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MSOs Making Business Connections

While some may find truth in the saying "No man is an island," the same is also becoming evident for cable systems in their quest to serve local businesses and branch offices that, in many cases, fall outside the operators' traditional footprints.

Cable operators have identified business services as a key growth engine, but that growth stands to be stunted if they are prevented from serving satellite offices beyond their franchise areas. MSOs have spotted this problem and are beginning to strike interconnection agreements with fellow cable operators.

Such cross-border deals have started to emerge over the past two years or so. In Wisconsin, for example, Charter Communications Inc. and Time Warner Cable Inc. (NYSE: TWC), have created a statewide agreement. They've also joined forces in the Carolinas and in Southern California, and they're also hooking up some systems in Louisiana.

More recently, Cox and Charter have interconnected their respective Las Vegas and Reno systems for the purpose of serving commercial customers in Nevada's primary business hubs. (See Cox, Charter Make Biz Connection.)

The MSOs did not detail the financial terms of the Nevada deal, but it's "a simple buy/sell arrangement," according to Jack Gordon, the national manager of channel sales for Charter's business services unit. In other words, if Cox has customers in Las Vegas with sites in Reno, Cox "purchases" the Reno customers from Charter. Cox would become the service provider of record for those Reno sites, even though they're in Charter's territory.

Of course, the deal works in the other direction too, with Charter reaching into Cox territory.

Such deals "fit within the parameters of how we would do business with any carrier," Gordon explains. What's key is that they prevent those revenues from falling into the hands of competing telcos.

"I'd say we're beyond the startup stage. A lot of these interconnects are already there," Gordon says.

Cable MSOs are already collaborating in an attempt to make these deals easier to cut. The Cable & Telecommunications Association for Marketing (CTAM) , for example, has developed a template master service agreement (MSA) to help operators get the ball rolling on interconnection deals that serve businesses.

By using the MSA, operators don't have to start every cross-border deal from scratch. They'll need to add some customization each time, in areas like customer maintenance, troubleshooting, and how to apply service credits.

The MSA template, approved last October, has support from Bright House Networks , Cablevision Systems Corp. (NYSE: CVC), Charter, Comcast Corp. (Nasdaq: CMCSA, CMCSK), Cox, Insight Communications Co. Inc. , Mediacom Communications Corp. , Time Warner Cable, and Toronto-based Rogers Communications Inc. (NYSE: RG; Toronto: RCI). Bright House director of business services Andre Martineau, Sr. is credited with heading up the working group that created the MSA.

— Jeff Baumgartner, Site Editor, Cable Digital News

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