Cable isn't just a household name any more — it also means business. With their broadband network rebuilds nearly complete and data-services businesses maturing, many cable operators have put more effort in the past year toward developing commercial services for voice and data. They're not just finding they can reach more enterprise customers than they once thought — they've also discovered that the resulting business can add a healthy revenue stream.
Insight jumps in
The latest to jump aboard the commercial-services train is Insight Communications Co., which is readying tiered commercial services aimed primarily at medium-sized business customers.
"I think that there is a very good possibility this will be a 2003 product, in the latter part of this year," said Jim Stewart, senior vice president of Insight's high-speed Internet services. "We have really focused on our residential product up until now, and we have done some enterprise solutions.
"But we really want to focus on a product that is easy for cable systems themselves to sell — commercial products that are straightforward and competitive, that could give the business customer a broad range of choices and products to choose from."
At launch, the offerings will concentrate solely on data, rather than a combination of data and telephony. Insight has rolled the latter product out to residential customers in Lexington and Louisville, Ky.; Evansville, Ind.; and Columbus, Ohio.
"I think right now we are focusing more on the data play. Telephony is a whole different part of our company," Stewart said.
In contrast, business services are nothing new to Cablevision Systems Corp., which started delving into the commercial market in metropolitan New York City 10 years ago.
Armed with an 112,905-mile fiber-optic network, seven Class 5 circuit switches and a franchise that covers all of New York City, Cablevision's Lightpath unit is the fourth largest local-exchange carrier in the metropolitan market. It serves 138,501 business lines, with connectivity options that range from telco-esque T-1 and T-3 links to higher-capacity optical connections.
"What's different about what Lightpath provides than what other cable companies provide is our concentration in the New York metropolitan area," said Joseph Lhota, executive vice president of Cablevision and president of Lightpath. "It gives us a tremendous advantage by the fact that we are concentrated in one area; we're not spread out all throughout the United States."
Lightpath also taps Cablevision's hybrid fiber-coaxial (HFC) plant to deliver Business Class Optimum Online, a version of its residential cable-modem service, to small office and home businesses. That product "is growing by leaps and bounds," Lhota said.
In the past year, Business Class Optimum Online has doubled its subscriber base, from 9,600 to 21,100 customers, Lhota said.
Later this year, the addition of the Optimum Voice voice-over-Internet Protocol service recently announced will boost Lightpath's efforts in the small office and telecommuter market.
"You are also seeing an increase in the number of people doing work at home, and that's an important part of it," Lhota said. "We are seeing large companies actually buying high-speed Internet for their employees at home."
Cox: $10 billion
Probably the most aggressive of the cable operators in the business-services arena of late has been Cox Communications Inc., via its Cox Business Services subsidiary.
Cox Business is approaching the $270 million mark in annual revenues, but the estimated market opportunity is north of $10 billion, according to Bob Hattori, Cox Business's vice president of business operations.
A majority of Cox Business's customers — some 60,000 — are served by a Data Over Cable System Interface Specification modem Internet connections, while another 10,000 take a traditional fiber-fed data connection like a T-1 or OC-3.
The cable-modem-fed high-speed data segment focuses on the small and home-office market. High-speed data, meanwhile, includes a range of connection options, from point-to-point fiber between campuses to metro area networks.
The expansion "to do" list for Cox Business involves no shortage of projects, including the Hy-Life marketing push begun earlier this summer, targeting telecommuters, and a plan to expand voice service to all of Cox's 21 enterprise markets.
Cox also is looking at technologies to boost the bandwidth beyond what is supplied by the DOCSIS connection. Up to now, the only option for such customers is a dedicated fiber connection, but this is limited by proximity to Cox's HFC plant.
"We've done some lab trials and are starting field trials, and we are really looking for that to hit some customers that we can't get to with fiber," Hattori said.
Given its management and financial restructuring, it isn't surprising that Adelphia Communications Corp.'s business-services efforts are running in maintenance mode.
The MSO, which has weathered bankruptcy and major management changes in the past year, has also seen big shake-ups in its business services.
A year ago, the former Adelphia Business Solutions separated from the company and went through Chapter 11 bankruptcy, re-emerging as TelCove.
Adelphia still offers a menu of T-1, direct fiber, collocation, frame relay and optical connections through Adelphia Business Networks. It also sports cable-network based business services aimed at small office and home office customers, according to spokesman Eric Andrus.
"Basically we are just going to continue the organic growth, and the company clearly has a focus on accelerating the digital upgrade, which could support some of these activities," Andrus said.
Having just passed its first birthday in February, Time Warner Cable's Road Runner Business Class is steadily growing, hunting primarily for telecommuters and small-business customers. While the customer count has not been broken out of the overall Road Runner subscriber base, "it's growing rather quickly," said spokesman Mark Harrad. "It's been very successful for us since last year marketing it."
Business Class comes at three levels of service. The Select level is targeted at businesses with a standard Web site, while Professional service aims for companies that need more-advanced Web site functions. The top-level Premier service is for companies running large, sophisticated Web sites sporting advanced design and applications.
A shift in emphasis toward larger customers is in the works at Charter Communications Inc.'s Charter Business Networks subsidiary, said corporate vice president of CBN Steven Santamaria.
The numbers are guiding that shift: The large business-Internet side of the unit constitutes 4% of its total customer base, but pulls in 13% to 15% of its revenue.
"So you can see, that's an area we want to go after," Santamaria said. "It's significant, it's large, it's very healthy and stable environment. The way I look at it, it's growing RGUs by the hundreds."
CBN also is going after higher-education clients, particularly setting up 802.11 wireless broadband networks on university campuses that might already take Charter's video service. In partnership with 802.11 hot spot provider Vivato Inc., Charter will create a network using the MSO's wired network for backhaul.
"It's increased revenue, and we see it as a huge opportunity," Santamaria said. "I think if we are in there, let's go get it."
Realignment is also a focus these days at Comcast Corp., which is working to align the business services offered in the former AT&T Broadband territories under the Comcast banner, said vice president of marketing and business development Greg Butz.
The MSO has fielded fiber-optic drive enterprise services through its Comcast Business Communications subsidiary. That division has halted marketing to new customers, and its operations will eventually be folded into Comcast's unified business-services organization.
On the cable data side, the focus is on small office/home office, small to medium businesses and telecommuters who work for larger national corporations. The data-centric service packages range from $80 to $225 per month.
Comcast has been particularly aggressive in the telecommuter segment, noted Butz, "and very well-received, because of obviously the bandwidth value proposition, when you think about the speed and the physical footprint that cable has and the quality of that product."