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Telecom Expenses and Small Businesses

Small businesses may be spending disproportionately more for telecom services than larger businesses, according to a study.

The study, conducted by Telenomic Research for the U.S. Small Business Administration, showed firms with between five and nine employees paid about $50 per employee for local and long-distance phone services, compared to an average $21 per person for firms with 10 to 500 employees.

Telecom services can be a major expense for small businesses. The businesses surveyed said they paid an average of about $550 each month in bills for telecom services. The majority of this cost–83%–was for local, long-distance and wireless phone service.

Some industries spend more than others on telecom services, the study showed. The finance and insurance industry spent the most, with telecom bills averaging a whopping $1,800 each month. The manufacturing, wholesaling and transportation industries were also big telecom spenders, with bills averaging $700 to $800 dollars a month. Farming and agriculture businesses spent the least, only about $200 a month. Retail businesses also had fairly low bills, at around $380 a month.

Cellular phones, used by 73% of small businesses, were a primary telecom expense.

In fact, a fourth of businesses surveyed said they spend more for wireless phone service than for local and long-distance service combined.

The study showed Internet access has become another necessary telecom expense for small businesses. About three-fourths of small businesses surveyed had Internet access, and of those connected, 60% had broadband, or high-speed, access.

For businesses that do have broadband access, however, a new technology called Voice-over Internet Protocol (VoIP) may soon help lessen telecom expense. About 3% of small businesses surveyed said they have begun using VoIP services to conduct telephone-like conversations over the Internet, allowing them to bypass telephone company expenses all together.

The Telecom Expense Management market globally is expected to grow at a Compound Annual Growth Rate (CAGR) of 16.1% from 2014 to 2019. The growing market for the Information Technology (IT) and telecom sector in the Asia-Pacific (APAC) region is expected to significantly bolster growth in the TEM market. Middle East and Africa (MEA) is also expected to enter the high growth phase around the later part of the forecast period. North America (NA) is expected to account for the largest market share, followed by Europe and APAC for the forecast period.

Enterprises will invest in the Telecom Expense Management market at a much encouraging rate in the coming years. However, the Small and Medium Businesses (SMBs) are expected to provide a major boost in investments in this market, witnessing the highest growth during the forecasted period. Sectors such as healthcare, BFSI, and consumer goods & retail have shown a positive growth outlook in this market. These sectors account for a major share of the overall market.

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