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Winning With Managed Service, Not Speed, For the Long-Term Win

The key for service provider prosperity in the years to come isn’t raw speed, but managed services that deliver great experiences to customers. With plenty of broadband competition expected in most markets, service providers can’t sit on their fiber laurels, but instead pursue value-added services that provide utility to customers and increase average revenue per user.

“Most of the growth in fiber in four years is going to be happening across all states, smaller cities, rural areas, and suburbs,” said Matt Collins, Executive Vice President of Commercial Operations and Chief Marketing Officer at Calix. “We have government initiatives, we have private money flowing in. We estimate the private funding flowing into [the fiber] market is as big or bigger than the government funding programs that have been announced, which is pretty astounding. If you serve a community where the density is more than 20 households per square mile, you’re probably going to have more than one fiber service provider in that market.”

Collins said many forward-thinking fiber providers are already looking at ways to differentiate against expected competition, with gigabit and multigigabit speeds unlikely to provide an edge over time.

“Speed is the start,” Collins said. “You have to have an amazing network if you want to deliver a great experience, but 10 Gig is not a go-to-market strategy. It’s a great investment strategy for a long term business. Your go-to-market strategy has to be something other than the technical capabilities for the network.”

Experiences will be the name of the game, Collins said, with consumers not identifying themselves by the speed of the service they are getting, but as gamers needing low-latency, households that need robust synchronous bandwidth to support work from home, small businesses, and the like.

“Successful service providers are recognizing that this is how they have to present themselves,” Collins said. “That’s how they create a great connection that they can deliver on.”

The way to build and establish connections with the customers is with continuous innovation, providing services that the customer doesn’t know they need, but will pay for. “You have to find ways to surprise your customer on a regular basis with something that they may not even expect, but it delights them.”

More importantly, managed services provide the stickiness needed to keep customers and also contributes to higher average revenue per user. Managed network services purchased by customers tended to contribute to higher NPS scores for those customers, a leading indicator that they’re going to stick around instead of moving to a different service provider because of a simple price difference.

For more discussion on the win-win in offering managed services, listen to the latest Fiber For Breakfast podcast.