are to place their trust in a single supplier.”

Interest in valued added services from unified solutions includes the following most popular services:

• Least Cost Routing: 84 per cent (automatic routing of calls and Internet access to the lowest cost route)
• Unified Messaging: 80 per cent (messages of any kind located in a single mailbox)
• Location Based Services: 70 per cent (lower rates for internal / team mobile calls than for outdoor / external calls)

About the research

Orange commissioned the Bathwick Group to conduct research to examine the telecommunications strategies and investment intentions of SMEs across the UK. A total of 181 SMEs ranging in size from 10 to 500 employees were surveyed during the course of this research.

About Orange

Orange is the key brand of France Telecom, one of the world's leading telecommunications operators with more than 153 million customers on five continents.

In June, 2006, as part of the France Telecom integrated operator strategy (NExT programme) to deliver simple, convergent products, Orange became the single brand for mobile, internet and TV offers in France, the United Kingdom, The Netherlands and in Spain, strengthening Orange's position as the number two mobile and internet services brand in Europe. In addition, Orange Business Services became the new banner for business communications solutions and services. Orange Business Services is present in 166 countries and territories and serves customers in 220.

France Telecom (NYSE:FTE) is listed on Euronext Paris Eurolist market and on the New York Stock Exchange. At September 30, 2006, the group had 92.59 million mobile customers, 12.09 million internet customers and 48.59 million fixed line customers.

At the end of 2005, France Telecom had consolidated sales of 49 billion euros by IFRS standards in 2005 (38.4 billion euros for the year-to-date at September 30, 2006) and had 203,000 employees.

Further information about Orange can be found on the Orange website at www.orange.co.uk.

Orange and any other Orange product or service names included in this material are trade marks of Orange Personal Communications Services Limited.

About The Bathwick Group

The Bathwick Group researches how businesses buy, implement, and use information and communications technologies today, and how business requirements and structures will change over the next several years. Combining primary research with trend analysis in large corporate, mid-market and SME sectors, Bathwick provides research models, benchmarking, market analysis, and strategic consultancy services to a variety of IT, communications, government and media clients, and helps user organisations plan for technology-driven change.