Advertisement
Articles
Advertisement

Business Services Booming

Sun, 01/31/2010 - 7:40pm
Mike Robuck, Senior Editor

Cable operators are gearing up for another big year

Damn the economy, it’s full speed ahead for business services. Cable operators’ business services offerings - from small businesses to large enterprises - have taken root and started to grow over the last few years, and this year will be no exception as MSOs look at more ways of leveraging their networks while expanding their slate of services.

“On the one hand, the recession forced some small and medium-size businesses to cut back on their IT departments, which left a void for cable operators to enter, but on another level, businesses can’t cut the cord with the cable operators that serve them because they’ve become a valued partner in their day-to-day businesses,” said Maura Mahoney, RCN Metro Optical Networks' vice president of sales and marketing.

“If you take a look at RCN Metro Optical Networks, what we provide to our business customers and our carrier customers, it’s not really discretionary spending. These customers use the infrastructure we provide to really run their organizations. We really are kind of a lifeblood for how successful they are in the marketplace, so when it comes to economic downturns, the services and the support we provide aren’t something that will go first,” Mahoney continued.

“We’re really proud that we were able to weather this storm and able to continue to grow despite the challenges we faced with the economy,” Mahoney added.

Kristine FaulknerDespite the downturn in the economy, business services more than earned their keep last year for cable operators. To cite just one example, Optimum Lightpath’s net revenues increased 3.8 percent to $65.1 million during the third quarter of last year, while adjusted operating cash flow increased 14.5 percent to $24.1 million, and operating income improved $2.5 million to $4.1 million compared with the same quarter in 2008.

This year, Cox Business, which is Cox Communications’ fastest-growing division, is poised to exceed $1 billion in revenue after 15 years of providing business services.

“MSOs have really capitalized on a section of the market that has, to some extent, been ignored,” said Kristine Faulkner, Cox Business’ vice president of product development and management.

Referring to incumbent phone companies, she said: “There are service providers that are trying to push consumer offerings up and repackage them, or they’re trying to take bits and pieces of their enterprise offerings and push them down market. There is no one completely focused on addressing succinctly their needs with the right packaging of business-class services that can enable them. That’s really where the MSOs have excelled.”

One area that will see increased traction this year for cable operators and their business services offerings is managed services. Cox Business launched a national managed services suite - which included online backup and storage - earlier this year (see sidebar), while Cablevision’s Optimum Lightpath is also reviewing managed services opportunities.

“In the midmarket, the big push in 2010 will be down the managed services path. Things like managed security, managed backup and recovery, or business continuity – so essentially a range of services that these customers require,” said John Macario, Optimum Lightpath’s senior vice president of product strategy and management.

John Macario“Once you supply a company’s voice and data needs,” Macario continued, “I think it’s natural for that company to look at their service provider as a managed service provider and ask, ‘What other IT-like services can you do for me?’ We haven’t formally launched that product, but it is on the 2010 roadmap, and it’s fair to say that we’ll be working with a partner. We’re not going to be building our own data center.” Managed services can mean different things for different cable operators, but Macario, Faulkner and Mahoney all said that their respective companies are in the process of looking at how they can capitalize their networks and in-house expertise to offer more managed services to businesses.

“We’ve dipped our toe in but haven’t jumped fully in on those managed services,” Mahoney said. “The question we have is how can we leverage our expertise and skill at designing, building and maintaining optical networks on behalf of our customers and create that into either professional services, or how do we move up the protocol stack a bit to offer additional services that make our underlying products more sticky?”     

RCN Metro has made inroads on managed services with a managed router offering that launched two years ago. Mahoney expects more deployments this year for the managed router service, which is ideal for small, “boutique” financial firms that need gigabyte interfaces but don’t have the personnel in place to configure and connect the circuits.

WHAT’S HOT FOR 2010?
RCN Metro and Optimum Lightpath also expect to provide more media transport services this year, which include terrestrial transport of uncompressed video for local TV stations, as well as transport of one-time events such as sports events and concerts.

RCN Metro is also targeting a “burstable” Ethernet service deployment in the first quarter of this year that will allow customers to briefly turbocharge their bandwidth over short periods of time. Customers will also be able to check the performance of their networks, status on orders and billing information via a Web portal.

With a wireless service ramping up this year, Faulkner said Cox Business will look at blending in mobile applications to its triple-play services in order to extend them beyond office walls. Cox Business will also spend more money and mindshare on making sure it has a rich IP portfolio in the VoIP landscape, and on adding intelligence to its Ethernet transport capabilities by standardizing on Alcatel-Lucent’s Ethernet platform.

“We’re looking at how to evolve that [business services] portfolio because we are front and center with the customers,” Faulkner said. “We’re a hand to shake, a face to see, and even a throat to choke when they have an issue, but I think we’re very responsive.

"I think we have begun to build the trust that provides us the opportunity to expand on the services that we’re already providing.”

A case for managed services

Cox Business used its New England market as a proving ground for its managed services offering that went live in December.

“We have one market that has been real good about stepping forward, and that’s our New England market,” said Kristine Faulkner, Cox Business’ vice president of product development and management. “We’ve launched online storage and backup capability there, and we’ve also launched a security offering. We really began to test the waters by fully enabling our tiers and speed packages with these capabilities.”

After conducting research with local customers in New England, in 2008 Cox Business created a suite of managed services to complement the existing Cox Business Internet product there.

During focus groups and secondary research, a common theme emerged: Customers were confused about how to secure their computers and protect their business data.

Cox Business’ answer was to develop a managed services portfolio that includes a business-grade security suite, data backup, Web hosting and service assurance services. While Cox Business worked on pairing the managed services with its data tiers, it also offered managed services as a standalone offering for customers without its Internet service.

Once the services were launched, Cox Business’ findings last year included reduced customer churn and better takes for its higher Internet tiers.

“What we saw is that it was a driver for businesses to adopt higher tiers because they got more richness in terms of speed, managed services capability and applications that they felt really helped them improve their businesses,” Faulkner said. “So we’ve seen healthy RPUs in doing this, and we’ve also seen a healthy shift in more distribution of low- to midto high-speed customers based on the richness and packaging across that landscape.”

Parlaying the success of the New England trial, Cox Business partnered with Mozy late last year to launch its Online Backup service for small businesses in southern Virginia, with more Cox markets coming online this year.

With the service, businesses will have access to between 2 GB and 10 GB of online backup storage space, based on their speed of Internet service, and they can also purchase additional capacity if needed. Like in the New England trial, Online Backup is also available a la carte for businesses that are not currently Cox Business Internet customers.

 

Advertisement

Share This Story

X
You may login with either your assigned username or your e-mail address.
The password field is case sensitive.
Loading