Is Cable Ready for the Business Big Leagues?

NEW YORK -- The Future of Cable Business Services -- If cable's going to move up market to address the needs of larger business customers, MSOs will need to prepare themselves for a world that's vastly different that the one most of them have been serving early on.

"When you move up market, it's a different game, a different league," said Dave Pistacchio, president of Optimum Lightpath , a keynoter here this morning who shared some advice on what other MSOs need to be thinking about as they target larger commercial customers.

"That's not to say that the SMB [small/mid-sized business] space is not great, or that bigger is better," he said. "They're just different."

And that generally means a lower volume of transactions, but higher value transactions. It also means much longer sales cycles -- up to 12 to 18 months to hook the biggest fish.

Optimum Lightpath is the all-fiber commercial services arm of Cablevision Systems Corp. (NYSE: CVC), targeting mid- and large-enterprise customers. In Optimum Lightpath's view of things, its mid-market constitutes businesses with 100 to 499 employees that spend $1,500 to $10,000 per month, and a large sector with 500 or more employees that spends more than $10,000 per month. Cablevision, by contrast, addresses the small end of the market using its existing cable plant and technologies such as Docsis.

But there are also key differences that Optimum Lightpath addresses -- as will other MSO-backed companies -- in this potentially more lucrative end of the market.

As the middle ground goes, "price is always the lead competition," Pistacchio said. "However once they switch, you won't keep them if you're not doing everything else right," he added of a segment that's traditionally been served by copper networks and looking for options that give them higher levels of availability.

Price is also critical in the enterprise space, but so is the ability to provide superior latency and other more appealing premium capabilities that go beyond commodity-type services that any competitor can offer.

Prized customers such as Goldman Sachs & Co. and Morgan Stanley are the most hotly contested. Competition for those kind of customers, Pistacchio pointed out, is most vigorous and represent a group that has historically been well-treated by incumbent providers.

"Credibility is critical; you have to earn it," he said of cable's pursuit of larger commercial game. But once you get in, you can likely stay there for a long time. Optimum Lighpath still has some customers that were signed over 20 years ago, with many on board for six or seven years.

But Pistacchio also cautioned cable operators to be careful if they follow the siren song of enterprise services and try to land customers that will probably require the MSO to spend heavily on capital to handle their special needs.

"Not all business is good business. You need to have some discipline," he warned, but acknowledged that operators might have to go underwater to get some big contracts so long as there's an opportunity to grow that business over time.

— Jeff Baumgartner, Site Editor, Light Reading Cable

Be the first to post a comment regarding this story.
Sign In