Cox has been the most successful cable operator in capitalizing on
the market in small and medium sized businesses (SMB) and commercial backhaul
services, a potentially big growth area for cable, according to Sanford
Bernstein Senior Analyst Craig Moffett.
In a report stemming in part from a meeting with Cox business
executives, analyst Craig Moffett said that the SMB market is a $50 billion-$70
billion opportunity, or about the same as the combined residential video and
broadband market.
Cox has revenues on par with those of Comcast and
Time Warner on a footprint only a fifth to a little over a third as large. Both
Comcast and Time Warner are ramping up their SMB revs, Sanford Bernstein said.
According to the report, about 11% of Cox's revenues comes from
commercial services, with Cablevision next at about 10%. By contrast, only 5.9%
of Time Warner's revenues come from business services, and only about 3.6% of
Comcast's. Cox's service is also more heavily in voice than video, with voice
the biggest growth opportunity in the business sector.
But even though that growth market represents yet another blow to
its telco competition and a hedge against declining rates for residential
growth, Moffet says the company remains hesitant to recommend cable stocks
based on the uncertainty surrounding possible Title II reclassification of
broadband service by the FCC.
