Cox Communications Inc. plans to expand its trial of various high-speed data service offerings to four more markets in the coming months, adding a slower, lower-priced service plus a more expensive higher-speed tier with additional services.
The MSO's flagship 3 Megabyte per second service — its current offering — is priced at $39.95 a month. Cox plans to pursue dial-up customers by offering a lower-speed service in the $20 to $30 range, said senior vice president of marketing Joe Rooney.
The cable operator will also offer a higher-speed service, geared to heavier users, for $70 to $80 per month.
MSOs are under increasing pressure from analysts and investors concerned that cable-modem growth could stall as the big telephone companies slash digital subscriber line prices to below $30 per month.
While the regional Bell operating companies are doing well at DSL — SBC Communications Inc. added a record 365,000 subscribers in the third quarter, while Verizon Communications Inc.'s 185,000 additions marked its second-best quarter ever — cable has held steady.
Cox added a record 169,000 high-speed data customers in the just-reported third quarter, while Insight Communications Co.'s 29,000 quarterly additions were a record for that MSO.
Cox's research shows three times as many people are interested in its higher-tier service as in the lower tier, Rooney said.
The higher-tier service will be designed for heavy users, such as people involved in online gaming, and could include security features and remote dial-in options as bonus features, Rooney suggested.
The lower-speed service would be designed for an older, late-adopting, lower-income demographic, frustrated with tying up a phone line for a narrowband Internet connection.
Cox inherited a three-tiered pricing package in Las Vegas, where consumers can buy a 128 Kilobyte per second service for $30 a month, a 1.5 Mbps service for $40 and a 3 Mbps service for $50 a month.
Rooney said it was unlikely that the lower-tiered package in the four new markets would mirror Las Vegas, but Cox had yet to decide on final pricing and speed of service.
Pat Esser, executive vice president of operations, said about 10% to 12% of customers in Las Vegas take the lower-tiered service and 10% to 12% take the highest tier, "so it's [revenue per customer] neutral."