Cable Operators

Ringing in Recovery

8/25/2006 8:06 PM Eastern

A year ago, Cox Communications New Orleans was set for its fourth annual sale of small tea bells to mark the Sept. 11, 2001, terrorist attacks. But the day before the items were to go on sale, Hurricane Katrina struck.

This year, the operator is back selling bells: black-and-gold bells with New Orleans’ signature sign, the fleur-de-lis, on them. This time, the $3 ornaments commemorate the first anniversary of the city’s own hometown tragedy, on Aug. 29.

Last week, Cox sold out all 30,000 of the “Remembering Katrina” bells, according to Brad Grundmeyer, the New Orleans system’s manager of public affairs.

All proceeds go to fire departments in the Big Easy region. Tomorrow, Cox’s partner in the bell sale — CBS affiliate WWL-TV — will feature a live broadcast of residents ringing the bells at a half-dozen sites.

A year after the hurricane, Cox and other Gulf Coast cable operators, such as Cable One Inc. and Charter Communications Inc., are still ringing in a new kind of normalcy after their businesses were ravaged by Katrina. The storm killed 1,460 and caused $40.6 billion in damage to property in southern Louisiana alone.

Trying to reconnect customers may be the only way the operators can find their way to a new normal in New Orleans.

“Back to normal? I can’t even define that,” said Scott Randall, general manager for Cable One’s Biloxi, Miss., system. “But offering same-day service? You bet.”

Cable systems have made a post-Katrina comeback. While video-subscriber numbers are still down at Charter and Cable One systems hit by Katrina, those operations are making up much of that lost revenue with other offerings, such as high-speed Internet access.

Cox New Orleans now has only 187,500 cable subscribers, versus about 270,000 before the hurricane. Cox’s future there, in good part, is tied to whether or not the Big Easy’s decimated population returns to pre-storm levels.

Yet that system’s loss has essentially been the gain of Cox’s cable division in Baton Rouge, La., where many New Orleans-area residents relocated. Cox Communications Greater Louisiana, which also includes Lafayette, La., has grown to about 310,000 subscribers from 280,000 before Katrina, according to Jacqui Vines, regional vice president and general manager for Cox Communications Greater Louisiana. Evacuees from the New Orleans-area have added 25,500 new households to the overall Baton Rouge region.

“Normalcy now, for us, has become a different-sized system,” Vines said. “It was very challenging in the sense that overnight, we became a growth market.”

The new normalcy means connecting service to trailers, instead of homes; seeking out and replacing cable plant that’s been damaged over time due to salt-water exposure; and navigating around derelict-but-not-demolished structures.

CHAOS AND COMPOSURE

Officials at cable companies that suffered damage from Katrina said they have taken many actions in response to the lessons learned from the post-storm chaos, and are better prepared to weather any future weather events.

They’ve updated or created emergency-preparedness and business-continuity plans, including mandatory contact-information updates from employees; distributed satellite phones to diminish reliance on terrestrial infrastructure during a disaster; arranged to have backup stocks of fuel at their disposal; and set up better systems to communicate with employees during emergencies.

Apart from operational issues, the storm continues to take an emotional toll on cable-system employees, in terms of heartache and stress. Day after day, they are trying to rebuild their own lives amidst Katrina’s destruction.

Even a year later, “you can drive for two hours [along the coast] and everything is gone,” said Cindy Byrd, general manager of Cable One’s Pascagoula, Miss., system.

Byrd lost her composure as she recalled Katrina’s effects on her family: Her mother’s home had to be gutted after it was flooded, her daughter’s home was destroyed and Byrd lost her roof and siding.

“And we’re nowhere near the water,” she said. Levees opened near Mobile, Ala., to relieve water pressure caused inland flooding.

Byrd teared up as she said, “My granddaughter was born in December, and the only home she’s ever known is a FEMA trailer the size of a closet.”

Cox New Orleans still has a psychological counselor coming to its headquarters twice a month for employees, typically seeing a half dozen of them individually each visit, according to John Holly, vice president of human resources.

A counselor will return Aug. 30, the day after Katrina’s first anniversary, “because we want people to know that they’ve got the opportunity to talk to someone on-site,” according to Holly.

Cox New Orleans in early September expects to complete a door-to-door audit of its service area, according to Mike Latino, the system’s vice president of engineering. That survey will tell Cox which residents are back, which homes are inhabitable and which houses are uninhabitable but have a Federal Emergency Management Agency trailer in front of them, so that they are still considered “passable” for cable service.

By Katrina’s anniversary, Cox will have restored service to about 92% of its original service area, according to Latino.

“So even though the homes don’t approach anywhere near 90% — the homes that were here pre-storm — our network infrastructure is over 90% restored,” he said. “So we’re certainly serving less customers in some … areas, but we are available to all who come back.”

The Big Easy cable system has a lot of variables to contend with. New Orleans-area parishes have set an Aug. 29 deadline for residents to start repairs on their homes, or risk having them torn down.

“We’re not back to normal. The city is not back to normal. There’s a lot of work that still has to be done now,” said Steve Sawyer, Cox’s vice president of public and government affairs.

TRANSPLANTED DEMAND

Cox has promised to spend $550 million over the next five years to restore and upgrade its plant in New Orleans.

In what became a symbol of its commitment, the system opened up a $4 million customer-service center in July. In attendance: New Orleans Mayor C. Ray Nagin, former head of Cox’s New Orleans system.

Cox New Orleans’s so-called “red team” of first responders — a team of technicians and managers — stayed at Cox in Baton Rouge when Katrina struck, waiting for it to be clear to return to the Big Easy to start repairs.

Although about 80% of Cox’s Baton Rouge subscribers lost service after Katrina, operations were back up and running in just over a week with the help of the New Orleans technicians, according to Vines.

Since the storm, there has been an influx of about 75,000 New Orleans-area residents who came to Baton Rouge and stayed, she said.

Baton Rouge “became a growth market overnight, with different types of demands” for Cox, Vines said. “The New Orleans customers were accustomed to entertainment-on-demand, and we hadn’t quite launched yet. And where we may have averaged about 1,500 installs [a week], it went to 6,000. It was just bam. We had to bring in a lot of contractors.”

Since Katrina, Cox in Baton Rouge has also hired 160 employees, with half of them people who had relocated from New Orleans.

As a result of the influx of Big Easy customers, Baton Rouge moved up its launch of on-demand video to September, instead of early next year as originally planned, Vines said.

The system’s customer-service reps and technicians clocked a lot of overtime dealing with the new customers, according to Vines — particularly the technicians.

“They were running 24/7 for a good nine months,” she said. “We’re just now recovering, or alleviating some of the stress around it. We certainly had to adjust.”

Charter still has not recovered all its Slidell, La., market, near New Orleans. In July 2005, it served 172,000 houses. One year later, that base is just 157,000 subscribers, said Kip Kraemer, vice president and general manager of the region.

A NEW CHARTER

But despite the loss of homes, revenue per-home has increased so the division’s income is almost back to pre-Katrina levels, he said. The region is only $100,000 below pre-hurricane revenue levels on an annualized basis.

Digital-video penetration is at 77,000, down only 2,000 homes from one year ago. But residents realized the importance of Internet access as a communications tool in the wake of the hurricane, and penetration of that product is actually 12% higher than before the hurricane. The product is in 57,000 Charter Gulf homes.

The region has also seen a 43% growth in pay-per-view; a 52% increase in small-business connections; and 103% growth in penetration of digital video recorders during the last 12 months.

For part of its business success, the Charter folks thank Cox. Kraemer and his team think many of the transplants to their area had advanced products when they lived in New Orleans, and purchased them again when they moved to Charter territory.

Charter is working to drive sales further. Relocatees mean more road congestion, so the company is advertising on drive-time radio, said Lisa Brown, director of sales and marketing. Direct-mail marketing has resumed in non-devastated areas, and workers are being encouraged to identify current satellite homes to be targeted in an upcoming win-back campaign.

Brown said direct-broadcast satellite dealers saturated the area with sales personnel immediately after the storm, taking advantage of the few weeks it took cable operators to re-establish service. Those one-year contracts will be up soon, and Charter is poised to lure customers back.

MORE THAN ONE HURDLE

Cable One’s system in Gulfport-Long Beach, Miss., was hard-hit by Katrina and is still rebuilding, according to general manager Jim Perry. Technicians are finding aerial and underground plant that is now failing due to corrosion from salt water. Perry said about 13 miles of plant, in 100- to 300-feet stretches, need to be dug up and replaced.

Workers had to go to extreme measures to get systems up and running. Perry said one system tracked down a trucking company in Tulsa, Okla., to bring in gas after the storm.

To avoid having the truck commandeered by federal, state or local emergency personnel, its load of gas was transported to Jackson County, Miss., where the sheriff is related to Byrd. The fuel was deposited at the county fuel dump where the cable fleet could go, escorted by local law-enforcement officers, and refuel.

But, in some places, Cable One systems are growing, too. Its Biloxi, Miss., system lost 7,000 homes from the base of potential customers. But five months after Katrina, the system had installed more than 11,000 high-speed data connections, topping the pre-storm number. Pascagoula, Miss., has regained all but 900 of its 20,500 pre-Katrina cable customers.

“Customers are patient. Everyone down here lost something … but the Gulf will come back,” Perry said.