Definitions vary on business markets for cable, telco

While cable operators claim they are pushing--or want to push--services into the small and medium business market to compete with incumbent telcos, there’s a significant disconnect in the definition of small and medium. At the same time, cable operators have some intrinsic advantages they can exploit to capture market share.

Cox Communications, which is has more than 100,000 customers and reported $275 million in business-related revenue in 2003, defines the small business market as anything under 20 lines. The medium business customers are classified as everything between 21 and 100 lines. “In the 21-lus employee category that drives almost 45% of our revenue,” said Kristine Faulkner, vice president of product development and management Cox Business Services.

Incumbents typically use slightly larger numbers for their definitions. In many cases, customers with up to 300 lines still would fall well within the medium business category for many.

Irrespective of definition, though, cable operators have some natural advantages in the sub-100 line category. One of the more important is the fact that cable operators don’t have to worry about eroding legacy services. Many analysts expect cable operators to make significant moves in the Ethernet market in part because most don’t currently offer T-1 services and have no concern about service cannibalization.

At the same time, some question whether cable operators will have the sales infrastructure in place to tackle the market.

“It’s a different selling cycle and value proposition,” said Bill Zakowski vice president of business development for amedia. “There’s a learning curve for them as well.”

Others, though, believe the ability of cable operators to use their field technicians (often non-union employees) in a flexible manner will be a significant advantage.

“One of the advantages they have is they’re typically using their existing field technicians that would setup their basic cable services for these types of services,” said Brian Van Steen, senior analyst for optical networking at RHK. “They do have an advantage over RBOCs in terms in field techs and work details.”

Regardless of any disagreements on their future competitive position, few disagree that cable operators will charge into the SMB market if only because it represents a rich potential source of revenue.

“We are talking about an average of $3000 per month per customer site,” Zakowski said. “The value is there and the willingness to pay is there.”