Cox Biz: Cable's Next Billionaire?
Cox Communications Inc. , which has pursued the business services market for 15 years, believes its commercial division is poised to breach the $1 billion revenue mark by 2010.
So says Phil Meeks, the vice president of Cox Business. Meeks took the post in July, joining Cox after founding Channel Solutions Inc. and spending 30 years of a career that spanned AT&T Inc. (NYSE: T), MCI, and Southern Bell.
Growth in cable's core residential service is slowing in the midst of economic turmoil, but Meeks says Cox's business unit is on track for 16 percent growth in 2008 and revenues in the neighborhood of $855 million. (See Cable Pros See Slow Growth in a Bad Economy.)
"The business is very healthy," he says, noting that the overall revenue opportunity for Cox Business is roughly $5 billion.
Publicly held U.S. MSOs likewise seem to be finding success with business services. (See Cable Gets Down to Business.) And Meeks says Cox Business has some tricks up its sleeve to help its growth stay on track.
For starters, the division intends to expand beyond its current bread and butter -- small businesses with one to 20 employees, which today make up about 80 percent of its customers. Cox Business intends to attack the next level up -- businesses with 20 to 99 employees -- by using its hybrid fiber/coax (HFC) infrastructure to deliver symmetrical T1 services tailored for that group.
It's also ramping up a wholesale play, aiming to capitalize, for example, on cellular backhaul deals as Verizon Wireless , T-Mobile US Inc. , Sprint Corp. (NYSE: S), and AT&T migrate to 4G.
That kind of work would produce some decent high-margin revenues for Cox, Meeks says.
It could also serve Cox's own plans to build out a wireless network. (See Cox Wireless: Soup to Nuts and Cox Preps Cellular Network, Eyes LTE.) A chunk of that infrastructure could be subsidized, Meeks suggests, since more than half of the areas where Cox will need fiber-based wireless backhaul could also tend to Verizon's needs.
For now, Cox Business doesn't have any grand plans to add mobile services to its commercial package. Cox's first targets for wireless will be residential customers, although Meeks says wireless could eventually become part of a bundled business service.
Cox Business also hopes a partnership with Nortel Networks Ltd. will bring in some services cash. Nortel is selling video services and business-class voice services to Cox's single-product customers in Kansas and Oklahoma City, with subsequent launches planned for all of Cox's cable markets.
Cox Business thinks it can gain market share in the downturn, but Meeks acknowledges that his outfit has seen a slight uptick in "unavoidable churn" caused by businesses either cutting back or going out of business. That's been most apparent in California and the New England region.
More details about Cox's business-services ambitions could come to light soon. Kristine Faulkner, the VP of product development and management for Cox Business, is keynoting the next Light Reading Live! event -- The Future of Cable Business Services -- slated for Dec. 2 in New York City.
— Jeff Baumgartner, Site Editor, Cable Digital News
Interested in learning more on this topic? Then come to The Future of Cable Business Services, a one-day conference that will explore the impact cable operators are having on the swiftly expanding $130 billion-plus U.S. business services market. To be staged in New York City, December 2, admission is free for attendees meeting our prequalification criteria. For more information, or to register, click here.