Cox Targets $2B in Biz Revenues

NEW YORK -- The Future of Cable Business Services -- Cox Communications Inc. 's business services division is on target to breach the $1 billion revenue mark in 2010, and has a batch of growth ideas on the way or in the works that will allow that number to double that sometime during the next six years.

"We will definitely hit $1 billion in 2010," predicted Cox Business vice president Phil Meeks, the morning keynoter here. He said Cox Business will come "perilously close" to hitting that milestone in 2009, but acknowledged that the economy did affect growth, particularly in markets such as Las Vegas, Phoenix, and Orange County, Calif. (See Cox Biz: Cable's Next Billionaire? )



But there's still lots growth to be had, and Meeks thinks 2010 will be a bit better than this year, which is seeing growth in the "mid-teens." Given Cox's current business services growth trajectory, the division is "on track to hit $2 billion within six years," Meeks said. "The market's there for us to get it."

And even when Cox hits that mark, there's still more share to snare from the telcos. Meeks estimates that Cox's current cable franchise area represents a $7 billion opportunity for wireline business services. The company also sees another $4 billion in commercial wireless opportunities.

Cox is using a multifaceted approach to go after that opportunity by offering services to potentially lucrative "verticals" such as government, healthcare, education, and financial institutions.

Among that grouping, Meeks thinks the healthcare segment offers lots of near-term upside, pointing out that the U.S. government has set aside $15 billion in stimulus funds to accelerate the digitization of medical records.

"That's a huge, huge development for a company like Cox," he said, noting that doctors' offices and other medical facilities will need to work with partners like Cox to enable secure storage and comply with the required privacy management components.

Cox is already pursuing that market with its Ethernet-based "MedNet" strategy, and even has some customers to show for it.

Integris Heath of Oklahoma City, for example, is tapping that network to provide data connections among eight rural hospitals and two metro medical centers, and to serve apps such as prenatal monitoring and remote video consultations. Others already on board MedNet include Gateway Healthcare of Rhode Island (for IP hosted voice services), and Sentara Healthcare of Hampton Roads, Va., which is using the network for distance learning and monitoring, going as far as streaming a live kidney transplant that demonstrated a new procedure.

"Healthcare should be the biggest vertical for us," Meeks said.

Other opportunities
Cox Business also sees some additional upside coming from wireless backhaul as operators move to 3.5G and 4G services and require bigger pipes to connect their towers. Meeks said Cox can also peel off those towers to provide fiber connections to adjacent businesses.

Cox Business's growth plan also involves moving "up market" to larger and larger business customers. Today, about 80 percent of its commercial customers have fewer than 20 workers, with 65 percent of revenues coming from that group. In a separate conversation with Cable Digital News, Meeks said Cox is also expanding its capabilities to go after businesses with 20 to 99 workers aggressively with symmetric Docsis Internet services and other offerings targeted to larger commercial customers.

The MSO is also looking to put more single-service business customers into video and voice product bundles. About half of Cox's 250,000 business customers are only taking the MSO's Internet products. About 30 percent are taking tailored video packages, which are "great churn reducers," Meeks said.

Although Cox's forthcoming 3G/4G wireless service will target residential customers, Meeks says the MSO also intends to use it to provide mobile packages to what he calls an "underserved" small business segment. (See Cox Wireless: Soup to Nuts .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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