with Steve Rowley, senior vice president, Cox Business
Just a few years ago, the large, diversified bucket known as "business services" was a throw-away line at the end of cable company earnings calls. Sure, the revenue was growing, but we weren't talking about real money.
Well, as Cox Business Senior Vice President Steve Rowley will tell you, $2 billion — a figure his division stands to bring in this year alone — is real money.
For its part, Cox isn't the biggest provider of such diversified services as managed voice for small business and backhaul for large wireless carriers. But the company has been developing these revenue streams as long as any MSO and is widely seen as a pioneer, spawning much of the top executive talent that roster other top cable companies.
FierceCable caught up with Rowley after he spoke on a panel at the INTX Show in Boston a few weeks ago. He shared his thoughts on business services space and Cox's place in it.
FierceCable: How big a piece of the business is biz services for Cox?
Steve Rowley: We've been operating the business services side since 1998. We're the fastest growing segment of Cox Communications. Overall, we're about an $11 billion operation. From 1998 to 2010, business services grew from nothing to about $1 billion. And from 2010 to 2016, we should cross over $2 billion. So you can see that we've had really explosive growth.
FierceCable: What's driving the growth?
Rowley: The way we approach the business, we look at four sectors: small business, the mid-sized space, the enterprise space and what we call carrier services.
FierceCable: Right, but what's the main driver?
Rowley: We have over 350,000 customers today, and about 80 percent of those customers come from the small business space. And we've seen a great appetite for voice, video and data from that spectrum. So if you think of when we started we had single digit, multi-megabit service. We now have a platform where we have people starting off at 25 Mbps and higher in the small business space. Voice manager services, as you can imagine, is a big part, and then video services. That space we've really done well because we have a commitment to it. We have feet on the street. And that feet on the street really acts as a chief information officer. They're really helping that small business, whether it's a start-up or new business, they're really being that telecom advisor for them.
FierceCable: How big is the mid-sized sector for you?
Rowley: In the mid-sized space, we've seen growth in what we call hosted voice, or IP voice. Three years ago, we had no revenue. This year hope to exit at about $50 million. So it's very explosive. If you think of a service having the functionality of an IP phone, so now that phone sits on an IP infrastructure — we bring in unified communications so we can forward that call to your smart phone, we can put an attendant on that … we can make a mid-sized business have the functionality and breadth of an enterprise type of environment. We've had great success there.
FierceCable: What drives the enterprise area for you guys?
Rowley: In the enterprise space, it's really been a focus on verticals. We looked at the healthcare vertical, hospitality, finance, government and education. Those are areas we've really focused on. In the educational sector, we've had unbelievable success. We've penetrated about 50 percent of our base in the educational space. We've got about 7,000 schools and about 3 million students we support. We offer our data services as well as some voice services, along with managed Wi-Fi, managed video, things of that nature. It's been a big, big push for us.
FierceCable: What falls under "carrier services"?
Rowley: Our carrier or wholesale division is a $200 million business focused on backhaul. If you think of the AT&Ts and the Verizons and the T-Mobiles of the world, having to backhaul the service to their towers and move that data off the network. The other side is the wholesale. The last mile. In any give community, we're providing either fiber or HFC coaxial cable to the business, and we're able to provide wholesale services for those folks.
FierceCable: What do you have to say about the "Special Access" NPRM?
Rowley: It still hasn't been fully publicized, so I'm still trying to figure out what that looks like over time. From my vantage point, not knowing the regulation — just bits and pieces of it —what I would say is that when you look at our marketplace, about 97 percent of it is competitive. I don't know what that entails and how that comes about. We think that there's a lot of competition out there.
FierceCable: What's the next big thing for your division?
Rowley: Security, surveillance and video — it's an area where we just came off of trial and we're going to be launching services. We see great opportunity there. We also see cloud services continuing to grow pretty quickly. And we also think there's great opportunity in data centers. Whether we partner with them and bring them pipes or its other opportunities. Over the last 10 years, we've put about $16 billion in our network. We continue to invest in every one of our customers. We're putting in equipment on site and making that capital investment in those customers. Or we're building fiber to the customer if it's not there.