CTAM 2010: Cox in N.O.: 'The Big Easy' It Wasn't

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Anyone with a heart won't soon forget the images from the Crescent City in the days following the Aug. 28, 2005, landfall of Hurricane Katrina: the homes swamped to the roof line, the famished and thirsty gathered disconsolately in the lobby of the Ernest N. Morial Convention Center, the pitiful "help" signs spelled out with sodden clothing. If you watched the news, it seemed there would be nothing left to fix.

Indeed, Cox Communications' local system entered that hot August day with 500,000 homes passed and 270,000 customers. After the levies failed and the flood waters came, Cox found that it had lost much of its plant and the homes of an estimated 90,000 subscribers.

In just the third quarter of that year, according to a Cox filing with the Securities and Exchange Commission, the company estimated $115 million in losses, $44.9 million of that in lost revenue.

It took Cox New Orleans two years to rebuild 98% of its system nodes and 98% of its network.

Because the system had to be rebuilt anyway, corporate management took the stance that the plant should be recreated better than before. Atlanta-based Cox invested a half-billion dollars in private capital to create a system offering faster Internet connections, a stronger business proposition and higher revenue generating units, especially for phone services.

The region was one of the first in the Cox universe to institute an Extendable Optical Network (EON) upgrade, improving the plant to 850 Megahertz. That jump-started the deployment of HDTV, advanced services and faster high-speed Internet service.

Now, instead of Cox New Orleans, the local system is Cox Louisiana, the result of a consolidation last year. State operations are connected with a redundant fiber link including the Baton Rouge and Lafayette markets.

As a result, "we're as well-positioned as any competitor in the market," said Colleen Levy, vice president of marketing for Cox Louisiana. "There's a feeling here that we can get through anything."

Levy's been connected to that can-do New Orleans attitude for a long time. She's a city native, who mercifully was at a different job, in Atlanta working for BellSouth, when the storm hit. Her parents were also on vacation that August day, and close family friends were in the Lakeview district and on high enough ground that they weren't flooded.

Levy didn't make it back to the city until the following May. Seeing what her hometown had become was really hard, she said, but she was also inspired by passion and the resilience of people who decided to stay and reinvigorate the city.

The repair and upgrade effort have helped make New Orleans one of the growth markets for Cox, especially for phone services, Levy noted. Ann Ruble, system spokeswoman, noted that phone penetration in the division has increased by 84% during the last five years (as a private company, Cox does not report specific subscriber numbers).

Part of that growth is attributable to the introduction of enhanced features, Levy said. New Orleans patrons can use Caller ID on TV and Phone Tool, which enables customers to check their voice mail via the Internet.

The most competitive feature may be the extended local calling zone Cox offers that its competitors don't. Levy said Cox analyzed calling trends and realized Louisianans living south of Lake Ponchartrain make lots of calls to family and former neighbors who have relocated north of the lake. Rather than continue to charge extra for long distance, the system launched a marketing campaign in the local argot, urging customers to sign up for phone service that would allow them to "Call Yo Mamma and Them" at local rates.

System improvements also allow the operator to offer data service at speeds of 22 Megabits per second, which allows both consumers and Cox to keep ahead of such trends such as the so-called over-the-top streaming of Internet content. The system plans for top speeds of 50 Mbps by year-end, Levy added.

The robust plant has also allowed the operator to sell in business services to both legacy businesses and new industries that arrived as part of the post-storm revitalization effort.

Business sales are especially strong in the health care, financial and government sectors, according to system spokeswoman Ann Ruble. The regional optical network makes Cox a natural partner for hospitals and banks with multiple rural and urban markets, she added.

The company has also leveraged the local partnerships it cultivated before, during and after Katrina.

"Localism has always been a great differentiator," Levy noted, against competitors such as satellite. Through its regional sports network, Cox Sports TV, the company built relationships with Louisiana State University, the New Orleans Hornets of the National Basketball Association and a little franchise called the New Orleans Saints. Who dat? You know, the winner of last year's Super Bowl.

Levy said because of its relationship, Cox was able to offer replays of Super Bowl XLIV on VOD. It drew some of the best viewership of any asset ever on the division's VOD platform, with subscribers staging "Super Bowl Replay" parties, Levy said.

But executives said the system's remarkable progress in rebuilding and growing both the residential and business services operations wouldn't have been possible without Cox employees.

"Their commitment to bringing customers back, in the face of their own rebuilding challenges, has been nothing short of remarkable," Ruble added.