September 12, 2007

Home Networking

Cox Rolls Out Home Remedies

By Carl Weinschenk

Cox sees home networking and computer services as a revenue-generating opportunity. Such services, the operator believes, also make it easier to add to the services already sold to subscribers and, perhaps most importantly, are a golden opportunity to gain a higher level of their trust.

During the past few years, several national organizations, most notably Best Buy's Geek Squad, have joined local mom-and-pop operations in providing in-home support, which covers everything from hardware and software problems with individual machines to setting up and troubleshooting networks. These initiatives seem to be so closely related to cable's core mission and so important to its future that it is surprising only Cox seems particularly active.

That may be changing. Martin DeBono, the vice president of business development for Pure Networks, said it is cooperating on a rollout and two trials with cable operators, none of which he named.

The rationale for making a move now is clear: The proliferation of networked devices means that a higher percentage of homes will have issues. If these challenges are not met, the customers could do three things: churn completely, remain as subscribers at a lower level or call in experts from outside the industry. In the last scenario, the outside firm would control how new elements are configured.

This isn't only about today's base voice, video and data. It speaks to coming services such as home security, home data backup, family member-specific VPNs (segregating, for instance, a telecommuter's work from the rest of the family's) and other services for which setup is nonincidental, DeBono said.

"I think it's one of those things that is a huge opportunity and an absolute necessity. If MSOs want to continue to grow revenue, they will have to continue to deliver (additional) services in the home," he said. "In the future, this will be mission-critical, and then MSOs will have no choice but to support it."

Cox is aggressively attacking the market, according to Director of Strategy and Development Jessica Shrum. In January, Cox relaunched Cox Tech Solutions in San Diego, Orange County and New England. The company just began offering services in Arizona and will set up shop in two more regions this year. The results of all those markets will be assessed and a game plan developed for more rollouts in 2008, Shrum said.

Make money, keep subscribers happy

Cox Tech Solutions is designed both to make money and keep customers satisfied. "We definitely hope it is a revenue generator," Shrum said. "The Geek Squad has very successfully monetized. The big premise is to provide an end-to-end customer experience."

Shrum said different models were tried in the early markets. Models varied from emphasizing home visits, relying more on phone service, and even picking up machines and bringing them into the shop. The research led Cox to create an approach - which is consistent across all the markets - centering on a blend of phone and field service, Shrum said. Pricing ranges in increments from $59.95 per hour for basic remote phone support to $149.95 per hour for advanced on-site help. Additional half-hours are charged $50, the presentation said.

So far the results are good, Shrum said. Malware and viruses are the biggest software issues. Help on Vista installations is a common request. Hardware-focused requests include installation of more RAM. Establishing home networks and setting up iPod connectivity also are big issues.

The reality is that Tech Solutions is entering an area of expanding competition. In a paper delivered at this year's Cable-Tec Expo, Shrum and co-author Field Service Vice President David Colli outlined the basic approach, known staffing and advertised pricing of five competitors. In addition to Geek Squad, competitors include Fire Dog from Circuit City, Tech Pro from CompUSA and internal services from AT&T and Verizon. Pure Networks has an arm, Network Magic, which works with service providers.

Shrum said that Cox Tech Solutions could eventually be marketed to nonsubscribers. The promise of the initiative is indirectly suggested by a slide used in the Cable-Tec Expo presentation outlining risk factors of such a service. The lion's share of potential problems are those that would exist in any entrepreneurial endeavor, including entering competition against entrenched players and the risk to investment should the venture fail. The only unique risk seems to be potential liability claims from the operators' remote software.

Just because a market exists, however, doesn't mean that it will be easy. Both DeBono and Shrum said their organizations have learned a lot. For Cox, the idea is to launch uniformly across the entire region simultaneously and carefully determine the right mix of field and phone representatives. She said that if problems can't be solved over the phone, it is important to give customers a realistic estimate how long the job will take to finish.

- Carl Weinschenk