Unlocking the Untapped: FiberCos’ Strategic Playbook for B2B Connectivity

By: Steffen Stern, Roman Friedrich, Alain Illi, Robin Anders, and Carolin Bimmermann

In the relentless pursuit of connectivity, one frontier remains largely unconquered by fiber companies (FiberCos) that are business-to-consumer (B2C) focused: the lucrative yet challenging business-to-business (B2B) sector. With a focus traditionally anchored in B2C connectivity, the potential within B2B presents an unmissable opportunity.

On the other hand, B2B-focused FiberCos are looking for opportunities to improve their scale, address a broader market, and substantially increase their top line.

This article delves into the strategic imperatives for FiberCos, both B2C and B2B focused, to effectively address and capitalize on the B2B fiber market opportunity.

In a future article, we will focus on yet another currently untapped fiber opportunity: connecting customers in multi-dwelling units (MDUs). This challenge is present in a number of geographies, but differs by market depending on each region’s specific MDU market structure, fiber player setup, and regulations.

The Untapped B2B Potential

The B2B market is split between those B2B locations already fiberized and those that must rely on non-fiber connectivity. In most circumstances, large corporates or companies with substantial connectivity requirements are already connected with fiber. But there is a significant long tail of small to mid-sized companies, or small branches of larger corporates (such as retail stores), that are not yet fiberized. This long tail typically represents the majority of B2B locations in a country, and can often be found in or close to the footprints of B2C FiberCos.

While these B2B locations may constitute only 5% to 15% of the “households” passed by B2C FiberCos, their higher average revenue per user (ARPU) offers a valuable revenue opportunity. The quest for deeper market penetration into the B2B realm is more than just a revenue opportunity; it’s an essential pivot to ensure future growth and sustainability in a rapidly evolving digital landscape.

A Multifaceted Approach to B2B Connectivity

To navigate the complex terrain of B2B connectivity, B2C FiberCos need to consider a diversified strategy, balancing direct engagement with strategic partnerships. BCG sees the following four generic strategies:

• Full B2B Market Engagement: In this strategy, B2C FiberCos would complement their existing B2C capabilities will a full set of B2B capabilities. This includes building a comprehensive product portfolio targeted to B2B customers and developing sales, service, and operation functions that are able to address the specific needs of B2B customers. Forming a strong B2B market reputation is essential for establishing trust and acting as a catalyst to win over B2B customers.
• Resell B2B Market Engagement: Another strategy might involve B2C FiberCos purchasing white-label B2B products from B2B partners and managing the marketing efforts independently. This approach would allow them to address the B2B opportunity with standard “mass market” B2B products while mitigating the challenge of developing their own B2B portfolios.
• Indirect B2B Market Engagement (Wholesale): In this strategy, B2C FiberCos would develop an attractive B2B wholesale portfolio, offering products that can be easily utilized by B2B partners for their end customer products, such as symmetrical bandwidth and B2B-specific service-level agreements that emphasize, for instance, rapid fault resolution. Equally important is selecting B2B partners that align closely with a B2C FiberCo’s sales and marketing strategies, ensuring that the approach to selling fiber to B2B customers is coherent and synchronized with a B2C FiberCo’s overall rollout and promotional efforts.
• Indirect B2B Market Engagement (Dark Fiber Only): In this strategy, B2C FiberCos would fully focus on their core competency: building fiber and selling B2C fiber accesses. A B2B partner with strong network capabilities would then install its own active equipment and operate the B2B part of the network itself, allowing the B2B partner to offer targeted B2B solutions with full control over the entire provisioning and management process chain.

Developing dedicated B2B capabilities requires considerable resources and focus, which might be spread thin at B2C FiberCos due to concurrent efforts to scale B2C market penetration. Consequently, relying on a strong B2B partner is often more feasible, providing a balanced pathway to engage B2B customers effectively without overextending organizational resources.

Partners with a very good fit could be B2B FiberCos, as they typically have all capabilities in house, from B2B network development to a B2B product portfolio and B2B go to market. Such a partnership might therefore be a win-win situation for both sides.

Embark on the Journey: Seize the B2B Opportunity Now

As we pivot from understanding the strategic spectrum to actionable insights, the moment for B2C FiberCos to act is now. Turning strategy into success involves the following three critical steps:

1. Assess Market Potential: Dive deep into an evaluation of current and future buildout areas to identify untapped B2B opportunities. This foundational analysis is key to pinpointing lucrative markets ready for fiber connectivity.
2. Choose a Path Wisely: With potential markets in sight, it’s time for B2C FiberCos to make strategic choices. Deciding whether to pursue a full, resell, or indirect B2B market engagement will shape the trajectory of their B2B endeavors, guiding resource allocation and strategic partnerships.
3. Identify and Engage with Partners: The final step is to meticulously search for and engage with B2B partners that not only bring the right capabilities to the table, but also share a strategic vision. This critical move toward forming partnerships will lay the groundwork for a successful B2B venture.

Now is the time for FiberCos to step forward and translate insights into action, leveraging their strategic edge to meet the complex demands of the B2B market.

Let’s Connect the Future, Together

At BCG, we guide every step of the journey, from strategic planning to execution. Let’s unlock the untapped potential together!

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