How About an Office Flirtation?

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You've got to start somewhere. But first, let's get this straight: Imagine you manage a small insurance or real estate brokerage out in a suburban office park.

The cable company that just put your family through hell with its At Home Corp. conversion comes to your office, offering to handle all the IT work for you and your staff of 60. They're pushing a turnkey information-technology package, complete with remote hosting and full-time maintenance.

The salesman's business card has the logo of that cable company whose rate hikes make you bristle. And that's not even mentioning the outages.

It's one thing to miss five hours of Home Box Office or Yankees games. But you can't afford to lose even five seconds of data flow during the business day.

Cable's offer is price-competitive — certainly better than the package you've cobbled with computer companies and your local phone monopoly. Of course, you're also getting pitched by a couple of the surviving competitive local-exchange carriers.

You have the same feeling about the CLEC that you have about the cable data-services provider: Will it be around a year from now? (You've read those stories about Adelphia Business Solutions.)

IT'S BEEN SLOW

It's this kind of scenario that accounts for cable's slow movement into the office environment, despite nearly three decades of promises and attempts, which — to be fair — are accelerating right now.

In particular, Comcast Business Communications and Cox Business Services have stepped up their enterprise initiatives, and AOL Time Warner Inc. (as part of its Road Runner rearrangement) seems to be heading that way, too.

Their moves come as small and midsized businesses expect more telecom and information-technology choices. When the National Association of Manufacturers recently surveyed its members, electronic business services and related telecom capabilities ranked near the top of their "want" lists. So the demand seems to be there.

But most other operators concentrated on the traditional video market, even as their lines kept passing the sprouting office and industrial parks that have popped up along suburban highways.

One seasoned observer suggests that on the industry's list of top 10 "to-do" objectives, business services fall in at about No. 7 or No. 8.

Plunking into this morass is Narad Networks Inc., which claims it can enable business services through existing coaxial plant. Narad's sales material very self-consciously evangelizes the scale of the business market.

It cites $62 billion in annual telecom spending by small and midsized firms and emphasizes that coaxial infrastructure "passes more than 60 percent of all small business."

1 BUSINESS = 39 SUBS

And it's interesting to know that — to quote Narad — "a small business generates the same EBITDA [or cash flow] as 39 residential subs."

But how do you seek and sell to that one small business? Well, you've got to start somewhere.

Narad thinks it can solve the problem through a multi-tiered business model that relies on third-party IT providers. It confides that the service-bureau subsidiaries of International Business Machines Corp. and Hewlett-Packard Corp. are "interested" in developing such sales alliances.

Of course, those guys would be interested in anything that opens a sales channel these days. Not surprisingly, the giant independent system integrators — such as Electronic Data Systems Corp. and Accenture Ltd. — don't seem eager to hook up with cable, though they're not in hot pursuit of small-business customers, either.

BEARING 'IT' BRAND

The Narad approach would have its IT allies sell a package that pushes total infotech support — including the outsourcing of computer and network maintenance, which is now handled by an overwhelmed IT staff in small firms. The service package would be branded — at least initially — by the IT company.

Admittedly, it's a good way to obfuscate the role of the cable operator at the front-end of the process. Eventually, of course, the business user will have to confront the reality of cable's reliability.

Narad's plan to help cable operators hide behind a recognized IT provider underscores the sales hurdle.

Comcast Business Communications — which is not hiding its Comcast Corp. parentage — already stresses that its business customers will access service via a separate trunk, and that an entirely different service support organization will be ready to help.

Comcast promises same-day service calls — and no long waits for phone support, tacitly acknowledging in the process that its (and the cable industry's) customer service remains clunky.

GO FOR GOVERNMENT

A few MSOs think non-corporate institutional customers should be the first targets for business services. In particular, government offices and even educational facilities — all of which are heavy IT and telecom users — may be the low-hanging fruit of the business market. Their premises are passed, but usually aren't exploited.

A few cable managers also relish the retributive aspect of such deals, given the amount of money (franchise fees, education rates, etc.) that cable puts into those institutions.

After all, you've got to start somewhere.

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