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Managed multi-service gateways open opportunity for service providers

By simplifying branch office networks, managed multi-service gateways are gaining traction and giving service providers new revenue opportunity.

As small business and branch offices look to cut costs, managing multi-service gateways (MSGs) for them might prove a growing, lucrative field for telecom service providers.

"The economics have always favored owning your own equipment," said Keith Nissen, a principal analyst with In-Stat who recently published a report on the devices. "However, a bundled solution allows a company to take a product purchased by a small business … then remotely provision and manage it, and you get the best of both worlds."

Nissen's research found a rapid about-face in terms of corporate willingness to outsource MSG management, particularly in the branch offices of major enterprises. In 2005, two-thirds of enterprise branch offices managed their equipment on site, while 75% of small business managed their own equipment.

"I did the same survey again at the end of 2007, and I found that small businesses really haven't changed," Nissen said. "But branch offices are evolving, and now only a third manage their equipment on site."

While some MSG management has moved to internal IT shops, a lot is going to savvy service providers that see an opportunity to help manage customer communications without the need for costly truck rolls and regular on-site maintenance: Most MSGs come with strong remote management functionality, so the branch office can be across town or across the world and still be managed effectively.

Key In-Stat Findings

Over half of US businesses with greater than 20 employees have installed MSG devices.

60% of businesses favor MSBGs with integrated Wi-Fi technology.

Nearly 66% of businesses prefer "office-in-a-box" devices.

Prime candidates for this outsourcing include enterprises in vertical markets with a high percentage of staff spread throughout hundreds or thousands of branch offices: Realty, insurance and tax-preparation outfits might all fit the bill.

Nissen's study found that branch offices were the first to take the plunge to managed MSGs, but he said small and medium-sized businesses will probably soon follow suit, particularly if service providers can offer management at the right price point.

"That may end up being a very attractive solution for small businesses that say, 'I just don't want to have to know how to set up my security policies. I want somebody I can call who can fix it,' " he said.

Once the initial service sale is made, Nissen noted, a variety of ARPU-enchancing add-ons could be included, such as service provider-managed antivirus and VPN.

"The No. 1 benefit of all of this is it combines multiple functions into a single box, which reduces the cost of equipment," Nissen said. "It makes life simpler for small businesses and branch offices."

Have a question or suggestion for a story? Contact news writer Michael Morisy.

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