UK SOHO Market Heats Up

R. Pritchard

Summary Bullets:

• Infrastructure-focused Giganet has launched a wholesale connectivity offering targeting the SOHO market for its reseller, managed service provider, and ISP partners.

• This re-emphasizes both the importance of the SOHO and SME markets as a key target as well as of the fragmentation of the supply/value chain.

Small and medium-sized enterprises (SMEs) and small office/home office (SOHO) businesses are becoming the telecoms target markets of preference across many countries at the moment. Given the background of deglobalization and trade wars, combined with many individuals choosing to pursue their own path or work on side businesses as a result of the pandemic as well as associated experience of working from home for white-collar workers (or laid-off blue-collar workers), smaller business is where much of global growth is being delivered, presenting an opportunity for many companies across all verticals, including the telecoms sector.

UK connectivity provider Giganet is working with partners CityFibre and Openreach – as well as using its own infrastructure – to offer 160 Mbps connectivity via telecoms resellers, managed service providers, and internet service provider (ISP) partners. The goal is to address the micro business market with a service that sits between established copper-dependent ‘fiber’ and Ethernet services – and will have been helped by Ofcom’s recently announced initiative to ‘tackle confusion’ about different types of broadband.

Within the UK market, Virgin Media O2 Business has demonstrated traction in the smaller business segment, BT is actively targeting the market (including a partnership with the Federation of Small Businesses) and has even launched a dedicated SOHO unit, and Vodafone is targeting SOHOs with fiber-to-the-premises (FTTP) – and the list extends way beyond these main players. In fact, service providers worldwide have tended to report growth in the smaller business market as corporate and MNC revenues have come under strain.

The other interesting angle of the Giganet strategy is that it offloads identifying and recruiting target customers to third-party partners. This has the advantages that Giganet can focus on its core business to minimize overheads and complexity, leaving others to find, sign up, and retain customers. It also means that a variety of go-to-market partners can develop and shape their propositions to meet the needs of their target customers – be that by geography, solution, or vertical sector. This delivers a mass customized approach, but with the commercial risks and benefits more equally divided and optimized.

Ultimately, this model appears to reflect the overall direction of the telecoms market with established large service providers and former incumbents increasingly offloading their physical fixed and mobile assets either in response to changing regulation, or to pass on the capital expenditure of provision to third-party infrastructure investors (sometimes as outright sales, sometimes as a joint venture), often aimed at boosting investor returns – although not always successfully.

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