In early 1996, with the ink still damp on the Telecommunications Act, Cox Communications was actively exploring the "hows" and "whens" of providing wired voice services to its cable TV customers.
Its telephony initiative got a jump-start when Westwood Residential, a Dallas-based developer with southern California expansion plans, approached Cox's Orange County operations to find out just how cable franchises were handled in the state. The developer was ready to launch construction of "Sonterra," a luxury complex of 300-plus apartments in Foothill Ranch, an affluent, high-growth area in the rolling hills of southeastern Orange County.Fast pitch for packaged services
In January, Westwood's agent met with Kimberly Toonen, director of business development for Cox's Orange County system. Toonen works directly with developers to negotiate access agreements for Cox's telecommunications services. "There's a lot of building going on in this part of Orange County, especially in the multifamily product area," states Toonen. "Builders, owners and property managers of these private-property complexes are recognized as the 'gatekeepers' to their tenants. So they're very important to us both as customers and as intermediaries between Cox and our future subscribers."
Westwood traditionally contracted for cable TV services with private cable companies that delivered wired voice off a PBX (private branch exchange) or through a Bell operating company. Now, with deregulation altering the communications landscape, Westwood felt the time was ripe to take a new tack. Its mandate for Cox: deliver a package of services—video, voice and high-speed data—that would satisfy the more sophisticated expectations of a "typical" Sonterra tenant: well-educated and upwardly mobile, with above-average income and a taste for convenience, choice and added value. Unless Cox could deliver, Westwood would go to a competitor.
Toonen knew right from the start that the stakes were high. "We had to deliver a viable alternative—and deliver it quickly—or lose our cable TV customers in the community, as well as future wireline business." Underlining the strengths that had made Cox a trusted household word—especially its history of customer service—she convinced Westwood Residential to sign with Cox to provide video, voice and high-speed Internet access for Sonterra, with the promise that telephone service would be up and running when the first phones were plugged in the wall. Westwood's bottom line: its construction timeline couldn't be held up by Cox's development process.Play ball
Ground was broken in early April 1996. Cox installers were, for the first time, running cable and twisted pair through joint trenches, and as buildings were framed and roofed, installing inside wiring with dual-port outlets that could handle both coax and twisted pair connections. Eight months later, as construction wound down for the December holidays, Sonterra's first phase (100 apartments) was ready for leasing, as was telephone service.Service roll-out schedule
Cox Communications Orange County products/services
MDU telecommunications services—Voice, video, Cox@Home high-speed data (select MDUs): Now
Cox Digital TV: Spring 1997
Residential/commercial wired telephony: 1997
Sprint PCS: Mid-1997
A few quick statistics:
Homes passed 282,000
Fiber in place 400 miles
Cable in place 2,786 miles
Completion of 750 MHz rebuild Mid-1997
Equal cause for celebration was the overwhelming vote of confidence by tenants for Cox telephone services, attractively packaged with video and high-speed Internet access services as the "Community of the Future." With initial penetration rates of more than 95 percent, Cox personnel were throwing their hats in the air. "We're so pleased with the response we're getting," says Gordon Williams, director of broadband services for MDU (multiple dwelling unit) markets. "After a year-and-a-half of work, it's great to see it paying off." Steve Becker, vice president of commercial broadband services, underscores that Cox has "transitioned very successfully from delivering just traditional cable to telephony and high-speed data. Especially in regard to telephony, we're launching an innovative service that most of our counterparts aren't doing."
A happy ending for all concerned—Sonterra residents and management, as well as Cox Communications. The behind-the-scenes path to this happy ending is an interesting story that illustrates Cox's sincere commitment to its customers and its prudent attention to long- and short-range planning.Up-front call...no errors allowed
Cox understood that the potential rewards for being one of the first to dive into wireline waters were counter-balanced by risks that had others walking away from the shore. Says Toonen, "We knew we would be scrutinized intensely by builder clients, other cable operators, telephone companies, vendors, analysts, investors, government agencies, and very importantly, current and potential subscribers." Refusing to jeopardize a reputation built on superior customer service, Cox prudently set out to identify and defuse roadblocks that could impact the Sonterra project.
Navigating a maze of regulatory issues was a first priority, according to Williams. "We knew how important it was to get California PUC approval to operate as a competitive local exchange carrier (CLEC). We began working on these issues in 1995, and it took us the better part of a year to resolve them and receive CLEC certification.More to come
With Orange County growth projections skyrocketing, and approximately 25,000 apartment units as candidates for shared tenant services, Cox envisions a bright future as a full service provider of telecommunications services, with expansion to broader residential markets following very quickly.
By year's end, Cox's Orange County franchise areas will offer their customers digital and analog video, high-speed Internet access, Sprint PCS, and telephony via Nortel AccessNode and DMS-500 technology.
Nationally, Cox plans to begin rolling out wireline services in its largest markets later this year.
"Internally, billing was a significant challenge," explains Williams. "Cable and data services are invoiced on a straightforward monthly basis, with pay-per-view being the only variable. But long-distance telephone service is transactional—so it has to be metered minute-by-minute, and the billing has to reflect that. Cable Master' is our proprietary billing system, and it's one of the best in the business, but it wasn't designed to capture long-distance transactions. "
Cox's information systems team enhanced Cable Master's software to capture voice, cable and data billing. Cox is currently examining customer feedback and issues before it decides whether all services will be billed on one invoice or separately.
But, says Williams, "If the customer wants all three services on one bill, we have that ability."A winning game plan
"We knew that the high concentration of potential customers at the Sonterra environment was definitely an advantage for our first foray into wired voice," says Becker. "We expect faster penetration ramp-up in a newly- built MDU because of the opportunity to sell to every new tenant and minimal local number portability issues."
Mark Davis, director of engineering for telephony technology, who was responsible for system configuration, underscores that theme. "What was significant here, as in any MDU application, was that we had very high customer concentration, so it made sense to push the electronics closer to the subscriber using a cost-effective, off-the-shelf, fiber-fed, digital loop carrier technology."No rookie in voice services
Cox was tuned in to the competitive advantages and revenue opportunities of providing telephone services long before it signed up Sonterra. It had, in fact, already chalked up several years of solid telecommunications experience.
Some highlights :
1992—Cox is the first cable company to invest in Teleport Communications Group, a competitive local exchange carrier.
1993—Cox partners with SBC CableComms to deliver cable and phone service in the U.K.
1997—Cox is awarded an FCC Pioneer's Preference award for industry leadership in making the world's first PCS phone call over cable infrastructure.
Today—San Diego residents can subscribe to digital wireless telephony via "Sprint PCS by Cox."
Cox's choice was Nortel 's (Northern Telecom's) Sonet-based AccessNode with the capacity to provide individual line access (DS-0) for voice service to each apartment. "With the AccessNode," says Davis, "we have a proven, mature product that lets us provide subscribers with all the voice services they're looking for—from basic POTS to advanced services such as digital centrex.
"And, for our high-speed Internet access service with the Cox@Home program, the AccessNode gives us DS-1 and DS-3 connectivity between Sonterra's on-campus LAN (local area network) back to our regional data center and servers. So, using the AccessNode for transport, along with Ethernet routers and hubs, we can provide subscribers with high-speed access to the Internet."
Davis estimates that "right now, about six other apartment complexes are underway in Orange County, and they'll all get AccessNodes. And we'll be deploying many more as we start to crank up." Adds Williams, "AccessNodes will continue to proliferate throughout our network because of the way they serve high-density populations of users."
Located at Sonterra, the AccessNode system connects via Cox's unique ring-in-ring fiber architecture and Nortel's Sonet-based TransportNodes to a Nortel DMS-500 local/long-distance switching system at the Master Telecommunications Center in nearby Aliso Viejo. Able to serve up to 128,000 lines, the DMS-500 has the capacity that Cox needs, and then some. Its compatibility with existing public network equipment means that Cox can establish market operations at the accelerated pace necessary to be competitive with already established incumbent LEC competitors.
Cox has also chosen to deploy the Cornerstone Voice cable telephony system from Antec. Cornerstone Voice is developed and supported by Arris Interactive, a joint venture of Nortel and Antec.
This product allows telephony services to be delivered over a hybrid fiber/coax network—capitalizing on the more than 2,700 miles of cable already installed by Cox in Orange County.Pre-season training pays off
"The fact that we're able to aggressively forge ahead in telephony when other companies are pulling back is a reflection of our strategy over the last five years," declares Becker.
"A key element of that strategy is 'clustering'—85 percent of our 3.2 million customers are in our nine biggest markets. That gives us much higher average system size than anyone else in the cable television industry. With such economies of scale, Cox can more easily afford the fixed costs of getting into the telephone business, plus the talented people to help us roll it out. That's been critical to our strategy.
"The Cox standards for customer service and reliability are not just concepts we dug up a few weeks ago to get into the phone business," continues Becker. "They've been a part of what we've done from our very beginnings. Recognition like the J.D. Power award for the highest overall customer satisfaction among all major cable television companies certainly has contributed to the successful penetration rate that we've gotten on our first rollout."
A recent customer survey showed an almost 85 percent approval rating among Cox's customers. Cox's cable service ranks among the highest in the industry for reliability, thanks to fiber deployment and an innovative "ring-in-ring" system architecture that lets the company-wide network exceed the telephone industry's reliability guidelines for 911 lifeline service.
With a delivery network that combines fiber optic and coaxial cables, Cox is positioned as having a broadband pipe into the home with the ability to deliver video, voice and data services over a single platform. The net result of continuously upgrading to fiber means that today, broadband plant passes virtually all homes within the Cox service area, so Cox can realize added revenue from the extensive capacity and flexibility of the existing delivery network.A good business
The response from Sonterra customers is that they are delighted with telephone service via Cox's "Community of the Future" package. One service provider means one convenient point of contact, lower prices, and enhanced features. The money-saving benefits that Cox offers, such as free repair service, help, too.
From its perspective as builder and apartment manager, Westwood Residential is very pleased, says Williams. "Westwood Residential plans to use Cox again in other developments. They appreciate the close relationship that we develop with the complex as we train leasing agents to present our services, and maintain our high level of customer service."
For Cox, notes Kimberly Toonen, "a big plus is our exclusive marketing arrangement with Westwood. All new tenants get a guided tour from the leasing manager, along with demonstrations and a brochure that welcomes them to Cox's 'Community of the Future.' They hear about our services first. It translates to a very effective partnership."
Steve Becker sums it up for Cox: "Our decision to provide telephone service that many others can't provide began as almost a defensive measure. Now, having gone through this process, we realize it's much more than that; it's turning out that phone service is going to be a really good business for us. Yes, it's a strategy that retains our cable business, but being in telephony and data makes it a win/win."