Small business won't fall for cheaper broadband

Australian PC World –

The introduction of A$29.95 (US$23) ADSL (Asymmetric Digital Subscriber Line) retail products by Telstra Corp. Ltd. and the massive price war that has ensued will stimulate interest in broadband from the small business sector, but most won't sign up to cheaper barebone plans, an industry representative claims.

Pacific Internet Australia Pty. Ltd. managing director Dennis Muscat said although the new price point would help draw the small business sector's attention to high-speed Internet services, most were too technology savvy to be fooled into signing up for services with entry-level download excess charges.

Cheaper ADSL services would stimulate interest and fuel small businesses to take up broadband, but not at the A$29.95 price point, Muscat said. This is despite the fact that 41 percent of small businesses in Australia are now using broadband plans aimed at the residential market.

According to the results of Pacific Internet's latest Broadband Barometer January 2004 report only 47 percent of small businesses surveyed use a broadband product tailored specifically to the business and small business market.

Muscat said there was a plethora of broadband products designed for businesses in the market today. However, the industry was still not doing enough to sell the benefits of business-grade services to the small business sector.

The quarterly broadband report, compiled for Pacific Internet by ACNielsen.consult, is based on a survey of 452 Internet-enabled small businesses (with up to 50 employees) across both metro and regional areas in Australia.

Of those surveyed, 47 percent are now accessing the Internet via a broadband service.

DSL services proved most popular, with 30 percent of respondents using some form of DSL as their broadband connection.

For the first time since the report began in June last year, respondents were asked to compare the impact of broadband with narrowband on their business.

In total, 61 percent of respondents said broadband had "significantly" improved efficiency and productivity of their business, while another 25 percent said broadband was "extremely significant".

But the benefits were being lost to regional businesses unable to access broadband services, Muscat said.

Of those businesses surveyed in metro areas, 55 percent were using broadband, compared to 20 percent in regional areas. While 34 percent of regional businesses said they didn't use broadband because it was too expensive, 37 percent said they could not access broadband in their area.

The report also found take-up of "value-added" high-speed services, such as Voice over IP (VoIP), videoconferencing and Wi-Fi, remained low across the small business sector.

Just 6 percent of businesses surveyed were using VoIP, with a total of 17 percent intending to use VoIP within the next 12 months. Public wireless Internet hotspot access fared slightly better, with 9 percent of survey respondents claiming to currently use the technology and 15 percent planning to use it in 12 months time.

Telecommuting, however, had become a popular topic for discussion with small businesses, Muscat said. Of those surveyed, 35 percent said they used broadband for telecommuting or remote access. Another 10 percent said they intended to use these services within the next six to 12 months.

In contrast, 17 percent of businesses surveyed in June 2003 were using their broadband connection for telecommuting or remote access. A further 17 percent said they planned to introduce these services in the future.

Small business concerns with excess broadband usage and download charges has fallen since the first Barometer report in June 2003. Twenty-six percent said they had concerns about download usage in the latest report, a 7 percent improvement on the 33 percent in June 2003.

The impact of Telstra's $29.95 ADSL retail plan featuring 200M bytes of download usage per month might prove a cause for concern for retail users, but Muscat said he was confident small businesses would read the fine print and sign up to services which matched their download needs.

Volumes of data downloaded by small businesses in the January report remained fairly consistent since the first Barometer report. The majority (22 percent) use less than 500M bytes per month (down from 26 percent in June 2003). The next most popular download usage bracket is 500M to 1000M bytes per month (21 percent), followed by 1G to 2G bytes per month (19 percent).

While small businesses might not necessarily be swayed to broadband at the lower $29.95 ADSL price point, the new ADSL and cable plans had already stimulated residential demand, Telstra said.

Since the announcement of its new retail prices 10 days ago, the rate of new retail applications had jumped by 85 percent compared to last month, the telco said.

It has also announced it will drop its wholesale ADSL prices in a bid to appease its wholesale customers and cooperate with the ACCC.

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