Small businesses, under pressure from the sagging economy, are in turn increasing pressure on telecom service providers to lower prices – even on those with lower IP-based cost structures. That was the report from Robert Fugate, chief financial officer of CBeyond (NasdaqGS: CBEY), at an investor conference yesterday.
“Most of the pressure we’re seeing would be simply on the core package, the pricing for that under pressure from existing cutomers as well as…new customers who may look for some kind of promotional rebates to make a decision for us, let’s say, in greater quantities than in the past,” Fugate said.
Cbeyond is also seeing slightly lower usage for metered services such as long-distance, he said, which, combined with the pricing pressure, will bring second-quarter revenue down 1% lower than expected.
CBeyond, which serves small businesses in a dozen markets that spend an average of $755 a month on its IP-based communications services, began reporting softness in SMB markets more than a year ago. And in February, Cbeyond’s chief executive officer Jim Geiger – reporting record sales in last year’s fourth quarter and predicting 20% to 26% growth this year – said, “It’s quite possible that our SMBs were the first to enter this recession and may also be the first to exit.”