More Takeaways...

Here are a few more tidbits from this week's Light Reading Live event centered on cable-fed business services. (See Cable's Biz Battle: HFC vs. Fiber , Slideshow: Cable Business Services Show, and A Tale of Two MSOs .)

Romancing the phone
Although operators started going after small- and mid-sized businesses (SMBs) with data services, many have coupled those with voice offerings.

That's a good move, considering that voice service revenues make up as much as three fourths of the revenue that pours into the telecom sector, according to Heavy Reading senior analyst Alan Breznick. Oh, and cable MSOs tend to pull in better margins with such services than they do with residential subs.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) is starting to go after this segment with an eight-line service -- companies with fewer than 20 employees are considered the current sweet spot.

In addition to being underserved by the ILECs, that group has "unique needs, so we thought we'd go in and focus on them," said Kevin O'Toole, Comcast's vice president of business products and strategy. The MSO is backing up its plan with 1,000 sales reps (including 700 on the street), a refurbished NOC tailored for business services, and 1,500 trained techs.

Time Warner Cable Inc. (NYSE: TWC)'s biz unit launched phone service early last year, starting with a 12-line service. It signed up 23,000 commercial phone subs at the end of the third quarter, with customers taking 2.2 lines on average.

Cox Communications Inc. has already rolled out commercial phone to all 18 of its divisions and has even started to add in SIP-based services. At last check, it had 600,000 business service phone lines up and running.

Cablevision Systems Corp. (NYSE: CVC)'s Optimum Business division (the one that targets SMBs using its hybrid fiber/coax plant) has a 12-line offering available and expects to double that to 24 lines.

While SMB phone service offers nice growth potential, it's also a sticky offering. Time Warner Cable's business phone subs tend to sign up for three-year terms, said Alina Montano, senior director of voice services for Time Warner Cable Business Class.

Don't be afraid to go big
Although they are central to many MSO business service strategies, SMBs can be a tough segment to sell into.

"They want to be treated like an enterprise, but they have the pocketbook of a consumer," said Terry Canning, the senior VP of Rogers Communications Inc. (NYSE: RG; Toronto: RCI)'s business solutions division.

His advice to MSOs: Don't be afraid of enterprise opportunities, even if they seem to be more complicated and more difficult to serve. Sure, enterprise customers are sophisticated buyers, but they know how to use their networks... and they produce solid margins.

And that doesn't mean only big MSOs should go after super-sized enterprise opportunities. Buckeye CableSystem , an operator based in Toledo, Ohio, actually started off service with high-end, institutional customers. It got an all-fiber biz solution off the ground in 1998 and is now in the process of migrating everything to GPON.

"Size isn't an impediment to [going] after the [big] business market," said Joe Jensen, the MSO's EVP and chief technology officer. But he warned that enterprise customers require a more "consultative approach."

"The larger customers are interested in reliability and relationship," he said.

Get the urge to converge
Rafael Fonseca, senior director of product evolution at Cedar Point Communications Inc. , said MSOs need to get out of the service silo mentality and start thinking about co-mingling and integrating their business service offerings.

It's not longer about discrete voice, video, and data services, "but a multimedia experience," Fonseca said of future business customer needs.

O'Toole warned that MSOs must also be careful as they start to converge services, noting that the move should not "break our principles" for business services, which emphasize simplicity and competitive pricing.

— Jeff Baumgartner, Site Editor, Cable Digital News

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