By Kimberley Donoghue PBN Web Editor Twitter: @kydonoghue
Five Questions With Philip Meeks
“It’s an evolutionary process. We’re not going to wake up tomorrow and be a huge player in the health care applications [field]” said Philip Meeks, senior vice president of Cox Business about the unit’s plans.
By Kimberley Donoghue PBN Web Editor Twitter: @kydonoghue
Philip Meeks, senior vice president of Cox Business, was touring Cox’s nine national P&L centers last week.
“Of the $15 billion that is Cox Enterprises, about $9 billion comes from Cox Communications, [and Cox Business is] $1 billion of that,” said Meeks. Last time he spoke with Providence Business News two and a half years ago, that figure was nearer to $750 million. “So we’ve had some nice growth,” he noted.
Meeks, hoping for some relief from Atlanta’s sweltering heat, was met with 91 degree temperatures in Providence. He stopped into the PBN offices to chat about the company’s plans for growth over the next six years, which include adding more staff as the company ventures into new markets.
Meeks skirted questions related to Cox decommissioning its build-out of a 3G network, the potential impact on the possible AT&T-T-Mobile merger on Cox, and whether or not Internet access is a human right.
He did, however, say that Cox is pro-competition and that he is believer that a free market drives and accelerates technology adoption.
PBN: Cox Business reached the $1 billion benchmark; you say you get this question all the time but I think it’s worth asking again: How do you quickly do you find the next billion?
MEEKS: A lot faster than we found the first. There is a significant market opportunity for us. If you look at the 18 markets that we do business in, just in the commercial space – excluding wireless – we view the telecom opportunity as a $7 billion opportunity. So we’re $1 billion of a $7 billion opportunity.
Despite the drag on the economy - and the economy here has been about as bad as any of the markets that we’re in, we really have had sustained growth in the commercial space. And if you ask the question: Why are you growing? The answer is that we really serve an underserved market.
We have 267,000 customers; about 85 percent of them are very small businesses – which we define as 19 or fewer employees – which says to us that that market has been pretty underserved by the ILECs (incumbent local exchange carriers) - the Verizons and the AT&Ts of the world … so we’re taking customers from them, frankly.
We’ve got the right network; we’ve got products that we’ve built specifically for small business customers; we’ve had a long-focus on customer service. But I think the main reason that companies do business with us is because we have local people in local markets.
PBN: So is your competition the same across the country?
MEEKS: If you look at a map of the country, we share the most footprint with CenturyLink (a Monroe, La.-based company), so they’re our largest competitor in terms of market coverage. They’ve had a tremendous growth trajectory, principally on acquisitions. They’re mostly in the Western states.
Then behind that, then our footprint is competing against AT&T … and then Verizon; those are our main competitors and then in all markets you have small, secondary … tertiary companies.
We do business as a locally-flavored company. We have resources in [our] markets that provide sales, sales support, sales engineering and customer care for those small businesses within the markets, and that’s a very different model than the large ILEC [companies].
The reason that we can do – and they don’t do it – is we have our residential business and our business side come together; my boss is where they intersect. At Verizon, the residential and business sides really don’t intersect until the chairman’s office, so they have a harder time providing shared resources in markets that do things for both commercial and residential customers.
I think that’s the big differentiator for us in the marketplace.
PBN: Technology-wise, what developments has Cox made since the last time we spoke nearly three years ago?
MEEKS: We’ve launched VoiceManager, voice over IP platform, and New England has been one of the key markets where we got early traction. That’s launched in all markets.
We’ve made enhancements to our Internet access platform, CBI, where we stacked three applications: hosted security, hosted commercial email, and online storage. That’s really helped us shift our business away from a pure product play toward products and services.
We’re touching customers in different kinds of ways. We’re providing all the communication needs of small businesses.
PBN: What’s the growth strategy to get to that next billion?
MEEKS: In current trajectory, we will be a $2 billion business in six years. It’s a number that I’m comfortable that we can make as well.
We’re going to do that by doing what we’re doing right now. Our objective is to double our market share in 6 years, which will bring in over half the billion.
And we will do that by:
Investing considerable dollars in Web enablement and making sure that we are much more robust in the future on e-commerce, e-care … and making sure customers can interface with us in whatever way they want to.
Creating partnerships with systems integrators and value-added resellers and sales agents…to get more diversity of our distribution channel. Currently, we’re predominantly a direct sales organization, so we’re looking to build on that and diversify our distribution channels.
The second thing is we’re focused on “large locals” – companies that are geographically densely concentrated within our footprint: hospitals, universities, etc.
There’s focus on three key verticals: education, government and health care and turning our products into solutions that are specifically designed for them. For example, [with the federal government’s digitization of medical records] companies like us can securely store and transport your medical records. We’re not the only company aspiring to do that.
PBN: So does this require more infrastructure for the hospitals, universities, etc.?
MEEKS: It depends, if they’re customers of ours, typically we’ve already built the physical infrastructure, but what I want to do is take it to the next level where we’re really putting additional applications on top.
Our goal is … to re-purpose our product and turn those into vertically aligned services. Some of that is aspirational, we don’t have the expertise within our company to do that right now. Over the next several years we need to bring in [experts] in those three keys areas.
Our strategy is to bring in $250 million of our next billion from these three key locals.
PBN: What do you think is the biggest revenue generator of those three areas? Is it a concern about overextending the company when you talk about branching out into areas that Cox has no previous experience in?
MEEKS: Health care, by far.
You always have risk when you move beyond your present core capabilities. What we’re looking at with these three verticals is - we’re already deeply into those verticals now - we’re deeply into them from a telecom transfer perspective, so I don’t think it’s a huge leap of faith. And it’s an evolutionary process. We’re not going to wake up tomorrow and be a huge player in the health care applications [field].
The final quarter of the billion will be made by the wholesale business […] It’s really growing significantly and one of the drivers of that is wireless backhaul. We fix the problems carriers have caused because everyone has smartphones. The big providers have capacity issues. What we do by wireless backhaul is provide physical infrastructure – fiber pipes – that connect wireless towers together. That’s a huge opportunity for us.
Cox Business is part of Cox Enterprises, which is a $15 billion, privately-held company headquartered in Atlanta. Cox Enterprises owns Cox Media Group, which owns TV, newspapers and radio stations, Manheim – wholesale automotive platform – Autotrader.com, and Cox Communications, which Cox Business is a part of.