Cable's Newest Billionaire: Cox Business
Kristine Faulkner, the VP of product development and management for Cox Business, revealed here Thursday that the division expects to break the US$1 billion mark for 2010 sometime next week. Faulkner, a keynoter here, said (only half-jokingly, we think) that the CFO has pinned down the hour and minute Cox will break this all-important threshold.
Cox will be the first US MSO to publicly breach the annual $1 billion revenue mark in commercial services revenue. Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC) are also expected to join the club this year. (See Cox Biz: Cable's Next Billionaire? and Cable's $5B Biz Services Bonanza .)
The milestone is quite an achievement for privately held Cox, considering it had $9 billion in total revenue, across all its divisions, in 2009.
But Cox, which has more than 200,000 business customers and over 800,000 commercial phone lines in service, is already determined to hit the $2 billion mark. It took about 10 years and a compound annual growth rate (CAGR) of 27 percent for Cox to reach the first billion-dollar milestone, but it expects to reach the next one more rapidly, though the MSO isn't pinning down the year it plans to cross that one.
"We'll be very much quicker than 10 [years] and we'll go about it as fast as we can," Faulkner said, noting that Cox believes it has a $6.2 billion wireline opportunity, plus the potential to add wireless to its business services portfolio.
Cox Business got where it is today by offering a mix of voice, data and video services mostly to traditionally underserved businesses with fewer than 20 employees (52 percent take more than one product), and coupling that with a surge of cellular backhaul activity.
To reach the next level, Cox will continue to move upmarket to businesses with 100 or fewer employees and to bundle in a range of revenue-driving managed services as it continues to beef up its OSS and BSS systems.
Cox will focus on elements such as managed communications, including hosted voice services and storage, network WAN management, security services, and business service applications.
Faulkner said the strategy will also require Cox to rethink and evolve the way it sells to businesses -- moving from a transaction-based model to one that prioritizes solution-based options.
But Cox is already fixed on how it will deliver most of those services, since it's positioned to use Ethernet over its Docsis or fiber networks. "Ethernet is becoming the de facto mechanism to deliver all of our services," Faulkner said.
— Jeff Baumgartner, Site Editor, Light Reading Cable