2012 atlantic-acm business connectivity.executive summary
TRANSCRIPT
ATLANTIC n ACM
2012 Business Connectivity
Wireline and Wireless
Report Card
Executive Summary
One Beacon Street, Boston, MA 02108 . Tel 617-720-3700 . Fax 617-720-1077 . www.atlantic-acm.com
ATLANTIC n ACM
The U.S. business market will remain relatively flat over the forecast
period 2010-2017e
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 2
$34.1 $35.0 $35.9 $37.0 $38.0 $39.0 $39.9 $40.7
$32.9 $31.7 $30.2 $28.9 $27.7 $26.8 $26.1 $25.5
$0
$10
$20
$30
$40
$50
$60
$70
$80
2010 2011 2012e 2013e 2014e 2015e 2016e 2017e
Business Voice Business Data
Business Market Revenue Forecast 2010-2017e: Voice & Data
Reve
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$67.0 $66.6 $66.1 $65.8 $65.7 $65.8 $66.0 $66.2
Source: U.S. Telecom Wired and Wireless Sizing and Share: 2012-2017, ATLANTIC-ACM, 2012; ATLANTIC-ACM Research and Analysis 2012
• ATLANTIC-ACM expects continued pressures in the business voice market, bringing down revenues at a CAGR (2011-2017e) of 3.5%
– Economic declines and migration away from traditional circuit-switched voice will drive most of the decline
• Business data products are predicted to grow steadily, due to a mix of positive growth rates from IP-based products and negative growth rates from legacy products
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ATLANTIC n ACM
Over the forecast period, VoIP revenues should grow by a CAGR of
17.7%, slightly offsetting drastic declines in domestic and local voice
revenues
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 3
$0
$10
$20
$30
$40
2010 2011 2012e 2013e 2014e 2015e 2016e 2017e
VoIP International Voice Domestic LD Voice Local Voice
Business Voice Products Revenue: 2010 – 2017e
Source: U.S. Telecom Wired and Wireless Sizing and Share: 2012-2017, ATLANTIC-ACM, 2012
Reven
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$32.9 $31.7
$30.2 $28.9
$27.7 $26.8 $26.1 $25.5
Note: Domestic LD Voice includes Conferencing
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ATLANTIC n ACM
Business data revenue growth will be driven by IP VPN revenues, which
are expected to climb at a CAGR of 6.4% through 2017
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 4
$0
$10
$20
$30
$40
$50
2010 2011 2012e 2013e 2014e 2015e 2016e 2017e
FTTx
Cable Modem
ATM/Frame
DSL
LD Transport
IP Access (DIA)
IP VPN
Local Transport
Business Data Products Revenue: 2010 – 2017e
Source: U.S. Telecom Wired and Wireless Sizing and Share: 2012-2017, ATLANTIC-ACM, 2012
Reve
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$34.1 $35.0 $35.9
$37.0 $38.0
$39.0 $39.9 $40.7
Note: Transport includes Ethernet, ISDN (PRI) and SONET Ring
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ATLANTIC n ACM
Major factors influencing trends within business telecom services
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 5
U.S. Business
Telecom Market
Cautionary economic conditions
in 2012 encourage businesses
to look for cost savings with
enhanced telecom capabilities
Continued migration from
legacy TDM voice services
to VoIP will shrink the
overall size of the voice
market
Cable providers’ ongoing success
in the small business market will
challenge major service providers’
share of the overall business
market
Cloud service adoption and
partnerships in 2012 signal
the success of SaaS and
long-term opportunities in
IaaS and PaaS
1. Technology
Investments for
Cost Savings
2. Increased
Competition
4. Movement to
the Cloud
3. Evolution of
Voice
ATLANTIC n ACM
The Business Connectivity Report analyzes customer opinions
from a range of company segments and business sizes
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 6
Small
Businesses
Medium-
Sized
Businesses
Large
Enterprises
Regional Bell Operating Company/Interexchange Carrier
(RBOCs/IXC) AT&T, CenturyLink, Level 3, Sprint, Verizon, Windstream
Competitive Local Exchange Carrier
(CLEC) Cogent, EarthLink, tw telecom, XO
Major Mobile AT&T Mobility, Sprint Wireless, T-Mobile, Verizon Wireless
Cable Cablevision, Comcast,
Time Warner Cable
The RBOCs,
LECs and
nationwide
IXCs provide
connectivity to
businesses of
all sizes
Likewise, the
major nationwide
mobile providers
also serve all size
businesses
CLECs, such as tw
Telecom and XO
focus on the
medium-sized
businesses, including
some smaller
customers
Cable providers
began selling to
small
businesses and
are now moving
up the market
The overbuilds of
fiber provided by
players such as
Fibertech Networks
and Sidera
Networks typically
focus on medium to
large businesses in
heavily populated or
large data
transmission areas Fiber Players
Fibertech Networks and
Sidera Networks
ATLANTIC n ACM
Network Performance continues to be the primary driver of
business telecom purchases
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 7
6.56
6.68
6.94
7.40
7.76
7.81
7.97
8.11
8.81
8.91
9.29
6.47
6.57
6.78
7.05
7.53
7.73
7.75
7.98
8.14
8.80
8.96
9.33
0 1 2 3 4 5 6 7 8 9 10
Sales Reps.
Recommendations of Others
Product Portfolios
Brand Reputation
Billing
Provisioning/ Installation
Economic Security of Business
Service Level Agreements (SLAs)
Customer Service Reps.
Price
Network Security
Network Performance
2012 Score
2011 Score
© 2012, ATLANTIC-ACM
Drivers of Purchase • Respondents have been consistent in rating their drivers of business telecom purchases, prioritizing network performance since the first year of this research
• While price rated above network security in 2008, in 2009, network security jumped ahead of price and has rated above it since, reflecting the increasing importance of security in networks
ATLANTIC n ACM
Since the inception of this research, Network Performance has
consistently rated as the top driver of purchase
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 8
7.76
7.27
7.36
7.44
7.98
8.29
8.35
8.43
8.57
9.00
7.71
7.72
7.80
7.98
8.03
8.28
5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0
Other
XO
Comcast
EarthLink
TWC
tw telecom
Cablevision
Cogent
Sidera Networks
Fibertech Networks
CenturyLink
AT&T
Windstream
Sprint
Verizon
Level 3
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N = 2,945
Q: For each carrier with which you work, please rate your perception of each carrier's network performance based on their network's quality, availability, and uptime
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
• For at least 4 consecutive years, Network Performance has been the operation for which business customers have perceived the smallest operational difference between CLEC/Cable/Fiber providers and ILEC/IXCs
0%
5%
10%
15%
20%
25%
30%
35%
40%
1 2 3 4 5 6 7 8 9 10
Pe
rce
nta
ge
of
To
tal R
ati
ng
s
Ratings
ILEC/IXC
CLEC/Cable/Fiber
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ILEC/IXC Ave.: 7.95
CLEC/Cable/Fiber Ave.: 7.89
Network Performance
Network Performance Scores Distribution
ATLANTIC n ACM
7.21
6.65
6.84
6.89
6.89
7.15
7.19
7.53
7.56
7.62
7.71
7.81
7.93
5.0 6.0 7.0 8.0 9.0
Other
AT&T
Verizon
XO
CenturyLink
TWC
Sprint
Earthlink
Level 3
tw telecom
Comcast
Windstream
Cablevision
7.76
7.49
7.52
7.73
7.86
7.86
7.97
7.99
8.07
8.19
8.30
8.31
8.48
5.0 6.0 7.0 8.0 9.0
Other
XO
Comcast
TWC
EarthLink
AT&T
Verizon
CenturyLink
Sprint
Windstream
Level 3
Cablevision
tw telecom
The overall average for voice quality rating average remained flat year-
over-year
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 9
Average: 7.96
Overall Voice Quality
Average: 7.12
© 2012, ATLANTIC-ACM © 2012, ATLANTIC-ACM
N = 2,342
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
N = 2,312
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
Overall Voice Price Competitiveness
• Overall Voice ratings combine individual scores from the following products: Circuit-Switched Voice, VoIP, and ISDN
ATLANTIC n ACM
AT&T
CenturyLink
Comcast
EarthLink
Level 3
Windstream
Sprint
TWC
tw telecom
Verizon
XO
Other
Cablevision
7.0
8.0
9.0
6.0 7.0 8.0
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 10
In 2012, only CenturyLink fell decisively in the Provide Premium
quadrant, as many of the carriers offering above-average quality were
also very price competitive
Overall Voice Quality and Price Competitiveness Correlation
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
More Price Competitive
Less Price Competitive
High Quality
Low Quality
Product Quality Average: 7.96
Price Competitiveness Average: 7.12
• Cablevision’s position within the Raise the Bar quadrant is illustrative of its high quality and competitively priced Voice services
Provide Premium
Raise the Bar
Shoot for Share Manage Margin
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ATLANTIC n ACM
Between 2011 and 2012, respondents perceived an improvement in the
overall price competitiveness of carriers’ Data product suites
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 11
N = 4,232
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
N = 4,061
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
• Overall Data ratings combine individual scores from the following products: Ethernet DIA, Legacy DIA, Internet Access, Metro Private Line, Ethernet Private Line, Long Haul Private Line, and IP VPN
7.29
6.53
6.69
6.94
7.03
7.13
7.24
7.38
7.51
7.73
7.76
7.96
7.97
8.24
8.37
8.95
5.0 6.0 7.0 8.0 9.0
Other
AT&T
Verizon
Earthlink
Sprint
Windstream
CenturyLink
XO
Level 3
TWC
tw telecom
Comcast
Sidera Networks
Fibertech Networks
Cablevision
Cogent
7.52
7.21
7.47
7.60
7.65
7.72
7.73
7.85
7.90
8.05
8.21
8.25
8.36
8.53
8.67
8.69
5.0 6.0 7.0 8.0 9.0
Other
Earthlink
Windstream
XO
AT&T
Verizon
Comcast
CenturyLink
TWC
Sprint
Sidera Networks
Level 3
Cogent
tw telecom
Fibertech Networks
Cablevision
Average: 7.85
Overall Data Quality
Average: 7.25
Overall Data Price Competitiveness
© 2012, ATLANTIC-ACM © 2012, ATLANTIC-ACM
ATLANTIC n ACM
AT&T
CenturyLink
Cogent
Comcast
EarthLink
Fibertech
Level 3
Windstream
Sidera
Sprint
TWC
tw telecom
Verizon
XO Other
Cablevision
7.0
8.0
9.0
6.0 7.0 8.0 9.0
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 12
The position of high quality and price competitiveness is difficult to
achieve in this competitive market
Overall Data Quality and Price Competitiveness Correlation
Source: 2012 ATLANTIC-ACM US Business Connectivity Survey
More Price Competitive
Less Price Competitive
High Quality
Low Quality
Product Quality Average: 7.85
Price Competitiveness Average: 7.25
Provide Premium
Raise the Bar
Shoot for Share Manage Margin
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• Sprint was the only carrier to rate within the Provide Premium quadrant, reflecting respondents’ dissatisfaction with Sprint’s data products’ pricing strategies
ATLANTIC n ACM
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 13
8.15
7.15
7.18
7.89
8.00
8.54
7.19
7.50
7.76
7.32
5.5 6.0 6.5 7.0 7.5 8.0 8.5 9.0
Other Wireless
T-Mobile
AT&T Mobility
Verizon Wireless
Sprint Wireless 2012
2011
Average: 7.59
Wireless Operations Average: 2011 vs. 2012
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N 2011: 3,667; N 2012: 4,272
Source: 2011 ATLANTIC-ACM US Business Connectivity Survey; 2012 ATLANTIC-ACM US Business Connectivity Survey
• Sprint’s 8.5% decline drove it towards the bottom of ratings for Wireless providers in 2012
• Other Wireless became the new top-rated Wireless provider for overall operations average in 2012, after Sprint Wireless was top-rated in 2011
AT&T was the only major Wireless provider to experience marked 2011
to 2012 improvement for overall operations ratings
ATLANTIC n ACM
Growth in cloud adoption among business customers will drive
increased need for high performing, secure networks • By storing an increasing amount of data and company processes in the cloud, company CIOs and CTOs
will need to ensure these precious assets remain secure as they are stored/accessed virtually
• Reflective of this trend, network security has remained among the top-2 drivers of purchase for 3 consecutive years, beating out price competitiveness
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 14
0%
10%
20%
30%
40%
50%
Software as a Service
Infrastructure as a Service
Platform as a service
Currently buy and will maintain spending
Currently buy and will grow spending/ Plan to purchase in the future
Cloud Service Purchase/ Planned Purchase
© 2012, ATLANTIC-ACM
Pe
rce
nt
of
Res
po
nd
en
ts
Cloud Services
7.98
8.14
8.80
8.96
9.33
0 1 2 3 4 5 6 7 8 9 10
SLAs
Customer Service
Price
Network Security
Network Performance
Top-5 Drivers of Purchase: All Respondents
© 2012, ATLANTIC-ACM
ATLANTIC n ACM
ILEC/IXCs improved year-over-year across all major customer
experience touch points while CLECs were either flat or down
15
-3.4%
-2.4%
-3.0%
-0.5%
-1.1%
-0.4% -0.2%
-0.8%
1.4% 1.1%
2.2%
3.2%
1.4%
2.8%
3.5%
1.4%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Brand SR: Professional
SR: Proactive
Provisioning Network Billing Cust Serv.: Technical
Skills
Cust Serv.: Professional
CLEC ILEC/IXC
Year-over-Year (2011-12) Change in Customer Experience Touch Points:
ILECs/IXCs vs. CLECs
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card
• The largest nominal difference in year-over-year change came from sales-reps proactive selling. While CLECs continued to rate above ILECs in 2012, year-over-year improvement from ILECs/IXCs indicate these carriers are working hard to change customer perceptions
© 2012 ATLANTIC-ACM
Ye
ar-
ove
r-Y
ea
r C
han
ge
in
Ave
rag
e (
%)
ATLANTIC n ACM
Despite strong growth in VoIP, declines in Legacy Voice
revenues will drive the business voice market down
16
• xxxxx
$0
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2010 2011 2012e 2013e 2014e 2015e 2016e 2017e
$30.4 $28.5
$26.3 $24.3
$22.3 $20.5
$18.7 $17.1
$2.5 $3.2
$3.8 $4.6
$5.5 $6.4
$7.4 $8.4
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Business Voice Revenue 2010-2017e
CAGR (2011-2017) = -3.5%
Legacy Voice*
VoIP
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Share 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e CAGR (11-17e)
VoIP 7.7% 10.0% 12.7% 15.9% 19.7% 23.8% 28.3% 33.0% 17.7%
Legacy Voice 92.3% 90.0% 87.3% 84.1% 80.4% 76.2% 71.7% 67.0% -8.2%
*NOTE: Legacy voice includes circuit-switched local voice, domestic LD voice and international LD voice
Source: 2012 ATLANTIC-ACM U.S. Wired and Wireless Sizing and Share: 2012-2017
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card
• According to ATLANTIC-ACM, business customers migrating away from traditional telephony solutions to more cost-effective VoIP solutions will translate to a smaller addressable business voice market
ATLANTIC n ACM
ATLANTIC ■ ACM Copyright © 2012 2012 Business Connectivity Report Card 17
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One Beacon Street, Boston, MA 02108
Tel (617) 720-3700 Fax (617) 720-1077
E-mail: [email protected]
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