Better Connections
Cable television giant Cox Communications Inc. made a groundbreaking advance move into telephone service Thursday, as it unveiled its first complete offering of video, voice and data services at a new apartment complex here.
The Atlanta company’s offering of all three services over a single network is the only one of its kind in the state, and one of a handful in the nation. It could provide a view of the future of the telecommunications industry following its deregulation by Congress last year.
For the first time, cable and telephone companies are free to invade each other’s territories. The stakes are enormous, particularly for cable companies, which are under siege from satellite TV services and have seen subscription growth slow to a crawl in recent years.
“It’s a critical stage for all these companies,” said Spencer Grimes, an analyst at Smith Barney in New York. “Much of their future is built on revenue growth from [phone and data] services.”
Cox selected the Sonterra apartment complex in Foothill Ranch largely because it is in the heart of the company’s shiny new fiber optic network in South County. The company has spent millions of dollars in recent years replacing older coaxial cable with new fiber.
Cox said that 90% of the 140 renters at the unfinished complex have signed up with the company for cable TV and local telephone service, partly because of discounts and the absence of installation fees. About 11 of the residents have also subscribed to Cox’s Internet service. All three services are carried over the same lines.
“We’re the only ones who can provide all these services,” said Leo Brennan, general manager of Cox’s operations in Orange County. “That gives us an advantage.”
Still, the trio of services is so far available only at the Sonterra complex. Brennan said other regions of Orange County, where Cox has 210,000 cable TV subscribers, could have access to the range of services by the end of the year. It could be years, however, before such services are widely available among the company’s 3.2 million subscribers nationwide.
Meanwhile, other companies are making aggressive pushes of their own. Two days ago, Comcast Cablevision in Orange County announced plans to begin offering Internet access later this year. And telephone giant Pacific Bell is expected to begin delivering wireless television in Orange County by midsummer.
Cox is considered one of the most aggressive cable companies in the nation, but is venturing into these new markets with commendable caution, analysts said.
“No one is going into this furiously, because you only get one chance to gain the hearts and minds of consumers,” Grimes said. “People can live without cable TV, but if you pick up your phone and there’s no dial tone, that’s a big deal.”
In fact, many industry experts give phone companies an edge over their cable TV rivals because the latter generally score poorly in customer service rankings. Phone companies also have smooth-operating service and billing departments already in place.
But Brennan said Cox has hired about 100 new employees locally in the past year, and has gotten high customer-satisfaction marks in a recent survey by J.D. Power Inc.
Cox’s telephone service costs $16.45 per month with unlimited local calling. The company also offers long-distance service through Sprint. Internet access costs $45 per month for Cox cable TV subscribers, and $55 per month otherwise. There is also an installation charge that ranges from $100 to $175.
That makes Cox’s Internet service expensive compared with the $20-per-month rates most Internet access providers charge for service over ordinary phone lines. But Cox promises data transmission rates of 1.5 megabytes to 3 megabytes per second, or at least 45 times faster than traditional modems.
