Business News - Long-Distance Resale Margins Up

Posted: 09/2000

Long-Distance Resale Margins Up

Operating margins are climbing for resellers of long distance, according to a survey released today by Boston-based telecommunications strategy and research firm ATLANTIC-ACM Inc.
(www.atlantic-acm.com).

Speaking of the ninth annual survey of long-distance resellers, ATLANTIC-ACM CEO Dr. Judy Reed Smith says, “Companies have been cutting internal costs, lowering wholesale contract rates, and enjoying the results of reduced access charges.”

Results for residential accounts show more dramatic evidence of this than business accounts, the survey shows.

According to the data unveiled in “U.S. Long Distance Telecom Resale Services: Trends & Opportunities 2000-2004,” the percentage of respondents with operating margins is more than 50 percent for residential domestic accounts. That figure more than doubled from 8 percent in 1998 to 17 percent in 2000.

For residential international accounts, more than 20 percent of companies expect greater than 50 percent margins in 2000.

The survey also reveals that resellers are supplementing traditional long-distance revenue with higher-margin data services, such as xDSL and frame relay.

In addition, products that leverage the Internet, such as e-commerce solutions and hosting services, lower churn and increase margins, the survey concludes.

While fewer than 9 percent of providers currently offer e-commerce solutions, 35 percent say they will by the end of 2001.

And nearly half of the resellers participating in the survey expect to offer hosting services during that period of time.

“Resellers are discarding their old business models to shape new versions which better meet evolving customer needs,” Reed Smith says.

The report offers insight into long-distance providers’ business models, customer mix, products and services, sales and marketing, finances and operations, and an industry outlook.

“U.S. Long Distance Telecom Resale Services: Trends & Opportunities 2000-2004” is available through ATLANTIC-ACM, One State St., Suite 1000, Boston, MA 02109; by telephone, +1 617 720 3700; Fax +1 617 720 1077; e-mail:
[email protected]; or its website.