Six of the seven top MSOs currently offer some kind of Internet service to businesses in their franchise areas, but Cox Communications is probably the furthest along when it comes to offering voice, video and high-speed-data services to both large and small companies.

?We started this business essentially in 1993 and have been growing it ever since,? says Chuck McElroy, VP/GM of Cox Business Services.

AT&T Broadband has moved slowly into the business services arena, currently counting some 3,500 customers in six markets, according to Lindsay Schroth, an analyst with the Yankee Group. Comcast Business Communications isn't disclosing the number of customers it serves but has been offering fiber-to-the-building and passive optical networking for about a year now. Charter Business Networks also offers fiber-to-the-building but has been slowly growing the business. Cablevision Systems is targeting businesses with fewer than four employees and currently counts some 8,000 customers. Adelphia is planning to offer Internet access, Web hosting and other expanded e-mail services to businesses in 2002.

But Cox and Time Warner are aggressively targeting businesses, according to Schroth. ?There is a huge amount of revenue to be made in serving businesses,? she says. ?Cox really got out the gate first, and other MSOs are following suit now.?

Indeed, Cox Business Services, a division of Cox Communications, generated $147 million in revenue for the company in 2001, and the unit should exceed its goal of 50% growth this year, McElroy says. That total only includes voice and data services. If a business wants to have video, Cox Communications handles that service; Business Services is responsible for Internet access and phone services.

To facilitate cooperation between Cox Communications and the Business Services unit, revenues from both are lumped together and GMs' bonuses are based on the total revenue generated by that system, McElroy says.

Cox first began offering competitive access services to companies in Hampton Roads, Va., in 1993. Cox's Orange County, Calif., system became the nation's first cable operation to deliver advanced voice, video and data services over a single network of coaxial and fiber optic cable in 1997, McElroy says. Cox currently offers a mix of bundled business services in Hampton Roads, Orange County, Omaha, Neb., Phoenix, Macon, Ga., Wichita, Kan., Rhode Island and San Diego. The company has been highly successful in signing up schools and governmental agencies, McElroy says.

One such customer is the Mission San Juan Capistrano, which has a school for children in grades K through 8 and hosts workshops, art shows, concerts and other community events. The mission receives cable TV, both consumer- and business-grade Internet access and local phone service from Cox, says Bill McNeely, an IT consultant hired by the mission to oversee its telecommunications needs.

?Cost was a big reason for our choosing Cox in the beginning, but their service is reliable and their customer service is pretty good,? McNeely says. ?They've been a good communicator with us, and they delivered services when other providers said they couldn't do it.?

Cox Business Services serves some 40,000 customers, and McElroy expects that number to grow substantially over the coming years. McElroy estimates that telecom businesses in Cox's franchise areas offering long distance, Internet access and local phone services generate a total $8 billion in revenue every year. He says growth could come from the fallout in the competitive local exchange carrier (CLEC) market. However, Cox also counted some of those CLECs as clients.

?We've been able to get some of their business,? McElroy says. ?But some of those guys were also using our networks to serve their clients.?

Cox Business Systems' network reaches about 20% of the total businesses in its service territories ? or $1.6 billion of the pie ? but that still leaves McElroy plenty of room to grow without having to build plant specifically for the business unit. In Hampton Roads, the business unit has a 35% penetration rate among businesses it can access. ?If I can get that kind of penetration in all our markets, we'll be doing well.?

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