Cablevision Eyes Commercial Phone


New York -- With the highest penetration in residential voice-over-Internet-protocol telephony service in the cable industry, Cablevision Systems is gearing up to attack the commercial telephone market full bore, eyeing large enterprise customers, as well as small to midsized business.

At the Goldman Sachs Communacopia conference here Wednesday, chief operating officer Tom Rutledge estimated that the commercial business in its footprint is worth nearly $6 billion.

“That’s a whole new opportunity for us and we’re going after it aggressively,” Rutledge said. “We think there is a substantial opportunity to lower the prices in that area [and] take our already existing plant and service those customers with secure data and voice products. We’ve begun mass marketing in earnest in the last several months.”

Rutledge added that with its existing completive-local-exchange-carrier business -- recently rebranded Optimum Lightpath -- Cablevision already has fiber service to twice as many buildings in its Metropolitan New York footprint than incumbent phone company Verizon Communications. And he said that among its current business customers is Verizon Wireless, which uses the Optimum Lightpath network to connect its cellular-phone towers to its services.

Adding to the opportunity in the commercial market is Cablevision’s success with its residential phone product. “We’ve gained credibility in the marketplace as a voice provider,” Rutledge said. “People know that Optimum Online and Optimum Voice work well, they’re good products.”

Rutledge said the relative cost efficiency of Cablevision’s VoIP network will also allow it to offer commercial services at rates that are one-half of what Verizon charges.

Comcast COO Steve Burke, presenting later at the conference, also saw a huge opportunity in the commercial telephone market. But while Burke estimated that business telephone is about a $20 billion business in its footprint, Comcast does not believe it will have to cut prices to attract customers. Comcast expects to begin offering commercial telephony next year, with the big push in 2007 and 2008.

Burke praised Cablevision’s success in phone, data and video service, adding that Comcast will likely concentrate on small to midsized business and will focus on adding value to those business customers, rather than on lower prices.

“I think we would be more inclined to compete on the basis of added value rather than price,” Burke said. “If you have a small or medium-sized business, you may not have seen anybody from Verizon or SBC [Communications] for years. It’s very hard to get competitive pricing; it’s very hard to get anybody’s attention. So, I like to think at least in the beginning we don’t need to compete on the basis of just price.”