MCI Worldcom this week announced plans to offer a bundled voice, data and IP service for the UK small and medium sized business market, which it hopes will catapult it ahead of rivals Cable & Wireless and Energis.
Michael Butler, managing director of MCI Worldcom UK, spoke to vnunet.com recently and explained the company's strategy for tackling the SME market, its plans to unbundle the local loop and what to expect from third generation mobiles.
"It's very much our ambition to displace Cable & Wireless as the number two provider to businesses, and that's something we believe is practical in 2001," said Butler.
While MCI Worldcom has a presence in the SME market, it represents only about one per cent of the total UK market. Butler wants to increase this presence five fold over the next two years.
"That's the area where we have a major thrust, because up until now we've been concentrating on metropolitan areas. However, we started this year with 15,000 SME customers by virtue of the MCI Worldcom dealer network - largely through voice - calling cards," he said.
"We still today have the largest dealer network in the UK and we are committed to that, but in terms of market share, we reckon we've got something like one per cent market share in the UK SME marketplace. In a couple of years, we're going to have five per cent," he added.
"Even though our dealers are ambitious and tend to be self-motivated entrepreneurs, we're not going to achieve that sort of market share through third parties. That's why we're ramping up quite rapidly our activity with SMEs," he said.
To achieve this growth in market share, the company is expanding its sales team. From having no direct sales people at the beginning of the year, it will have around 150 by the end of the year, each of these with three or four support staff.
It has also launched a new service that offers single billing for voice and Internet services, freephone 0800 number rental and multi-user Internet access, email, website hosting and free domain name registration.
"Through Uunet we have a very strong Internet capability and MCI Worldcom is a channel of that. But the proposition here is for customers to effectively take voice and Internet and have them cross-discounted as well on one bill," he said.
MCI Worldcom is targeting the service at SMEs with local area networks, with an emphasis on companies based outside London. This is where Butler claims customers are less comfortable with advanced network services.
"Although [network services] are quite advanced in London, people in the regions are not that comfortable with it. We need to help them not only save money, but instill that comfort factor - actually get them up and running. Not only connectivity, but Web space and email setup. Companies in the regions don't have that," he said.
The company is spending £200 million on a 1375 mile high speed fibre-optic network stretching from Bristol to Edinburgh. Last month it completed the Midlands section and hopes to complete the Edinburgh and Glasgow sections by February 2000.
Having its own fibre network means a lot of digging, but it's critical to compete in the UK, according to Butler. In addition to its national network, MCI Worldcom will have six to eight UK cities fibred by the end of the year.
"You have to have network coverage and access to the customer via the metropolitan loops. You also need a range of other access mechanisms, whether it be a wireless local loop or an unbundled local loop to get to those customers who demand it," he said.
Unbundling the local loop is key to providing broadband services for SMEs, according to Butler.
"There's a huge demand among SMEs for 2Mb access," he claimed. "If a customer says I want a 2Mb circuit and I'm only 50 metres away from their node, there's no reason why an SME customer should be denied high-speed access. That's part of the whole reason we're embarking on the ADSL trials before the end of the year."
One of MCI Worldcom's challenges over the next year is getting its name better known outside telecom circles. Despite being a top 12 global telco, its public profile in the UK is well below smaller competitors like Colt and Energis.
"Because we don't have a UK listing, people naturally assume that Energis and Colt are larger than us because we don't get the profile," he said.
The only gap in MCI Worldcom's UK strategy is a mobile telephony service, said Butler: "We're going to fill it, there's no doubt about that. We've got a number of options. We're looking at UMTS. We're taking a keen interest. But UMTS is a way off."
"In the meantime there's a gap to be filled, and we are talking to a number of major operators about becoming effectively a virtual mobile operator," he said.
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