Ship Comes in for Cox San Diego Customers

Cable World, Dec 2, 2002

Cox launched high-speed Internet service in May 1997. After the two-way data path was confirmed to work community by community, the system launched telephony in May 1998. Then, in January 1999, it went digital. This spring, the system launched its video-on-demand product. FreeZone followed shortly thereafter.

After all of the VOD kinks are ironed out, Cox will roll out subscription VOD, scheduled for the first quarter of next year.

New products bring in about 15% of the system's revenue.

Cox's success with new products may, in part, be attributed to the market it serves. The San Diego market is younger, more affluent and technologically savvier than the national average, according to Scarborough Research data. For example, the area residents are 67% more likely than the national average to own homes costing $250,000 or more. And the area is 19% more likely to have 18-to-34-year-olds than the top 75 markets. When it comes to Internet connections, 96% of the area's residents are more likely to have cable modems than the rest of the country.

These early adopters, combined with Cox's stable history in San Diego, put Cox in the lead when it comes to competition. Overbuilder Western Integrated Networks, which has a franchise in San Diego, filed for bankruptcy in March. And direct broadcast satellite penetration in San Diego is 7%, one of the lowest rates in the country, according to Cox.

"As far as where we're going to be, I mean, I always say our vision is a million-billion, which is a million video customers and a billion in revenues," says the system's VP and GM Bill Geppert. "In order to do that, we need to grow and consolidate the market to a certain extent beyond what it is, and we also certainly need to roll out new products and services and create new revenue steams. So I think we're certainly on that path."

In order to attain this goal, Cox would have to take over one or both of the two systems in its territory - Time Warner Cable or Adelphia Communications. Geppert says he is willing to talk to either system if they want to sell.

Merging systems isn't the only way to expand. Steve Gautereaux, VP of network management, should know. Gautereaux, who started as a janitor and gardener with Cox 34 years ago, upgraded 5,700 miles of plant to 750 MHz of two-way hybrid coax by the first quarter of 2000.

Gautereaux is now focused on expanding the plant elsewhere and bringing in new business. He works with the Cox Business Services division to wire companies large and small with video, data and phone lines.

As of last month, the system was scheduled to add a third switch in its operations head-end, to be completed by April next year. This will allow Cox to offer between 120,000 and 150,000 more phone lines.

Before the hybrid coax system upgrade was completed, Gautereaux doggedly pursued Cox's fiber expansion into Mexico. Eight years ago he applied for a permit to lay fiber across the border; approval was needed from the governments on both sides of the border as well as signatures from their respective presidents.