Dial-up connectivity has served small to medium sized enterprises (SMEs) well but it is nearing its end as the connection of choice. While wireless broadband apparently held great promise, it has only achieved moderate penetration, with ADSL by far the connection of choice for the SME.
This has emerged in the preliminary findings of SME Survey 2009, which confirms that ADSL now reigns supreme as the connection of choice for Internet savvy businesses owing to its reliability and relative low pricing.
Sponsored by Standard Bank, Umsobomvu Youth Fund and Fujitsu, SME Survey is in its sixth year and polls 2,500 business decision-makers on crucial issues affecting their business.
According to principal researcher Arthur Goldstuck, ADSL had almost precisely replaced dial-up as the primary form of Internet connectivity among SMEs. “ADSL had grown from 3% to 63% penetration of SMEs using the Internet in the period between 2003-2008, while dial-up dropped from 62% to 9,5% by last year. This year’s research shows that dialup has halved again to 4%,” he says.
This confirms the prediction made by SME Survey 2005 that dial-up would disappear as a viable connectivity option for SMEs. “ADSL is finally wiping out dial-up access as an alternative,” Goldstuck adds.
“We have seen a steady decline in the requirement for dial-up modems and on-board modems within our business clients product portfolio,” says Ross Olver, portfolio manager: business clients at Fujitsu. “Interestingly enough, we have seen a substantial increase in the demand for portable mobile devices with built in 3G (UMTS) connectivity as users discover the benefits of high-speed connectivity. This backs up the preliminary findings of the SME survey.”
Wireless broadband has seen more leisurely acceptance, growing from a zero base to 10.5% of SMEs using it as their primary connection by 2008. “With one in 10 SMEs using it as a primary connection by 2008, wireless broadband appeared to be destined to compete with ADSL, while ADSL would continue growing,” says Goldstuck.
However, instead of wireless broadband gaining further traction, it fell back for the first time. “All forms of wireless broadband combined, including 3G, iBurst, WiMAX and municipal WiFi, dipped from 10.5% to 8% penetration as a primary form of Internet connectivity among SMEs,” says Goldstuck.
It also demonstrates the need for reasonably priced services. “ADSL simply offers more reliable and cost-effective broadband than any wireless option – and the cost of incremental usage is not as high as for 3G,” explains Goldstuck.
The findings show a clear reversal of wireless broadband growth as a primary form of Internet connectivity. That, says Goldstuck, is an indication that wireless broadband is not meeting the needs of the SMEs to the extent that ADSL does from both a cost and performance perspective.
“Furthermore, the research shows that smaller companies are more likely to use wireless broadband as a factor of the lower entry level cost, while larger ones use ADSL. It can therefore be expected that as companies grow larger, they will move to ADSL,” he notes.
The real opportunity for wireless broadband lies in backup connectivity. A growing trend is emerging where SMEs use a 3G card as a secondary connection when away from the office; from 27% in 2008, Goldstuck says this has grown to 38% this year.
“What is clear is that once businesses start using the Internet, it very quickly becomes an essential service. Those that may have started using a dial-up connection very quickly realised its limitations and seek a faster, more reliable connection, with an increasing number looking for an alternative to keep them connected even when travelling,” Goldstuck says.