AT&T, Verizon's fiber offerings center on reinvigorating their SMB customer bases

Sean Buckley, FierceTelecom

AT&T (NYSE: T) and Verizon (NYSE: VZ) are both well known as having large-scale networks that can serve the largest multinational corporation customers, but their recent moves to enhance their fiber offerings for businesses show they want to keep a tighter rein on the small to medium business (SMB) market where their brands are still household names.

Leveraging its ongoing fiber-to-the-building (FTTB) program it began as part of its broader multi-billion dollar Project VIP initiative, AT&T's new Business Fiber service is being offered to customers that reside in buildings where it has already built out fiber.

Given the diversity of the customers that reside in each building location, the telco will offer a mix of asymmetric and symmetrical speeds initially ranging from 25 Mbps up to 300 Mbps. Later this year, it plans to offer a symmetrical 1 Gbps service.

Tom Hughes, vice president of Small Business Project Management at AT&T, told FierceTelecom that it is seeing a range of customers demanding higher and higher speeds from both large customers and even those that just simply have higher bandwidth needs.

"Some of the small businesses that are looking for a broadband service similar to what they have today, we believe the 25 Mbps service would be very appealing to them," Hughes said. "We'll have some larger customers, or customers that have larger bandwidth needs, that are going to want the 100 Mbps or 300 Mbps service because they are going to have a greater need for the speed and the connectivity."

Hughes added that the FTTB progress will also help it support its managed Ethernet applications. Being the dominant U.S.-based Ethernet player, having a greater on-net density will give it an immediate advantage over the competitors that may reside in these buildings but don't have fiber built into them.

But this is not just about providing a faster Internet pipe. AT&T could use the ongoing FTTB program as a platform for its user-cloud and Net Bond VPN service strategy. Having a fiber connection allows it to support the demands of cloud-based storage and other applications like videoconferencing.

On a slightly different turn, Verizon is extending its symmetrical FiOS upgrade program to the SMB space. Like the consumer drive, the SpeedMatch campaign for SMBs will automatically migrate customers to the higher speed tiers.

Unlike AT&T, Verizon's speed tiers top out at 500 Mbps, but given the capabilities of the GPON equipment Verizon is deploying, it could potentially offer a 1 Gbps tier if demand for such a service emerges in the areas where it currently offers FiOS to SMBs.

In the near-term, Verizon said that the majority of its FiOS SMB customers use the 50 and 75 Mbps tiers. That's not to say that some of its customers don't see the value in the higher speed tiers.

Mark Adams, director of SMB marketing for Verizon, said having the symmetrical service is about helping businesses, the majority of which have little resources, be more efficient.

"A lot of feedback from the small business owners was they don't want to wait and spend time," Adams said. "One of the biggest peeves they tell us as small business owners is not being able to run their business so if they don't have to think about the technology, they don't have to think about the speeds, and everything is getting done so they can run their businesses the way they want to."

Verizon said that a smoothie shop owner in Tampa, Fla., is using a 300 Mbps connection to provide an "immersive" experience for his patrons, including the ability to provide Wi-Fi service and streaming movies on multiple screens from Netflix (NASDAQ: NFLX), for example. 

While neither Verizon nor AT&T's new services are ubiquitous, they will become more important as cable operators move up market to accommodate larger multi-site business services deals.

One cable operator that AT&T and Verizon should fear is Time Warner Cable (NYSE: TWC). Putting aside their pending mega-merger with Comcast (NASDAQ: CMCSA)--one that will arguably shake up the business services market--the MSO's recent move to offer nationwide Ethernet shows it's serious about moving up into larger business accounts.

"The Ethernet services we have been selling for the last eight or so years, were generally geared at metro markets and regional markets such as Texas, New York, Los Angeles, and San Diego and we have done very well in that space," said Satyanarayana Parimi, group vice president of Product Management at Time Warner Cable, in an interview with FierceTelecom. "Now we're trying to get to the next level where we're moving past being a metro or a regional provider to being able to offer Ethernet services more widely across the country." 

Neither AT&T nor Verizon readily admitted that cable drove their new service initiatives, but given cable's successful move into the SMB market, it has to be on their minds. Having a fiber-based option on hand will help these telcos gain a competitive advantage--particularly where cable does not have fiber today.--Sean