Cox Business' SMB focus helps it cross $1 billion revenue mark

Cox BusinessCox Business got its start in 1993 when one of Cox Communications' residential customers in Hampton Roads, Va., asked the folks at Cox how the company might help his business. It was the start of a business segment that in 2010 will generate about $1 billion for Cox Communications.

Cox Business offers voice, video and data services to nearly 250,000 small and mid-sized businesses including health care providers, K-12 and higher education, financial institutions and federal, state and local governments.

Analysts are bullish on the commercial segment of the cable industry. Craig Moffett, senior analyst with Sanford Bernstein Craig Moffett wrote in a report earlier this fall that commercial services have the potential to come close to, and in some case surpass, revenue from residential cable services. He also believes the business sector could also offset lost revenue from a declining residential subscriber base.

"We believe SMB [small-to-midsized businesses] should be viewed as a way for cable MSOs to prop up growth rates as residential growth rates wane or even turn negative, and that most models are built in such a way that they are indifferent to the segment distinctions between SMB and residential," Moffett wrote.

Cox Business has ranked the highest among small/midsize business data service providers in J.D. Power and Associates' 2010 U.S. Major Provider Business Telecommunications Study. Cox led all providers in four of the six factors driving satisfaction: billing, customer service, performance and reliability and sales representatives/account executives. It's not the first time. Cox business ranked highest among small business providers in similar J.D. Power and Associates studies in 2006 and 2008.

Cox Business profileAt first, Cox concentrated on offering services to small business--those enterprises with between one and 20 employees, said Murray Goldstein, Cox Business' director of commercial marketing strategy. But the company has expanded its horizons to provide services to mid-sized and larger companies. Today, about 80 percent of Cox Business's customer base and 60 percent of the company's revenues still come from small businesses.

However, Murray said, a growing number of medium-sized (100-500 employees) and large operations (500 + employees) are now looking to Cox for their voice, video and data solutions. Cox Business grew its customer revenue by 13.5 percent in 2009 and the company is expected to match or exceed that this year. That's good news when the residential market is flattening out as that arena becomes fully saturated.

Cox Business is currently the fourth largest Ethernet provider in the U.S., which allows businesses to hook up multiple offices and buildings using a hub and spoke approach, Goldstein said. One area where that approach has been attractive is with local hospital complexes. The doctors and medical offices can send information over private, dedicated paths making their business more efficient, he said.

The company is constantly tweaking its offerings. Earlier this month, Cox enhanced its Internet product with new managed services designed to address the broader IT needs of small and medium businesses. New capabilities include business-class back-up, security and email enhancements. The new products provide companies with a reliable back-up strategy that is more effective and efficient than a simple external hard drive, Murray said. Cox is also offering military-grade security for companies so that they can be assured their data is safe.

Cox Business Online Backup is being offered to all Cox Business Internet subscribers at no additional charge as part of its data services portfolio and also on an a la carte basis for companies not currently using Cox Business Internet. Backed-up files are stored and protected in Mozy data centers with 24/7/365 onsite monitoring and security, state-of-the-art fire detection and suppression systems and redundant power distribution units.

As Cox Communications moves to offer residential customers wireless offerings, Cox Business will begin focusing more on its own wireless products as well, Goldstein said. About 10 percent of Cox Business' revenue already comes from wireless backhaul services, Goldstein said. In 2009 alone, Cox Business signed $100 million in wireless backhaul contracts.

"It's fair to say that we got into the small business market because it was underserved," Goldstein said. "The business wireless market is even more underserved so we expect to do well in that arena, too."

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