Spending by businesses on wired and cellular calling will hit $133 billion by the close of 2008, according to a new market research report from Insight Research. The study predicts that cellular calling will account for nearly 39 percent of the corporate phone bill for telecommunication services this year, and is the fastest-growing expense area.
The report, Telecom Services in Vertical Markets 2007-2012, reveals that wireless service revenue is expected to grow at a compounded rate of more than 13 percent annually from 2007 to 2012, while growth in wired services remains essentially flat. The study analyzes 14 vertical industries categorized by the NAICS (North American Industry Classification System), and focuses on corporate spending for wireline and wireless telecommunications services in each of the 14 industries.
“Even without the threat of a recession, revenue growth in wireline services was not forecasted, but now it seems close to a certainty,” said Robert Rosenberg, president of Insight. “On the plus side for carriers, wireless spending is forecasted to increase at a healthy rate, but that increase is going to be uneven across the various business sectors.”
The biggest spenders on cellular services will come from four market segments: construction; financial, insurance and real estate; professional business services; and transportation. As for corporate wireline telecommunications expenditures in 2007, four industries wholesale trade; financial, insurance, and real estate; professional business services; and communications accounted for 70 percent of revenue. If these industry segments were combined with two others durable manufacturing and health care it would add up to more than 80 percent of total business telecom expenditures. Hence, Insight said telecom providers should focus vertical marketing efforts within these markets.
While the report said proliferation of Internet Access is a high driver of telecom expenditures in vertical markets, the report also revealed that 43 percent of carrier local and long-distance business wireline revenue is still attributable to voice services. (The other drivers of telecom expenditures are listed as number of employees, type of occupation and size and number of establishments.)
Enterprise customers perceive telecom carriers as having no specialization and no locality; rather, carriers are viewed as generalists operating in national and international markets, meaning purchase decisions revolve around price alone, the report said. The challenge, then, is for carriers and indirect channel partners to find a way to capture more vertical market spending.
The Insight report urged telecom providers to steer clear of horizontal marketing or a one size fits all approach, and move more toward customized solution selling. With competition eating into already anemic profit margins, solution selling by vertical industry becomes an attractive way for telecommunications vendors to differentiate and a viable way to maintain profitability and sustained growth, the report said.
Partners can differentiate with stepped up customer service, customized offerings and value-adds a trend we are already seeing evolve in the marketplace.