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Cox Finds Ethernet Success in Verticals

Carol Wilson
LR Cable News Analysis
Carol Wilson, Editor-at-large
2/8/2010

Cox Communications Inc. has long been the cable industry's leader in delivering Carrier Ethernet services, but even with other cable operators now focusing more on business services, Cox actually widened the gap in the Vertical Systems Group 's 2009 Global U.S. Business Ethernet Leaderboard. (See AT&T Takes US Biz Ethernet Crown.)

Cable companies have been coming on strong in this category over the last couple of years, says Rick Malone, principal at VSG.

"But the last six to nine months, they haven't kept pace with the rest of the market," Malone adds. "It's something we will be watching."

By contrast to the other cable players, Cox held its ground, finishing fourth in number of Ethernet ports sold, behind AT&T Inc. (NYSE: T), Verizon Enterprise Solutions , and tw telecom inc. (Nasdaq: TWTC) (See Metro Ethernet Growing, Squeezing Carrier Pipes.)

One reason why other cable MSOs might be slipping is that they are more focused on delivering Direct Internet Access (DIA) over Ethernet, and that sector has become commoditized and price-conscious, coupled with slower growth, Malone speculates. By comparison, other companies, including Cox, are marketing DIA services, but complementing them with a portfolio of private line services based on Ethernet, he says.

"Cox is definitely a winner; they have been there since the beginning, being very aggressive," Malone notes.

Cox's Ethernet product mix doesn't match up with its cable brethren, but neither is it a carbon copy of what incumbents are doing. Cox is heavily focused on delivering Ethernet over hybrid fiber/coax (HFC) networks and over fiber to vertical segments that fit its regional footprint, says Bob Preston, the MSO's senior product manager, data services.

The key verticals include government units, education, and health care.

"We have strong relationships in those verticals and good sales segmentation in those verticals," Preston says.

Preston believes Cox's footprint, including major fiber buildouts, and its "localism" are two major reasons the company continues to do well selling Ethernet to businesses.

"We have extensive footprint in our markets, whether on HFC or fiber," he said. "We stress our localism, our reputation, which is manifest in several ways: overall service reliability, responsiveness, and the willingness to address customers needs, whether that means their upfront requirements or their need for technical support."

In fact, Cox stresses the fact the customers have local technical resources and local decision-makers, backed by a company that is large enough to do things at scale.

"We tell them it's the best of both worlds," Preston says. "The customer knows who to contact if they have a technical issue. They don't get a different person every time or have to work through layers of people like at some big company." Cox's next move, coming potentially later this year, is to move more aggressively into partnerships with applications providers and developed managed services capabilities that complement its existing Ethernet product portfolio, Preston says.

— Carol Wilson, Chief Editor, Events, Light Reading

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