Verizon Business Introduces New Mid-Market Bundle Options, Debuts 3G Access to Private IP

| May 21, 2009 | Business Network Services - U.S. | Competitive Intelligence Report

| Analysts: Brian Washburn, Cindy Whelan

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

May 19, 2009 –- Verizon Business is putting together integrated service packages mainly targeting single location, small to mid-size enterprise customers under the “BizPaks” brand name. “VoIP BizPak” bundles Verizon Business’ Internet Dedicated Access (IDA) with the carrier’s Hosted IP Centrex or IP Integrated Access; “PRI BizPak” bundles IDA with ISDN and local/long-distance calling plans. BizPaks include managed installation and a host of value-added Internet options. Verizon Business has also announced that Verizon Wireless' 3G services now support secure access to its Private IP service.

Analytical Summary

• Current Perspective: Positive on the launch of BizPaks, because the product line reflects a fundamental change in the carrier's go-to-market strategy toward SMBs. Verizon previously held lower-end SMB accounts under Verizon Telecom, which focused on its own set of services to target mainly in-footprint opportunities. Verizon Business is now pushing its advanced products into lower-end SMBs, and the carrier has a national marketing and sales strategy for this segment. BizPaks assemble open-ended SMB voice/data bundles from existing Verizon Business services, which let customers add components as they need them.

• Vendor Importance: High to Verizon Business because the carrier is working to make its growth services available down to smaller businesses (e.g., Hosted IP Centrex and IP Integrated Access via VoIP BizPaks) and up into enterprises (e.g., FiOS for Business). In the SMB segment, Verizon Business is using BizPaks both to offer competitively priced services with compelling package discounts, but also to simplify service quoting, aiming to make it relatively easy to do business with the carrier.

• Market Impact: High on competitors nationwide because Verizon Business' BizPaks represent the flagship offer that the carrier will use to redouble its efforts to retain, regain and win new customers both in-region and out-of-region. While the BizPaks don't introduce any new individual services, Verizon Business will market and sell these offers to SMBs on a nationwide basis – a direct threat customers in the RBOC/independent LEC territories of AT&T, Qwest, Embarq and others.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

Recommended Competitor Actions

• AT&T can and should sell into Verizon's dense and wealthy northeastern and mid-Atlantic service territory. The carrier could lead with bundles of wireless with wireline services that are tightly coordinated with each other – a level of coordination that Verizon Business may not be able to match exactly because of its looser relationship with Verizon Wireless.

• Qwest and Embarq need to review the portfolio of services they offer in their respective incumbent local carrier territories. If Verizon Business starts to target SMBs in their urban areas with BizPaks, these competitors need to make sure that customers are aware of their respective advanced services, such as Qwest's iQ Integrated Access and Titanium broadband, and that their equivalent services keep Verizon Business from winning consistently with BizPaks on price.

• CLECs including PAETEC should also keep an eye on Verizon Business' national strategy with its BizPaks. It is possible that the carrier may try an out-of-footprint strategy of targeting customers with carriers other than the ILEC, reasoning that businesses that have switched once are more likely to do so again. Verizon's price quoting strategy sounds similar to PAETEC's holistic approach to generating price quotes, another reason the carrier should monitor BizPaks for direction of its competitive push and for price.

Recommended End User / Customer Actions

• Verizon Business has advanced, sophisticated services, and the carrier's last very public demonstration of the opportunities to SMBs was the launch of its IP Flexible T1 service years ago. The carrier's BizPaks have great potential for bringing Verizon's most advanced services to smaller businesses.

• For out-of-region SMBs, Verizon Business needs to prove its BizPaks are competitive in pricing, are smoothly installed and have substantial internal support from Verizon. Verizon Telecom concentrated its small business focus mostly inside its local service footprint, so it's up to Verizon Business to prove the national broadening of its service focus has strong service support. Verizon Business certainly has the capability to offer strong support for these services.

• SMBs inside Verizon's incumbent local carrier footprint can check in with Verizon about BizPaks. Their current customer support might be doing business under a different logo, but it should be able to direct customers to opportunities to switch over to BizPaks, and describe the potential for cost savings by moving from other Verizon voice/data plans onto these new bundling packages.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Business Network Services - U.S. | More information

Top