If you ask me

Our double feature takes a look at business incubators and how the recession is affecting the communications industry.

Incubation isn't just cheap office space

Today, if you want to start out on your own in the UK there are more than 300 business incubators where you can find help. Some offer little more than cheap office space. Others provide free professional advice, mentoring by experienced entrepreneurs, introductions to potential investors, and access to university research facilities.

Among the latter are the SETsquared network of incubators that support early-stage, technology, high-growth potential ventures both from within and outside of the universities of Bath, Bristol, Southampton and Surrey. Each centre provides business mentoring to entrepreneurs and business professionals, and office space. Participants have access to 450 seasoned technology entrepreneurs, investors and support professionals.

A common misconception is that university-based incubators are only there to help commercialise academic ideas. In fact, only around 10 per cent of the companies within SETsquared fall into this category.

Over the last four years, companies supported by the centres have raised more then £120m and created over a thousand jobs. More than a hundred businesses have 'graduated' from the centres after 18 months to three years, and more than a hundred are currently being supported.

Research by UK Business Incubation, the body responsible for business incubators, shows that over 90 per cent of companies that go through the incubation process are still thriving after three years. This compares favourably with government statistics for start-ups in general, which suggest that only 41 per cent remain afloat over the same period. So there's a compelling case for trying to get into an incubator. However, business incubators are particular about the companies they take in; they have to be, they're spending taxpayers' money.

SETsquared directors look for clearly differentiated technologies, ideally those for which viable commercial applications have been identified. Part of the entry process may involve incubator directors exploring potential applications with candidate companies. They'll look for business ideas that are scalable so they can be developed into valuable companies. They'll also seek to understand the skills of the individuals running the business.

It's rare for a technology inventor to have all of the abilities to build a successful enterprise and around 90 per cent of them elect to employ a CEO to run their businesses. Recognising that you need help is a positive attribute and the quality of the relationship between yourself and the director will be crucial in how you benefit from incubation.

The process of incubation is now established and its benefits have been demonstrated. If you enter an incubator, you need to see it as a process, not just cheap office space, if you are to derive the most from it. The incubator will contribute a framework within which you develop your business, it will introduce proven processes to help you identify the most viable markets, and the centre directors will provide what is, in effect, free senior level consultancy to help guide your decisions as you business develops.

You'll be surrounded by experts with no other motive than to help you succeed but it remains your business, with you in control.

David Bream is centre director for SETsquared's business incubation at the University of Southampton (www.setsquared.co.uk [new window]).

The benefits of getting connected

How bad is this recession for the communications industry? The evidence is decidedly mixed.

Take broadband penetration. According to the Broadband Forum, there were nearly 429 million broadband customers worldwide in the first quarter of 2009. Subscriber numbers grew by more than 10 per cent year-on-year in 20 countries, with Latin American increasing 36 per cent and eastern Europe increasing 30 per cent. Even western Europe saw growth of nearly 11 per cent.

This spread is enabling the uptake of IPTV services, where subscriber numbers have more than doubled over the past year in eastern Europe, and are up a very respectable 46 per cent in western Europe to just over 11 million, or about one in ten broadband-equipped homes. Worldwide, DSL provides about two-thirds of home broadband connections, although fibre now accounts for one in eight.

What about the mobile world? Market analyst Ovum says global operator revenues grow more slowly than expected. What this means is that they won't breach $1tr until 2011, rather than 2010 as previously forecast. Most of the hit comes this year, with revenues down 9 per cent, but by 2013 Ovum sees revenues roughly back in line with earlier predictions. By 2014, its says there will be 6.42 billion mobile connections, or one for 89 out of every 100 people.

Informa Telecoms and Media predicts a 'missing billion' handset sales over the next five years, compared with earlier forecasts. But that's still 6.39 billion devices sold between 2009 and 2013. The number of net new subscribers in the fourth quarter of 2008 was just 164 million, apparently a poor result.

What about wireless infrastructure? Ovum says pressure on operator revenues will make them favour LTE over WiMax for their next-generation networks. ABI Research says a dozen operators will launch LTE services next year, and that they'll spend a collective $3.3bn on LTE base-stations in 2011.

So where does this get us? Well, despite a recession, the communications industry is still creating enormous change. This is an industry that takes on tens of millions of new customers a month, builds hundreds of millions of handsets a year and constantly upgrades wired and wireless infrastructure.

What's more interesting in the context of this recession, though, is the shift in perceptions about the importance of being connected. This is visible in the $70bn being set aside in stimulus packages worldwide to extend the reach of broadband networks, to those who are otherwise unconnected and now regarded as disenfranchised. The stimulus money is a signal that says that being connected is becoming a right and a basic human need, rather than a privilege of the wealthy.

The delayed sales and slowed revenue growth of this recession may seem a high price at the moment, but if the communications industry emerges from the recession as the steward and enabler of a new human right, perhaps it will be worth paying.

Luke Collins, communications editor.

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