NEW YORK -- Future of Cable Business Services -- While the SMB market remains the "bread and butter" of Cox Business, the company is now making significant strategic moves into managed services targeting midsized and large enterprises and into carrier products as well, namely mobile backhaul and small cell.
Speaking here this week after wrapping up his first year as the chief strategist for Cox Business, SVP Steve Rowley highlighted several initiatives which add up to expectations of continued growth for the unit, which is predicted to hit $2 billion in business revenues by 2016. (See US Cable Nears $10B in Business Service Revenues.)
Two of the biggest pushes are into managed services and the carrier market, where Cox Communications Inc. has been successful in macrocell backhaul and is looking to play in small cell as well, Rowley noted.
"Carrier services is a big push for us, it's about a $200 million business, and we've had great success in macrocell backhaul services, with double-digit growth again in the wireline last mile," Rowley said. "And we are very hepped up about small cells. We want to make sure we are part of that business."
Cox is trialing small cell connection services right now. But one of the challenges Rowley noted is that the wireless carriers haven't yet decided how they want to handle backhauling traffic from small cells. He expects some commercial deployments in 2015
"There is work to be done as we evolve with vendors and as carriers decide how they want that done," Rowley says. Some carriers want a turnkey solution that includes everything from site design, RF management, construction and ongoing operation, while others are looking more for pieces of that.
Cox has succeeded in developing managed VoIP services in the mid-sized market and wants to grow its managed services sales in the IP realm significantly in the coming year from the $100 million market it is today, he said. Managed services brings the cable company a bigger chunk of the customer wallet, and aids in customer retention as well.
"We have to be very careful and crisp as an industry, where managed services is concerned," Rowley said. "For us, it's managed router, managed network, managed security and that in alignment with managed WiFi."
These services need to be targeted and tailored for different segments, he added, and Cox is doing that, offering school districts additional security and content filtering, for example.
In general, the push to serve midsized and "large local" businesses -- those with a footprint within the Cox service territory such as big Las Vegas casinos -- means targeting, tailoring and customizing the business offer, Rowley said.
But that is also increasingly true of small businesses, who are getting much more sophisticated in how they use technology and more demanding of their service providers as a result, he noted.
Cox has spent $50 million to upgrade its operations and billing support systems (OSS/BSS) so that it can more efficiently scale its business services, by standardizing processes around sales, installation and territory management. That was done in recognition of the fact that growing the SMB space means handling many more smaller transactions, while supporting the midsized and larger customers generates greater revenues per transaction.
Both remain critical going forward, Rowley noted. Today, SMBs make up 80% of Cox's business customer base and generate 65% of its revenues. Going forward, it's likely that larger business revenues will be at parity with those of the SMBs, but Cox still wants to boost its SMB market share and build that business. That will mean maintaining and improving what it delivers to those customers.
"The reason customers stay is because of the support -- localism is key -- having local engineers, local sales folks that have been there five years," Rowley said. "We will continue to provide that localism, because we want to continue to grow that space."
— Carol Wilson, Editor-at-Large, Light Reading