Signing Up New Business


While other cable companies are betting the local pizza parlor will be the key to success for their fledgling commercial-telephony ventures, Cox Business vice president Philip Meeks knows where his future lies: In portable billboards, crawfish boils and good, old-fashioned customer service.

Business telephony has long been anointed as the next new growth engine for cable. For some of the bigger guys, like Comcast, the focus has been ultra-small businesses.

For Cox — with 250,000 business customers under its belt and on track to tally about $1 billion in revenue by the end of 2010 — commercial services are in a bit of a different place. While other cable operators are busy building out markets and launching products, Cox is getting the message out to drive growth.

For some of the newer areas — Cox launched its full business product suite in San Diego, Las Vegas, Phoenix and Northern Virginia earlier this year — it means the emphasis has been on early-market stimulation. In San Diego, for example, the local sales team has a portable sign that it rolls out to new office parks emblazoned with “Coming Soon To Your Area, Cox Business,” to drive interest, said Meeks. In Baton Rouge, La., the Cox Business team took a different approach — it pitched a tent at a local office park and held a crawfish boil, inviting tenants of the park to drop in as they left work.

“They spent the afternoon with us; we were feeding them crawfish and telling them a little bit about Cox Business,” Meeks said.

Driving that awareness, as well as building on the residential business's customer-service reputation, is going to be critical to the success of the business product.

While Cox has been in the commercial-services game since 1997 — when it started selling commercial high-speed Internet service to businesses in Hampton Roads, Va. — it is not necessarily the low-cost provider in its markets, said Meeks. What the company has been hammering home to customers is a total value equation. Cox might not be the lowest cost provider for a particular product, but the more a customer buys, the lower that overall telecom spend will be.

To address that end of the market — Meeks said that 80% of Cox's commercial customers have 19 or fewer employees — the MSO is creating a base-management center. The virtual operation is supported by vendors in two locations, Missouri and Maine, and is responsible for selling into the commercial base and converting single-product customers into multiproduct customers.

The Missouri location will launch Oct. 1, followed by Maine on Nov. 1. Together, they house 30 people primarily responsible for selling into the current customer base. This will allow existing sales reps to focus on additional opportunities with larger customers.

Cox Business is building a disciplined customer life-cycle process at the center, Meeks said. Each new business customer will receive a call from the center within 48 hours of service installation to make sure everything was done to its satisfaction. Forty-five days later, he said, the customer will receive another call, checking to see that it received its first bill, that the bill is accurate and that it understands what it bought.

Depending on the size of the customer, every 60 to 90 days thereafter it will be contacted by a Cox representative to make sure it is happy with service and to see if it needs any additional products.

“We don't position ourselves as a low-cost provider, but we do think it is important to demonstrate to customers the bigger the bundle they buy from us, the lower their overall technology spend will be,” Meeks said.

While most other MSOs are focusing on total value rather than lower price for business services, Leichtman Research Group president Bruce Leichtman said what sets Cox apart is its longevity in the business market and its credibility with consumers.

“The difference with Cox is that they are way ahead of the curve on business services,” Leichtman said, adding that many Cox markets began offering business service alongside circuit-switched residential phone service.

“Look at markets like Phoenix and some places in Rhode Island — they have tremendous penetration,” he said. “Years ago, they quoted 30% business penetration. That was because they were out there early, because they focused on the bundle and because they had the ability to deliver the services. Some of the other MSOs were a little later in being able to deliver phone.”

Cox Business also is supplementing its revenue with wireless backhaul deals with major wireless carriers. So far, Meeks said that Cox has signed more than a dozen wireless backhaul deals. While he would not reveal the companies, he added that they include all of the major carriers.

Wireless backhaul — basically providing fiber connections between a wireless carrier's communications towers and the public phone network — can be a lucrative business for cable companies. All of the major MSOs are either offering the service or are planning to.

Meeks said that the opportunities for wireless backhaul have enabled Cox to provide service to commercial customers that they wouldn't have normally built out to. It also could help offset some of the cost of building the fiber infrastructure for Cox's own wireless service.

Wireless will also play a role in Cox's commercial services bundle. While Cox plans to offer a residential Cox-branded wireless service sometime next year, Meeks said that the idea is that wireless will also be offered in the commercial bundle.

“The strategy is to launch [wireless] service months behind the residential service,” Meeks said.

While Cox is offering few details on the business wireless service, Leichtman said it is likely skewed more to wireless Internet than voice.

“I think the key to that offering is essentially BlackBerry service,” Leichtman said. “I don't think it's about wireless voice, it's about wireless Internet and that type of integration for a business.”

It is expected that the wireless service will be offered to larger customers, another new target for the business unit. Meeks said that Cox has been actively pursuing the next level of business customers — from 20 to 99 employees — and expects to be in five or six markets before the end of the year with a primary rate interface hybrid-fiber coax-based product for that segment.

Cox Business is pushing hard on that segment with its Voice Manager platform, a hosted voice-over-Internet protocol product. With the Voice Manager, customers have the features and functionality of a complicated Private Branch Exchange (PBX) system without the costs and hassle.

“What it means to a small customer is that we handle all of that for them — they don't need a wiring closet, they don't need to buy a PBX,” Meeks said. “We make it simple for them and they reduce their costs because they don't have to hire a telecom guy on premises, and they don't have the cost of an equipment closet full of telecom gear.”

Meeks said that Cox plans to grow revenue by about 14% to 15% this year and between 13% and 14% annually for the foreseeable future. So the $1 billion revenue milestone is just the beginning.

“Rest assured, we will attain $1 billion in revenue next year,” Meeks said. “There is still significant market opportunity out there. …We don't plan to stop at $1 billion.”