Counting on Commercial Success

The nation's four largest cable operators may actually mean business about the business telecom services market this year.

Appearing together on a Cable Show panel in Vegas last week, representatives of Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Charter Communications Inc. , and Cox Communications Inc. all talked about their intentions to boost commercial telecom services revenues by leaps and bounds over the next few years. They also spoke about their ambitious rollout plans for commercial VOIP. (See Ringing Up Business.)

But they've all done that before. What made this session different, and definitely more convincing, is that the four senior MSO execs spoke in terms of numbers to a much greater degree than ever before.

Take Comcast. The huge MSO, which has set aside $250 million in capital spending for its business services initiative this year, is seeking to capture 20 percent of the small-to-medium-sized business (SMB) segment by 2012. With this market estimated to be worth $12 billion to $15 billion in Comcast's footprint, that comes out to $2.5 billion to $3.0 billion in commercial revenues.

"Our sweet spot is companies with 20 employees or less," said Bill Stemper, president of Comcast Business Services, which generated about $300 million in commercial revenue last year. "We're going to grow about 10 times,"

Or take Cox, the cable industry's pioneer in business services. The nation's fourth largest MSO, which started out with just $28 million in commercial revenue in 1998, is still shooting to hit the $1 billion mark by 2010.

"We're on target," said Leo Brennan, regional VP and general manager for Cox in Las Vegas, noting that businesses now spend a little over $2.5 billion in the MSO's footprint. Cox ended 2006 with about $500 million in commercial revenues, collected from more than 187,000 business customers.

Then there's Time Warner, another early entrant into the business market. Ken Fitzpatrick, senior VP of Time Warner Cable Business, said the nation's second largest MSO sees a $20 billion "market opportunity" in its territories. He said the company, which now boasts more than 250,000 commercial customers, is enjoying 50 percent annual jumps in business revenue.

"We've seen some phenomenal growth," he said, while declining to disclose Time Warner's actual commercial revenue. "It's a nice piece of business."

And, if the MSOs really do mean business, it may get a whole lot nicer.

— Alan Breznick, Senior Analyst, Heavy Reading