Cable Operators

Bracing for The Next Storm

5/26/2006 8:06 PM Eastern

Metairie, La.— Still busy rebuilding from the devastation of Katrina nine months ago, Cox Communications New Orleans is now bracing for this year’s hurricane season.

The new storm season kicks off this week, June 1, and lasts through November. And residents of the Big Easy are uneasy, worried about what may happen this year.

“This city is waiting to exhale, and that’s not going to happen ’til December,” said Brad Grundmeyer, Cox’s local manager of public affairs.

Before Katrina hit last Aug. 29, Cox had 270,000 subscribers in southeast Louisiana. Service has been painstakingly restored to two-thirds, or about 180,000, of those customers, according to Cox Communications Inc. president Pat Esser. The company is even hooking up Federal Emergency Management Agency trailers with cable service.

But the operation’s restoration can’t just steam full speed ahead. In New Orleans proper, the population has been cut in half, to what rough estimates say is 200,000, from a pre-Katrina total of 455,000.

OVERALL DELAYS

The city’s recovery effort has been stalled by issues ranging from flood insurance to a long wait for billions of dollars in federal funds.

“I think all of us expected that the city, generally, would be further along,” said Greg Bicket, vice president and region manager for Cox New Orleans. “New Orleans is really struggling to get back on its feet. … The biggest obstacle that we’re seeing is the disconnection between the various different government agencies in terms of aiding in the reconstruction.”

Taking to heart the lessons learned by Katrina, Cox New Orleans has been revamping its emergency plan so it’s better prepared for any hurricanes that make landfall this year in the Big Easy vicinity. The biggest changes involve setting in place better communications mechanisms and planning with city, state and federal officials in the event of an emergency.

Cox also is conducting a door-to-door audit of all homes in its service area, expected to be completed by year-end, to determine which are habitable and which are not. That will help the cable system to plot out its rebuilding schedule.

Cox is committing $550 million over the next five years to run its cable operation in New Orleans, with a large portion of that money covering rebuilding and upgrading cable plant. Cox declined to comment on the exact cost of the reconstruction, according to company spokesman David Grabert.

Cox said it believes “a significant portion” of its Katrina-related losses will be covered by insurance, but it “awaits payment” under those policies, according to a March 29 filing with the Securities & Exchange Commission. The cable operator’s insurance, minus a $6 million deductible, covers damage to its New Orleans plant and business interruption. In the third quarter of last year alone, Cox reported costs from Katrina of $115 million, including $44.9 million in lost revenue.

In its March filing, the company also reported it suffered “an indeterminate loss of customers” in the Big Easy, and that “the long-term effect of Hurricane Katrina on the population of New Orleans, and therefore Cox’s cable systems in New Orleans, remains uncertain.”

Cox had spent about $250,000 on an emergency plan it had in place for New Orleans last year. That investment paid off. It laid the groundwork for Cox New Orleans to speedily begin getting cable and phone service up and running in the aftermath of the killer storm.

The plan hinged on a preassigned group of more than 100 system employees, known as the “Red Team,” who rode out the storm in Baton Rouge and then quickly returned to New Orleans as first responders, assessing damage and starting repair work.

But dealing with a catastrophe of biblical proportions like Katrina created challenges that Cox had never foreseen. So the storm’s aftermath taught many lessons, like the need to set up a foolproof system to track down its employees after the city’s evacuation.

“There were some things that we anticipated … but there are some things you can’t plan for,” Esser said.

OVER 500 LESSONS

During the past few months Cox has conducted an “after-action review” and has been revising its so-called business-continuity plan in preparation for this year’s hurricane season.

Cox’s New Orleans and Baton Rouge systems together initially put together a list of “over 500 lessons learned” from Katrina, according to Elvin Thibodeaux, safety and risk manager for Cox New Orleans.

“You can come close to putting together a four-inch binder of what we’ve put together,” added Mike Latino, Cox’s vice president of engineering in New Orleans.

Some of those lessons were “as small and minute” as the need to better coordinate where keys are stored for Cox vehicles, according to Latino.

The biggest lessons, which led to major revisions in Cox’s emergency plan, revolve around putting in place better coordination, communication and cooperation among Cox, FEMA, state and city emergency officials and local power company Entergy Corp., Thibodeaux said.

As examples of problems to avoid, Cox officials said that in the aftermath of Katrina, FEMA confiscated some of the fuel it tried to bring into the city to run generators to keep its plant powered.

The federal agency also took over some of the hotel rooms Cox had reserved for its own employees.

What’s more, Cox’s Red Team initially had a hard time getting clearance from authorities to get back into the evacuated city. At that time Cox, like most cable operators, had never secured government status, under the Department of Homeland Security’s 2004 National Response Plan, as performing an “emergency-support function No. 2” — namely communications, according to Thibodeaux.

“We had to go back and get that established,” Esser said.

PRIORITY STATUS

That designation as a provider of a critical component of the city’s infrastructure now gives Cox’s needs — in terms of getting its plant up and running — a high priority with authorities in an emergency situation.

As part of the preparation for hurricane season this year, last week Thibodeaux participated in drills with state emergency officials and area parishes, going through how they would be preparing if a hurricane was on its way. Communicating with its own staff became a huge problem for Cox during and after the storm, and the company has revised its plan to address that.

Cox officials had trouble tracking down New Orleans employees, who had scattered across the country when the city evacuated last year. To address that issue, cable-system workers now have a sticker to put on their employee IDs that includes a number to call to let the system know where they are after an evacuation. There’s also a phone number they can call and a Web site to visit for updates and information from the cable system during and after a hurricane, Thibodeaux said.

Cox New Orleans also had a May 17 meeting to walk managers through the revised emergency plan, including changes to the first-responder list and planning for additional evacuation locations.

“What we’re trying to do is communicate to our employees what our plans are, so they can have some confidence that we learned some lessons … so if we’re in a tough situation again, we’re going to be able to respond much better than we did before,” said John Holly, vice president of human resources.

The New Orleans cable operation is also sharing what it learned from Katrina with Cox’s corporate office, for use at the company’s other cable systems.

ADVISING THE FCC

Bicket is part of an independent panel that the Federal Communications Commission created to review Katrina’s impact on communications networks. The committee will submit its recommendations on ways to improve storm preparedness by June 15.

Cox is also one of the cable operators participating in a National Cable & Telecommunications Association initiative, called “Cable: Ready,” aimed at bolstering the cable industry’s preparedness for natural disasters, like hurricanes. Cable-provider participants have pledged to review their emergency plans and coordinate them with government officials.

Two of the four parishes Cox serves, Jefferson and St. Charles, were relatively unscathed by the storm. They now have more residents than before Katrina, as some people have moved in with their relatives in those two areas. Thus, Cox now has more hookups in those areas than before Katrina hit, Bicket said.

The same can’t be said for St. Bernard and Orleans parishes, which were hard-hit and have many desolate, devastated areas that still don’t have inhabitants or electricity.

Nine months after Katrina, FEMA trailers sit scattered throughout the city, sitting on blocks in front of homes. In an area like City Park, contractors are busy doing repairs on a few homes here and there on local streets. But in many neighborhoods, row after row of residences stand gutted — doorless, windowless and empty — creating what Grundmeyer calls a “jack-o’-lantern” effect.

Residents in some parts of the lower Ninth Ward in New Orleans weren’t even allowed back in their homes until earlier this month.

There are still piles of debris on many streets, but the area no longer looks like a barren moonscape, brown with silt from the flood. Lawns have turned green, with spring grass and weeds.

COUNTING UP HOMES

“We’re really sitting here now waiting for government officials, state officials and city officials to come up with a plan [for New Orleans],” Esser said.

To find out exactly how many are residents are back and where they are — in other words, how many homes are now “passable” — Cox is undertaking a massive door-to-door survey of New Orleans, to determine where there are customers they can or should try and reach.

“We’re in the process of doing a homes-passed audit where we’re walking through the entire system to get a good sense of just exactly how many homes are uninhabitable; how many are habitable and how many of them are maybe uninhabitable and have a trailer in front of them, so are still a serviceable pass,” Latino said.

This audit will help Cox plan out its future capital spending and network buildout in the Big Easy, according to Esser.

In the meantime, the repair work is continuing — replacing damaged equipment and checking for signal leakage — in areas where electricity is being turned back on and residents are returning.

Cox continues to have the problem of debris-hauling trucks that knock down lines or pull up pedestals housing the equipment that connects homes to the system’s network from the ground.

“Our biggest challenge is making sure we’ve got the timing right to make sure we are there when the customers are back, but not there too soon,” Latino said. “It’s a real delicate balance.”

As Entergy restores its commercial power grids in neighborhoods, Cox has been working with the utility’s field staff to ensure that electricity is restored to the cable system’s network.

Cox crews are working on dozens of service-distribution nodes, which served 700 homes each, on average, before Katrina. The system is restoring service node by node, which means it can offer its bundle of TV, Internet and phone services to these homes, according to Bicket.

Cox New Orleans officials are anticipating an influx of city residents back to the Big Easy in the summer and fall, after their children have finished the school year wherever they’ve been living since last August’s evacuation.

Bicker believes the city’s “cultural magnetism” — with attractions ranging from the congeniality of its many distinct neighborhoods to its music and food — will draw many residents back.

“Some people have painted this slowness to return as impending gloom and doom for the city,” Bicket said. “And I really don’t. … It’s going to be rebuilt.”

Those who don’t come back will ultimately be replaced when businesses come to New Orleans area to work on rebuilding the city, Bicket said.

COMMITTED TO CITY

Despite the many uncertainties, Cox Communications remains committed to the future of its New Orleans operation, according to Esser.

“We’ll rebuild where people live, so we have to be patient,” he said. “How fast that will come back: optimistic projections are that within five years we will be rebuilt. …We have a plan in place, a capital plan, to put everything back in place. It’s in our long-range plan, which is a five-year plan.”

This week, Cox is scheduled to open up a new storefront customer-service center in the Elysian Fields section of the Gentilly, the district west of the French Quarter that’s home to the annual New Orleans Jazz and Heritage Festival each year.

“It’s a pretty blighted area: It took a lot of water,” Bicket said. “Almost uniformly, unanimously, businesses in town are sitting on their hands. We’re going to open a $3.5 million facility. It states tangibly that we believe in the future of this city and what’s going to happen here, and we’re hoping that confidence is infectious.”

Editor’s Note

Seven months ago, Multichannel News editor Linda Moss went to New Orleans to chronicle Cox Communications Inc.’s efforts, and challenges, in rebuilding its damaged cable system, which was one of the victims of Hurricane Katrina’s fury last August. Moss returned in early May for an update, to find that Cox is readying for a new hurricane season and continuing repairs. She also followed up with some of the people who had shared their experiences during and after the storm with MCN readers.

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