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Cable Business Services

Cable's Move Upmarket With Biz Services Still an Uphill Battle

NEW YORK -- The Future of Cable Business Services -- The lion's share of cable business services revenues continues to come from small and midsized businesses even as some major MSOs flirt with the allure of the lucrative but tough large enterprise market.

Though major cable operators such as Comcast Corp. (Nasdaq: CMCSA, CMCSK) are going after the Fortune 1000 market and trying to achieve national scale using partnerships with other MSOs, other operators have not been nearly as aggressive, choosing instead to focus on smaller prey in their own footprints. (See The Future of Cable Business Services: Covering the Bases and US Cable Set to Rake in $18B in Biz Services Revenues in 2018.)

And the large enterprise market is not for the faint of heart.

That part of the market "is a long, slow slog, with a fair amount of disappointments," Brian Washburn, practice leader, network transformation and cloud services at Ovum Ltd. , said here last week. He spoke on a panel focused on the challenges that cable faces as operators look to go upmarket and serve larger firms.

"It's not an easy business to be in," Washburn added, noting that the MSOs that are pursuing that market are slow to get traction even as they build up new leads.

Alan Breznick, cable/video practice leader at Light Reading, said the two biggest issues for cable's move into the enterprise market are the industry's poor reputation for customer service and the lack of a national footprint for any one MSO.

Pick your spots
But the broader outlook in that part of the market isn't entirely gloomy. Opportunities will come as large businesses link together multiple service providers to reach their various markets and office branch locations.

"That's an opportunity for cable providers to come in and say, we don't want to just be a provider of the pipes, but we can also be the provider of a managed service that owns that customer relationship," Washburn said.

Cable ops are also well aware of where they can best fit in … and where they won't.

Cox Communications Inc. , for example, is not chasing large-scale enterprise customers, said Drew Davis, the company's executive director of wireless technology. However, he said Cox does see openings in a set of related areas: carrier backhaul (particularly with the installation, site permitting, backhaul, power and ongoing maintenance), managed services (WiFi being a big one), and enterprise IoT (the MSO's Cox2M division is dedicated to that).

"We see a lot of demand and a lot of growth in that space," he said.

Cable One Inc. , an MSO operating in 21 states and in mostly non-urban areas, doesn't have a lot of large enterprise business to pursue in the first place.

However, Cable One, which did add some focus on business services with its acquisition of Clearwave, continues to gain ground with SMBs that have been with local incumbent carriers for a long time and are overpaying for a PRI. As a result, they are now looking for new, less expensive options. (See Cable One Deals for Clearwave Communications .)

"We're moving into that market in a big way right now," Chris Boone, VP of business services at Cable One, said, adding that the operator is working through MEF 3.0 certifications.

And while managed services are important to the overall strategy, providing businesses with the "best pipes" -- increasingly via fiber -- has been a focus for RCN Corp. , Grande Communications and Wave Broadband , Patrick Knorr, the company's EVP and chief commercial officer, said.

"We're focused on the fiber business compared to some other cable operators," Knorr said. "We actually have more business revenue outside of coax than in it."

As his company looks at upmarket opportunities, outperforming the incumbent is important, Knorr said. Once trust is established, it's possible to then branch off and increase the company's share in the market.

"You have to dial into the unique needs of those customers," he said. "We are trying to steal that business away in many cases."

Cable One's Boone said MSOs also have to be wary of the longer sales cycles as they move upmarket. SMBs might be on a one-to-three-year contract, compared to something closer to five years for enterprises.

"It takes longer to get your foot in there," he said. "And if you wait for the RFP to come out … you've already lost the deal."

SD-WAN not for everyone
And not all cable operators are in lock-step when it comes to SD-WAN.

Knorr said his company has such a product, though it hasn't been a big focus yet.

Cable One, meanwhile, has no plans for SD-WAN. But it could help out other MSOs, such as Comcast, that do have an SD-WAN product and are trying to hit locations in Cable One's footprint

That's good for Cable One, Boone said, because it operates the last mile in some of those rural communities. "If you've got SD-WAN, great, but you still need a really good broadband pipe … or the experience is going to be bad."

And that might be the right approach for some operators. SD-WAN "is not a huge money-maker in and of itself," Ovum's Washburn said, noting that the margins come from the services that are being managed on the SD-WAN offering.

— Jeff Baumgartner, Senior Editor, Light Reading

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