Birch Communications isn't afraid of large cable MSOs like Charter Communications (NASDAQ: CHTR) and Comcast (NASDAQ: CMCSA) pursuing larger business accounts, because that focus will enable the provider to win more small to medium business (SMB) customers, Birch's new CEO says.
Tony Tomae, who earlier this month joined Birch as the company's new CEO, told FierceTelecom that the CLEC can now lure potential SMB customers that are examining their current contracts with cable operators.
"What's really interesting is that a lot of the cable contracts over the last three or four years are coming up now and we see that as an opportunity to position Birch," Tomae said. "If this was three or four years ago, it would have been really tough because the cable guys got after that low-end market."
Evidence is this trend is clearly seen at cable operators such as Comcast. In 2015, Comcast introduced a new unit that offers business services to large Fortune 1000 business customers in the U.S., for example.
With a focus on serving satellite offices of larger businesses the enterprise-grade organization will extend its growing portfolio of managed solutions that include broadband, Ethernet, voice, router, security, business continuity and Wi-Fi services. The product portfolio is being branded as "Managed Enterprise Solutions."
Tomae said that as cable allocate operators sales efforts on the medium and large business segments, Birch has an opportunity to strike SMBs with reps focused on this segment.
"Cable is not putting dedicated reps on the low end of the market anymore because they are focusing up market," Tomae said. "Our sweet spot is the SMB and mid-market, but I like that our conversations with our sales reps is that we're doing very well when we come up against cable."
Another weapon Birch wants to use to get more SMB customers is providing a good customer experience.
"I put a lot of emphasis on customer service representatives so we can have a higher touch point with the customer," Tomae said. "As long as video is not in play, I am confident we'll do very well and we'll continue to do very well."
So what's different about Birch's SMB play? Initially known for selling lower speed DSL and voice services, Birch can now provide a wider set of higher speed Ethernet services over its own fiber network and facilities it rents from other carriers.
Birch has been on expanding its fiber footprint. The service provider set a goal to gain a fiber presence in 1 million buildings. To get there Birch is taking a two-pronged approach that includes building out its own fiber and purchasing long-term fiber indefeasible rights of use (IRUs) from other network partners.
These assets have become the foundation for its BirchLink Metro-Fiber service line. Birch can now address new and existing customers with a larger portfolio of speeds from 1.5 Mbps up to 1 Gbps. Heavy data users can purchase up to 1 Gbps of symmetrical bandwidth.
That's not to say that Birch isn't interested in medium and large businesses. Instead, having built a nationwide network, Birch is pursuing larger businesses on a case by case basis.
"We're selectively playing in the medium and large business space," Tomae said.
While Birch may have a well-honed SMB services strategy, cable continues to thrive in the SMB market with revenues at the largest cable operators seeing growth as of the end of the first quarter.
Charter Communications, which will become an even larger factor in the business market with its acquisitions of Time Warner Cable and Bright House, and Comcast are still showing decent revenue trends in the SMB market segment.
Comcast reported that first quarter 2016 business services revenue rose 17.5 percent to $1.3 billion due to an increase in the number of small business customers as well as continued growth in medium-sized business customers. Likewise, Charter Communications reported that SMB revenue rose 11.3 percent to $202 million, while enterprise revenue grew 13.4 percent to $99 million.
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