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Cox Hits 100K-Sub Phone Mark in S.D.

3/10/2002 7:00 PM Eastern

Three and a half years of promotion and support have paid off for Cox Communications Inc.'s local phone offering in San Diego, which zipped past the 100,000-subscriber milestone on Feb. 21, system executives said.

MSO officials credit consumer comfort with the Cox brand, and packaging that delivers video, voice and data at a 30 percent discount off competitors' prices.

Cox's primary competitor is SBC Communications Inc.'s Pacific Bell. The cable company charges $9.99 a month for the first telephone line, versus $10.69 for Pacific Bell. Local, non-toll calls are covered in the Cox price, while Pac Bell customers pay up to 9.9 cents a minute.

Cox of San Diego presently serves 535,000 cable homes, so nearly one in five subscribers use its telephony product. The MSO considers its retention rate to be high: Monthly churn for telephony is 2.5 to 3 percent, said vice president of programming and communication Dan Novak.

Nearly 40 percent of phone customers take the entire Cox bundle of digital television, high-speed data access and telephony for $95, 10 percent less than the combined monthly price for each product when sold separately.

Including long-distance calls, monthly bills for the package average $110 to $120.

Telephony is now available in about 75 percent of the San Diego market; it should be fully penetrated by year-end.

EIGHT MARKETS WIRED

Cox offers telephony in eight markets. San Diego has already surpassed the penetration level in Cox's initial market, Orange County, Calif.

Cox now has about 3 million local phone customers, making it the No. 12 U.S. phone provider and No. 3 in California.

The San Diego system spent $600 million to upgrade its network to deliver phone service.

Cox's telephony product has some vocal fans, including the San Diego Utility Consumer's Action Network. The MSO's phone service "is like a candle in a dark, dank cave," said Michael Shames, executive director of the utility-monitoring activist group. UCAN has five state regulatory or court proceedings pending against Pacific Bell over billing and service shortcomings, but few complaints about Cox.

Shames said the only repeated complaint is lack of access to all available long-distance providers. Cox has agreements with several vendors, including Sprint Corp. and MCI WorldCom Inc., and pledges to connect with more when contract negotiations are completed.

Pacific Bell spokesman Marc Ben said Cox's success demonstrates "the market is open and competitive." Pac Bell is confident its service, products and pricing will keep PacBell in the forefront, he added.

Ben also said the telco could introduce more market-specific promotional programs in the future. He did not elaborate.

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