Follow the Leader

Cable World, Dec 2, 2002

Byline: STACI D. KRAMER

This time last year Cox Communications and Comcast were neck and neck in the race to merge with AT&T Broadband and emerge as the nation's largest cable provider.

Cox was the loser. Or was it?

While Comcast officially took the No. 1 spot last month by closing the AT&T deal, executives at Cox, now the fourth-largest MSO, were doing what they've done all along: outperforming the sector in key areas, bucking the trend by adding new basic video subs and running a successful three-pronged communications business.

How does Cox do it? By building on a foundation of strong and deep management backed by the company's majority shareholder, the Cox family. By trusting instinct but testing before execution. By matching marketing offers with back-office integration. By encouraging innovation and learning from mistakes. By prizing individuality while practicing teamwork.

All of which makes possible Cox's success in rolling out high-speed data and telephony, then bundling services into one bill.

"Cox has historically been a true leader and trailblazer in the development of our business over many, many years," says Michael Willner, CEO, Insight Communications and chairman of the NCTA. "It should come as no surprise that they're leading the industry in the diversification of our revenue streams.

"They understand," Willner adds, "that these businesses we're in should not be run as silos."

Cox EVP of operations Pat Esser recalls hearing Cox president and CEO Jim Robbins say years ago that he dreaded the day when a customer calls and is told digital would be installed on Monday, data on Wednesday and telephone service on Friday - and then gets three bills. "'That's not the business I want to be in,' I remember him telling us. As we've gotten these businesses off the ground, it's always an approach to 'be competitive but think about what the customer wants.' They want simplicity. They want service. They want savings."

Then Robbins made sure Cox could deliver. Convenience. One service call. One bill. As marketing SVP Joe Rooney says, "It's the bundle, baby."

Bundling is backed up by integration in every facet of the company, from customer service to the single IT platform across all products. AT&T was able to deploy the same products and offer bundles, but one of Comcast's most difficult tasks will be integrating after the fact. At Cox, it's part of the foundation, not an add-on.

"In fairness to AT&T, they could never get one IT platform going, it was a multiple number of platforms sewn together," says Esser. "When you called an AT&T call center - I can only say this because I'm an AT&T customer in Atlanta - no one service representative on the phone can help you because your bill doesn't come from a single source, it comes from multiple sources. No single-service tech can come to your home. They didn't integrate the processes. We spent so much time integrating the customer processes because a) it's a better customer service experience and b) it's cost-savings over time. That was important to us from day one."

Comcast EVP of marketing Dave Watson admires what Cox has accomplished. "One of the keys to a successful bundling strategy is to be operationally sound," he says. "They have built the solid operational foundation."

Cox has 6.4 million customers in 23 states, but none are in Atlanta. Ironically, Comcast's merger with AT&T makes Brian Roberts the new "cable guy" for much of Cox's HQ staff.

It's a continual process as products enter a market. "When we've launched a product, while we have a group that works on the launch of it we have a fairly large group that works on integrating the product at the same time," explains Esser. "It would be bizarre for us not to think about it that way."

Esser credits Robbins for that way of thinking. "He and Jim Kennedy always had a vision of this business that was a multiprofit business."

In 1998, Cox continued that drive for multiple revenue streams by spinning its nascent commercial operations into a division reporting to Esser. Today, Cox Business Services has $250 million in revenue, up 40% over last year, and considerable growth potential providing high-speed Internet, switched voice services and long-distance; and dedicated voice, data and video transport services. Recent deals include a contract from the state of Oklahoma, making Cox the first cable company to wire lifeline services to a U.S. state capitol complex (the services include digital voice, data and commercial video service). Other projects are more innovative, such as the $27.9 million contract with the Arizona School Facilities Board to create the Cox Education Network for providing educational resources across the state that can be accessed from school or home via the Internet.

Cox backs all of its products with a commitment to customer service that began soon after Robbins took over. GM performance is measured in large part by how their systems match up to the company's customer service standards. Systems are ranked quarterly and the results distributed across the company.