Retail, Self-Installs Key To Cox Modem Growth

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Grab market share by providing consumers with as many easy options as possible: That's the marketing credo for Cox Communications Inc.'s cable-modem service in Phoenix. "We're in the midst of a customer-migration period now," said Cox Cable Phoenix vice president of marketing Tony Maldonado. "It's a race between cable and DSL. There is an 18- to 24-month window for dial-up subscribers to migrate to broadband solutions.

"The best way is to err on the side of subscribers and give them as many options on their terms," he added.

Self-installs and retail availability are two key pieces of that strategy. "Both elements give subscribers more options," Maldonado said.

Some 93 percent of Cox's new cable-modem users buy their own device, he said. On average, one-third of subscribers buy a modem from the MSO, while the other two-thirds make purchases at retail stores.

Consumers like the retail and self-installation option because they don't have to take time off from work for a truck roll, said Maldonado. Self-install prices have also dropped.

While a Cox installation costs a subscriber $49.95, self-installs range from $9.95 to free of charge, depending on the offer.

The 93 percent retail sell-in rate has boosted modem ownership to well past 50 percent among all Cox high-speed subscribers, Maldonado said. The system declined to provide overall modem-penetration rates, but said it's higher than the MSO's 18 percent average.

Cox sells its modems for $129. "We've dropped the price as manufacturer prices have come down," Maldonado said. The system stocks units from two to three manufacturers, he said, but its network can support gear from about 20 Data Over Cable Service Interface Specification-based manufacturers and models.

Circuit City Inc., Best Buy Stores Inc., CompUSA, Gateway Country and a number of small, independent retailers stock modems from several manufacturers, Maldonado said. Retailers sell units from $79 to $119, he said.

The lower prices tend to drive traffic to retailers rather than Cox, Maldonado said. But many subscribers will buy their modem from the MSO, with the comfort of being able to call the cable company when something goes wrong, he added.

"We've been pricing our modems based on what our financials are," Maldonado said. "We don't want to create a [sales] channel conflict. There are certain advantages in buying from us.

"We'll stand behind a Cox-bought modem. Sometimes people don't want to deal with the manufacturer. You never want to put the customer in the middle."

Cox prices its high-speed service at $34.95 a month for consumers who own their modem and take video or another service. Subscribers who lease a modem are charged $15 a month for the lease, on top of the $34.95 service fee. A customer that takes only data service pays $44.95 per month.

About one-third of Cox's modem subscribers buy their service as part of a bundle, said Maldonado. The sell-in rate for new subscribers who take a bundle that includes data service is higher than that.

"Churn is about 30 percent lower when subs own their modem," he said. "Bundled churn is also lower."

Overall, Internet penetration in Phoenix is moving toward 45 percent, said Maldonado, and that's been spurred in part by broadband. A family with children is more likely to take broadband service, he said.

Even some segments of the older population have adopted broadband, using it to send e-mail and share photos of their grandchildren, he said.

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