Broadband investment top priority for UK SMEs

SMEs are split on whether or not they will see much growth this year, but agree that improving broadband connectivity is a priority

Getting access to faster and more resilient broadband connectivity will be a major priority for 90% of UK SMEs during 2015, according to the results of a report commissioned by internet service provider (ISP) TalkTalk Business.

Other key priorities for businesses were to grow sales, improve and maintain morale levels, cutting costs and investment in new technology.

The survey of 1,000 decision makers at SMEs found the market divided over growth prospects, with a quarter feeling very optimistic but a fifth admitting they were unconvinced they could achieve growth.

TalkTalk Business said close to half of businesses were not getting good enough value for money from their existing provider, and to this end the ISP put a series of deep price cuts into the market, targeting small businesses.

It added that many companies would be feeling some financial pain in the first month of 2015, having splashed out on Christmas bonuses and other staff perks over the festive season.

Taking the fight to BT

It claimed that its current discounting could save businesses over £700 per annum compared to BT.

TalkTalk Business managing director Charles Bligh said he wanted to “take the fight to BT” and address what he termed the “dysfunctional” broadband market.

“When you have a monopoly player with a market share of over 50% it is a dysfunctional market and I want to give people the opportunity to begin to question that,” Bligh said. “A third of companies believe that they can grow this year. Saving money will help them to do it.”

Bligh said that, in recent months, he had seen a surge of interest from new business customers, particularly following the government’s decision – announced in chancellor George Osborne’s Autumn Statement in November 2014 – to extend the lifetime of its broadband voucher scheme for another 12 months, and add £40m to the funding pot.

Part of the SuperConnected Cities programme, the broadband voucher scheme is open to companies with fewer than 250 employees and a turnover of no more than £42.4m a year, or a balance sheet of no more than £36.5m.

“We have seen an uptake in FTTC for businesses, which had previously been muted,” said Bligh.

Virgin calls for political support

Virgin Media Business head of SME Mike Smith said the extension of the SuperConnected Cities programme was a key tool for both the government and the opposition to support an important sector of the electorate in the run-up to the May 2015 general election.

"Businesses and government need to work together to bridge the gap between those doing technology well, and those that need more support," said Smith.

Bligh called for regulator Ofcom to take a more proactive approach to helping lower broadband costs to assist SMEs.

“What would really help is if Ofcom moved to drop the wholesale price. If that came down I could bring down my prices and really drive demand," he said.

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