BT 'to make millions' from SMEs

BT is hoping to take over half a billion pounds over the next four years from UK SMEs by teaming up with industry giants Cisco, Dell and Microsoft to sell broadband services. But one small business representative lashed out, claiming the service is far too costly for Britain's 1.2m small firms.

The service, dubbed Digital Business, will offer SMEs a range of hardware, software and consultancy packages incorporating solutions from all four partners.

Heavy emphasis will be put on broadband and wireless services. BT Retail - the division behind the project - will kick-start the initiative with a £15m advertising campaign aimed at signing up UK SMEs.

While sixty per cent of the Britain's small businesses are in broadband coverage areas, only 30,000 have signed up for the service so far.

Mike Langston, MD of BT's SME division, acknowledged that the company has so far failed to capture the SME audience.

However, two hundred and eighty customers have already signed up for the new service and according to Langston, we should see that figure jump to the tens of thousands by 2005.

Not everyone was as positive as BT though, especially Brenda Mendham, research and development manager for The Forum of Private Businesses, who claimed that the hidden costs makes the new scheme too expensive for many SMEs.

While monthly fees start at £90 for a basic PC and internet connection, stretching up to £700 a month for complete supply chain management and CRM capabilities, customers will need to pay extra for 24-hour telephone support and software upgrades.

Mendham said: "BT is looking at this market to increase its profits because SME's are creating the jobs and the wealth at the moment. BT knows that the PLCs are reducing their workforce and costs. They are screwing small businesses because they have shareholders to answer to."

BT's Langston was quick to defend the pricing though: "This has to be a profitable project. We wouldn't do it if it wasn't, but we worked with the partners on the price point and got it down to ninety pounds to make it affordable. I think ninety pounds is a superb price and I'd like to challenge anyone else to offer that," he said.

Paul Tollet, director of small and medium businesses with Microsoft, also defended the hidden upgrade costs, claiming the scheme still offered SMEs good value.

"You only pay a fee if you want to upgrade inside a three year contract, after that Microsoft will automatically upgrade you to new software. Since most SME's only upgrade every four and a half years, three years really isn't that bad."