Cox Sees the New Services Bolstering Old Streams


The introduction of new services like video-on-demand, digital video recorders and HDTV appear to be helping the bottom lines of cable's older revenue streams, at least for Cox Communications Inc.

In two separate Sept. 18 presentations at different management conferences, senior vice president of strategy and development Dallas Clement and senior vice president of engineering and chief technology officer Chris Bowick discussed the benefits of new services.

Clement told a Banc of America Securities audience that 26% of Cox's HDTV subscribers are actually brand new to the MSO, and some of them had been direct-broadcast satellite customers.

And 22% of high-definition subscribers were analog subscribers who upgraded to digital in order to get HDTV.

Clement also said Cox has seen some increase in overall premium units, as subscribers who rejected Home Box Office and Showtime have opted for those channels as HDTV became available.

On the DVR front, Clement said Cox has seen PPV revenue jump 40% in DVR homes. DVRs are a hit with consumers, he said. "It's a tremendous cul de sac impact," he said.

And Cox has seen overall movie buy rates increase on the VOD platform. In San Diego, an increase in VOD movie buys has more than made up for a slight drop in PPV buys. Clement showed a chart going back 20 months to January 2002. The top four months for combined VOD and PPV movie buys were April through August of 2003, with on-demand purchases more than picking up the slack for the reduced PPV buy-rate.

VOD was launched in March 2002 and by August 2002, VOD movie buys surpassed PPV. The on-demand movie buy-rate is now three times higher than PPV buys.

While Clement concentrated on the video side, Bowick discussed Cox's voice over IP telephony trial in Roanoke, Va., during a UBS Warburg panel discussion on VoIP. "The trial is looking pretty dog-gone good," he said.

The trial uses a softswitch that is actually located in Atlanta. Since Cox has put a national backbone in place, Bowick said, it could run nationwide VoIP from one central softswitch.

The key issue for VoIP going forward is whether the consumer buys the multimedia terminal adapter and the battery-powering device, he said. If that happens, Cox could implement VoIP for the about 25% of the overall cost of circuit-switched telephony, he said.

"We will market it as Cox Digital Telephone" with all the expected primary line features such as 911 emergency calling, he said. "We won't market it as a second line."

The VoIP platform will allow for much more than voice, he said.

"Think about picking up voicemail via e-mail, or vice versa," said Bowick. "We can layer in video applications resident on the network," such as video or still photos.