Skip Navigation

Ofcom publishes study on SMEs and communication services
Thursday 05 January 2017 11:10:55 by Andrew Ferguson

The SME (Small Medium sized Enterprise) sector is sometimes overlooked as part of its remit to ensure it is regulating the communications market appropriately Ofcom has published a new set of research looking at how SMEs utilise broadband and communication services. This latest survey was conducted over the phone with some a sample of 1,501 SMEs in May to July 2016 and then weighted to allow for modelling to represent the full UK SME market.

Beyond the use the research data will be in understanding how use modern communication services, for the many providers selling services to the SME sector the data laden report is a gold mine that may help to drive sales.

Click image for larger version

The initial summery of the report indicates that while 82% of SMEs are well catered for by the comms market the Internet is still a problem for some and those that do have Internet connections are very reliant on them, and ADSL is bottom of the pile in term of speed and reliability in the fixed broadband area. That ADSL is at the bottom should be no surprise to anyone who follows the market and our monthly round-ups of speed tests and the occasional summary on the quality metrics we track, worryingly while superfast (cable, VDSL2 or FTTP) is now available to some 92% of premises in the UK ADSL is still the preferred connection type. We did read the research and while we can find segments where those surveyed seem to know better is available, no precise reasoning is given for why they've not upgraded or is there any verification of what was or was not available broadband wise to those surveyed (i.e. was the sample while representative of UK SME scene, also representative of the availability of good broadband).

The research indicates that only a small number of SME (6%) are looking at upgrading to a fibre broadband (VDSL/FTTP/cable) service, we say small as with some 67% using ADSL or SDSL there is clear scope for a big change. What was a surprise was that while the fibre/superfast take-up at 23% is only lagging a little behind overall take-up, only 5% of SME are using cable broadband which given its ultrafast capabilities suggests maybe that it is less about headline speed and more about provider choice and connection stability.

Click image for larger version

Click image for larger version

The story varies a lot depending on where a SME is located and those businesses operating in rural and remote rural areas are only 62% satisfied with the availability of fixed internet service compared to 85% of their urban counterparts. This increases a little to 70% in rural, 72% remote rural and 88% when asked about reliability for emailing/internet service. Since the research uses the classical rural/urban definitions which means we can align the report with our own coverage data, where GB Deep Rural aligns with the Ofcom remote rural definition.

Click image for larger version

Click image for larger version

In the months since the survey was conducted you can see that deep rural availability of a superfast service has increased from 57% to 64.1%, in rural areas as a whole its gone from 73.4% to 78.4% and in the much better served urban parts of the UK from 95.6% to 97.2%.

If there is a key lesson we believe from this research it is that the SME sector may need much more pro-active help to make them aware that a better service is available, and more of the providers serving the SME sector need to be encouraged to offer a wider variety of products.

We would all love for every address in the UK to have access to full Gigabit symmetric broadband in the next year, but what is very revealing in pages 99 onwards in the report where businesses detail what they use their Internet connection for and email is top of the pile at 95%, ordering goods/services 84% and online banking just 71%. HMRC features pretty high at 65%. Cloud and back up services which will often benefit from faster upload speeds are just 29% and 33% respectively and video conferencing is propping up the stack at 9%.

What is needed now is a study with the same rigour to look at what changes in Internet use similar businesses make when much faster connectivity is available and is being used. If this new study shows lots of potential for business growth and success then the tightly controlled value for money criteria of existing BDUK projects may need to be re-evaluated when dealing with business areas.


Posted by TheEulerID 3 months ago
It would be interesting to know how many of those businesses who use ADSL and complained about the speed have other, faster options available (FTTP/FTTC/Cable).
Additionally, how many of those SMEs picked business packages with better service contracts, maybe from on of the specialist CPs, rather than standard consumer packages.
Posted by leexgx 3 months ago
unless its broke they don't try to fix what is working, is most likely reason they dont change (one place i went to had the legacy AOL capped ADSL 512kb service with 288kb upload)

one issue i do find that has happened to 2 businesses when they move they assume they can get FTTC at there new premise and don't check and end up with 2mb or slower service (unless they want a lease line for £400 a month + install fee which BT will happy provide)
Posted by Blackmamba 3 months ago
Hi Broadband Watchers.
If you check the (OMR SCC report) that states a coverage of 96% at 24 meg so most SME most be covered so it is down to the ISP,s to improve the service.
You will find that many customers are loyal to their chosen ISP even when they have crap service from them. The Surrey OMR spend starts in Q1 so this should eliminate the remaining SME 4%. The 4% looks time it will be covered by using FTTC + new technology. (Super Surrey )
Posted by TheEulerID 3 months ago
96% of coverage at 24mbps doesn't necessarily mean 96% of coverage for SMEs. It may be a disproportionate number in industrial areas which have not had their cabinets upgraded as they were either poor prospects in OR's commercial case modelling or looked like bad value to upgrade under the BDUK priorities of maximising coverage rather than targeting commercial sites. I believe there was a lot of noise made about that. Also, if farms count as SMEs they would also be disproportionately poorly served due to line length.
Posted by andrew (Favicon staff member) 3 months ago
And that 96% figures also JUST apply to Surrey.
Posted by Blackmamba 3 months ago
Hi THeEuler.
The SME ever Farms will be covered by the Last 4% in Surrey but not necessarily at the 24meg range but above 10 Meg if possible as long as there is money in the clawback pot. Openreach is providing the Ports but customers are not taking up these options if this is the case it will be happening across the U.K. By Q1 the 96% may be 97% time will tell from TBB results.
Posted by Gadget 3 months ago
Given that farms have an SIC code in Section A I'm pretty sure anyone would include farms as long as they also meet the criteria for SME sizing
Posted by WWWombat 3 months ago
I'm confused over the last 2 graphs, and the 3 yellow bars.

They say "GB Urban" has a tad under 75% of premises, "GB Rural" has 23% of premises, and "GB Deep Rural" has a tad under 11% of premises. That is over 100%, so there must be some overlap.

Is the "GB Deep Rural" entirely within the "GB Rural" classification?

If so, what would the bars depict for the 12% of premises that are "GB Rural but not Deep Rural" be? ("GB mildly rural"?)
Posted by andrew (Favicon staff member) 3 months ago
Yes Deep Rural is within Rural in this case.
Posted by andrew (Favicon staff member) 3 months ago
As to what bars depict, the named classifications give you an idea of the various other types of rural/urban categories.
Posted by WWWombat 3 months ago
Ta. I'd not seen the term "Deep Rural" used anywhere else before.

I guess the figures mean that "GB mildly rural" now reaches around 90%, which is reasonably impressive.

That "Deeply rural" reaches 64% is pretty good too. Most surprising is that "Urban" only reaches 97%.

I figure that, in the next year or two, we'll see things reach around:
- 99% for urban
- 95% for mildly rural
- 90% for deeply rural
Posted by andrew (Favicon staff member) 3 months ago
Was seeking a phrase to denote it, but maybe remote rural is a better one.

Urban no surprise, as the classic old industrial hearts in urban are often poorly served.

I'm not expecting deeply rural to reach 90% superfast this year for sure. The relative number of premises and value for money rules mean the mildly rural will see the bulk.
You must be logged in to post comments. Click here to login.