Cox Business Services was one of the pioneers of commercial services in the cable industry, lighting up its first customer in the 1990s. Since that time, the Cox Communications division has seen the business-services segment evolve from providing simple high-speed Internet services and telephony connections to small businesses, to hooking up complicated PBX (private branch exchange) and Ethernet networks for small, medium and large companies as well as providing landline connections between cellular towers for some of the largest wireless-communications operators in the country. Cox Business senior vice president Steve Rowley recently spoke with Multichannel News senior finance editor Mike Farrell about the unit’s 2014 performance and its outlook for the year.
MCN: What’s the state of commercial services at Cox?
Steve Rowley: This year at Cox Business we really had an incredible year, probably our best year on record. We’ve continued our double-digit growth across all our segments. It breaks down into the sense that we focused on small business, midsized [business] — what we call our large locals — and carriers. If you look at our small-business space, it’s still a major focus for us and we’re really seeing a strong appetite for more data and voice services as well.
We did a great job in developing a concept called “Get Started,” a program in which Cox goes into its markets and looks for entrepreneurial [companies] to come out and pitch their businesses. It was very wellattended; we’ve given out close to $100,000 in cash and prizes.
We’ve seen great success in our strategy to have sales professionals meeting our small business clients. We get comments back from our customers telling us these folks really are the IT or CIO for them, they provide an in-depth technology view of the operation and really provide that support for them and that is something we want to continue. We really view that as a strong asset for us in the small business space.
The other thing we’ve done is launch Cox BLUE, which is a socialmedia site, a place where our smallbusiness customers can go and listen to industry experts outside of anybody else and share information. We’ve really seen some great traffic.
Small business still a major focus for us; we’ve got about 330,000 customers, and 80% are small business.
MCN: By small business, you mean 20 employees and fewer?
SR: Yes. As we move into the mid-market space, we’ve had great success with our cloud-based, IP-hosted telephone service, or IP Centrex service. It really has given our customers a lot more flexibility and feature functionality that they’ve been looking for and also allows companies to move away from the complexities of a PBX or key system and really have more of a unified telecommunications front. We’ve seen great success [with] that product and we’re expecting to have large growth in 2015 with that product as well.
As we move into large enterprise customers, we’ve really seen success in our verticals — education, government, healthcare and financial. On the education front, we’ve got about 6,000 schools to date and more than 4 million students. We’re moving into new services as well in 2015 – more managed networks and managed routers and security for service as we look to put WiFi in those schools as well.
On the carrier front, we still continue to have strong relationships with large carriers on backhaul services. We’re generating over $200 million in our carrier business overall. We’re going to doubledigit growth in that area as well this year.
We’re also seeing trials get underway with the advent of small cells, pico cells. We’re working with several of the different carriers to make sure we understand how folks want to play. I think there are different strategies across the industry. I think it’s coming together and we’re an active participant in a lot of those trials.
MCN: Are you still on track to reach $2 billion in sales by 2016?
SR: We are. We are definitely on track, maybe a little ahead. Then we start assembling our plans for $3 billion. That will be our next push. We crossed over $1.8 billion in sales this year; a little ahead of schedule.
MCN: Eighty percent of your base is small business. Is a lot of your growth due to smaller companies buying more services?
SR: There are a lot of things changing in the smallbusiness space. There are more sophisticated businesses out there looking for larger pipes; they’re running different applications, looking for larger pipes to route to data centers. And then there are cloud services. There is clearly a strong appetite for new services, but I also think everyone is looking to be on the cutting edge of technology to create more efficiencies for their business.
MCN: You mentioned residential service and customers getting used to having all that bandwidth at home. Is that driving business customers too?
SR: Such a large portion of our business customers are residential customers — 55% to 66% of our customers in the small-business space base have our services at home. We’ve started a major initiative at Cox to launch our Gigabit services for the residential side of the operation. We’re seeing the demand from our residential customers and because there is such a large halo effect from our business to consumers there are clearly some synergies we are going to see.
MCN: One of the benefits of the Comcast-Time Warner Cable merger is the fact that the additional scale would help the combined company in the commercial-services segment, especially with larger enterprise customers. How important is scale to you? Do you need it to attract larger customers or are the connection deals you have with other cable operators enough?
SR: I think scale is important for us from a perspective of back-office and front-office [functions], making sure you’ve got scale and with scale you can drive a lot more transactions. I think there will be a lot of things that as an industry we will look at. Scale becomes important if you think of national accounts. A Starbucks or a McDonald’s, for example, have hundreds of locations throughout the U.S. and I think they all would love a one-stop shop. As an industry I think it will be great to figure out how to put that together, to standardize and be able to support some of those initiatives.
