In the enterprise landscape, broadband services are increasingly becoming a vital part of network infrastructure. With a noticeable shift toward broadband utilization, businesses are facing evolving commercial models and a more flexible approach to selecting suppliers. Key aspects such as deal structure and supplier mix play a crucial role in optimizing these services.
The broadband market is shifting away from traditional multi-year contracts with significant revenue commitments. Today’s leading deals often feature more flexible terms, such as 12-month minimum circuit terms, allowing businesses to avoid long-term site commitments. This flexibility not only enables enterprises to protect themselves from price increases over longer periods but also fosters competitive tension among suppliers by avoiding lock-in to one provider for an extended time.
While negotiating with suppliers, it’s essential to look beyond basic circuit terms. Suppliers may introduce volume or site commitments, which can limit flexibility. To mitigate this, companies can negotiate overall revenue commitments that are appropriately scaled to meet their needs. The goal is to maintain flexibility while achieving the best cost structure.
The concept of managing suppliers comes into play as enterprises seek a “best-in-breed” solution. Unlike MPLS services, which often involve one or two suppliers per region, broadband services can benefit from utilizing multiple suppliers. The optimal mix usually involves three to five providers, which offers significant cost savings while ensuring robust service delivery. More than five suppliers may lead to diminishing returns, so companies need to assess the balance between cost savings and the complexity of managing multiple providers.
One important consideration is the rise of service aggregators. Aggregators, such as Xperio, GTT, and Granite, provide broadband services by reselling other providers’ networks. Even big players like Comcast, Verizon, and AT&T engage in this aggregation model when they lack native service at certain sites. When working with aggregators, understanding who the underlying service provider is becomes crucial, especially if diversity in network suppliers is a requirement.
Additionally, enterprises should carefully assess their current supplier relationships and network design before approaching the marketplace. Are they looking for wireline-only services, or is fixed wireless access also in the mix? This understanding is key to sourcing the right solutions and providers.
On the topic of market activity, Verizon recently announced a significant acquisition of Frontier Communications, a deal valued at $20 billion. This acquisition is expected to expand Verizon’s broadband footprint and boost its fixed wireless offerings, a strategic move given the increasing demand for converged solutions in both consumer and enterprise markets. Some analysts suggest that Verizon’s next target might be Lumen, further fueling acquisition activities as providers compete to build comprehensive network solutions.
In summary, the broadband market is evolving toward shorter-term deals and more flexible supplier models. By leveraging multiple suppliers, businesses can achieve cost optimization and maintain flexibility. The rise of aggregators and strategic acquisitions further emphasizes the dynamic nature of this space. As companies navigate these changes, careful planning and sourcing strategies will be essential to securing the best broadband solutions for their enterprise networks.
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