For most North American telcos, cablecos, and ISPs, the SMB base looks stable on paper. Accounts are renewing, connectivity revenue is holding, and churn is manageable. But the underlying economics of a connectivity-only relationship are quietly deteriorating. (Techaisle, 2024) Cloud services overtook hardware as the largest single IT budget category for SMBs in 2024, accounting for roughly 31 cents of every IT dollar spent. SMB technology budgets are growing, just not in the direction of connectivity. The average SMB now spends $156 per user per month on SaaS subscriptions, up from $112 in 2023 (Productiv, 2024). Those dollars are going to vendors and channel partners, not to the operator holding the primary account relationship.
The structural problem is that connectivity, as a standalone offer, provides no natural expansion path. An operator with a thousand SMB accounts on broadband and voice has a revenue ceiling that is essentially fixed unless something changes. For most telcos, moving into new services is a crucial move to combat the commoditisation of connectivity particularly in the SMB market, where cost of customer acquisition is relatively high and value-added services are what make the segment profitable to serve (STL Partners, 2023). The accounts are already there. The wallet share is not.
The demand signal operators are underreading
The gap between what SMBs want and what operators currently offer is well-documented. According to AppDirect survey research, 74% of SMBs want cloud services from their primary provider, yet only 45% currently receive them. The same research found that 70% of SMBs are more likely to purchase software from their telco if it appears on a consolidated bill alongside connectivity (AppDirect). McKinsey’s survey of IT decision-makers reinforces this, finding that 80 percent see their telecom operator as a viable partner for products and services beyond core connectivity (McKinsey, 2025).
This is not latent demand that needs to be created. It is existing demand being captured by someone else. The operator’s trust advantage with an SMB is not being converted into revenue. A subscription pilot is the most direct mechanism for beginning that conversion.
The math on a cohort of 100 accounts
This is where the argument moves from strategic to concrete. Charter Communications’ publicly reported earnings provide a useful baseline: the company reported monthly SMB revenue per SMB customer of $164.56 in Q2 2023 (Charter Communications, 2023). A figure that reflects a connectivity-weighted account base with limited subscription attached. One hundred accounts at that baseline represent roughly $16,500 in monthly recurring revenue, or approximately $198,000 annualised.
Now introduce a modest subscription layer. As an illustrative scenario assume a conservative $50 monthly uplift per converted account and a 30% attach rate across the cohort, that is 30 accounts generating an additional $1,500 per month, or $18,000 in incremental annualised revenue from a standing start. At a 50% attach rate and a $100 uplift, the same cohort produces $60,000 in additional annual revenue. These scenarios are directionally consistent with what industry data shows: Hostopia’s analysis of telco digital service programs found that in mature programs, providers see $15 to $400 or more per month in ARPU uplift depending on bundle depth and SMB profile (Hostopia, 2026).
The churn dimension compounds the return further. Bundled customers churn 30 to 50 percent less than connectivity-only accounts when activation is strong (Hostopia, 2026). For an operator where the cost of acquiring a replacement SMB account runs at several months of ARPU, STL Partners estimates acquisition costs at roughly four times monthly ARPU for postpaid B2B customers (STL Partners, 2023). Reducing churn across even a fraction of the pilot cohort offsets a meaningful portion of the program’s cost. The pilot ROI is therefore a combination of new revenue from attached accounts and avoided replacement cost from retained ones.
What a pilot actually costs to run
The assumption in most operator planning processes is that launching a subscription offer requires building something, a marketplace, a billing integration, a product team. That assumption inflates the cost of entry significantly and is not accurate at pilot scale.
A properly scoped pilot borrows infrastructure rather than builds it. The product catalogue comes from existing cloud vendor programmes through established reseller agreements with Microsoft, AWS, or Google. The CANCOM case study documents a cloud subscription marketplace launched in 90 days using a third-party platform, with billing, provisioning, and subscription management automated from the outset, delivering 25 percent month-over-month sales growth for cloud offerings post-launch (AppDirect, 2019). The real costs at pilot scale are people time and sales motion design: account managers who can introduce a cloud offer at connectivity renewal, and a billing process that handles subscription lines alongside connectivity invoices. AppDirect research found that 50% of SMB IT decision-makers value simple management above all else when buying cloud services, ahead of low price, which ranked at 25% (AppDirect). An operator-delivered offer with consolidated billing is not just convenient; it is precisely what most SMB buyers are looking for.
What good pilot data actually tells you
The purpose of a pilot is not to prove in the abstract that subscription services work, the evidence already does that. The purpose is to establish operator-specific conversion rates, attach rates, churn deltas, and support cost profiles that feed a credible scale business case. A cohort of one hundred accounts run for six months generates attach rate data by product, pricing tier, and account size. It surfaces which sales conversations convert and which do not. And it produces a before-and-after ARPU comparison that is far more persuasive to a CFO than a modelled projection.
The global managed services market was estimated at around US$200 billion in 2022, representing 14 percent of global telecoms revenue, and is set to grow substantially through 2032 (STL Partners, 2024). Operators who establish a managed services motion now even at small scale, are building commercial capability in a market that will become progressively more contested. The Forrester Consulting Total Economic Impact study of AppDirect’s marketplace platform found that service providers using the platform drove $30.3 million in marketplace application revenue and realised a 109 percent return on investment over three years, with a payback period of less than three months (Forrester Consulting / AppDirect, 2019). Those outcomes reflect mature programs at scale. A pilot is how operators get there.
The cost of not starting
Every quarter spent waiting is a quarter in which an SMB account that could have been a multi-service relationship remains a single-line connectivity customer, and a quarter in which that account’s cloud and IT spend flows to a competitor. The math on a pilot cohort of one hundred accounts is not complex. The math on continuing to hold back is.