BY MAVIS SCANLON Rhode Island is a little state with a big reputation. Unfortunately, that rep is for government corruption. The misuse of public funds ran rampant at the state’s highest levels in the 1980s, a decade in which Mayor Brian Sarault of Pawtucket was also convicted of soliciting bribes from city contractors. The ’90s ushered in a host of other scandals, not the least of which was the indictment on bribery charges of former Gov. Edward DiPrete. These events precipitated unprecedented reforms in Rhode Island’s government, but even that didn’t guard against further corruption. In September, former Providence Mayor Vincent “Buddy” Cianci was sentenced to five years on racketeering conspiracy charges in connection with a City Hall bribery scheme; the flamboyant pol reported to a New Jersey federal prison in December. David Cicilline, the new mayor of the state’s capital and largest city, will have to continue the revitalization of Providence that began under Cianci. Known as the cradle of the industrial revolution, Rhode Island, with its 400-plus miles of coastline, was once a manufacturing and textile state. But those industries declined steadily after World War II, virtually disappearing in recent decades. In an effort to boost the state’s economy, government officials have lured new industries and are counting on services, health care, tourism and technology as future economic drivers. In that respect, Cox New England, which serves virtually all of Rhode Island (population around 1 million) fits right in. “The New England area has gone through some tough times,” says Paul Cronin, who was named VP and GM of Cox New England in 2002. But Cox is part of a technology revolution that’s rejuvenating cities, such as Providence, he notes. Jim Robbins, president of Cox Communications, played up Cox’s $435 million investment in upgrading Rhode Island’s cable plant to full fiber-optic capability in a November speech before the Greater Providence Chamber of Commerce. “Rhode Island is the most broadband-ready state in the nation, and one of the few places that has a broadband network that extends statewide,” he said. “The percentage of Americans who have access to broadband technology nationally is about 70%. Here in Rhode Island, it’s nearly 100% accessible.” That investment is helping attract businesses to the state, he added. Cronin, who spent two years as the system’s VP of customer care, touts Cox’s commitment to customer service. “We invest in it,” he says. “It’s near and dear to us.” Having spent years at Amos Hostetter’s Continental Cablevision, Cronin says that “localism,” a focus on employees and regional autonomy in operations were philosophies that were firmly embedded in him during his years at Continental. “We spend a lot of money differentiating ourselves,” he says. Cox New England employs about 1,500 and is building a new $10 million call center in West Warwick that will need an additional 200 employees. As the third-largest division in the Cox cable family, New England is an important system. Although Cronin won’t disclose subscriber numbers for cable modems and telephony, marketing VP Doreen Studley says the system is at or above the Cox average for those products. Cox ended the third quarter with 1.7 million digital customers, representing digital penetration of about 27%. The company’s telephony subscribers reached 651,000, for a penetration rate of 17% of telephony-ready homes, and its cable-modem subscriber base climbed to 1.3 million, for 13% penetration. The system itself has grown tremendously — from 100,000 customers in 1994 (60,000 in a J-shaped area outlying Hartford, Conn., and 40,000 in Rhode Island), to about 450,000 today, 300,000 of which are in Rhode Island. It wasn’t always so. In the period of 1989 to 1990, Cox served just three towns in Rhode Island. A spurt of acquisitions and systems swaps led to its current size. In the past six years, virtually the entire plant — over 7,600 miles — has been upgraded. Rhode Island’s small size (at just 50 miles from west to east it is the nation’s smallest state) eased the strain of explosive growth. “From a geographic standpoint it’s pretty condensed,” Cronin says, “an operating area less than the size of Phoenix.” Consolidated back-office operations and network connectivity have helped as well. Another plus for Cox is that people in the area tend to stay put — 58% of Rhode Island’s population lived in the same location as in 1995, according to Census 2000. That means lower move-related churn. With the system upgraded to 750 MHz two-way active, it can offer the Cox bundle of video, data and telephony. The latest product introduction was home networking, with a promotional price of $199 for a wired solution and $299 for a wireless network, plus monthly maintenance. One of the biggest challenges in completing the upgrade, which was finished about a year ago, was continual access to labor and materials “Everyone else was doing it,” says Alan Gardiner, VP of network services for Cox New England, referring to the late 1990s telecom explosion and ensuing construction and expansion. “It became a good exercise in project planning.” In upgrading, Cox upheld its philosophy of customers first, Gardiner says. “We tried to have a minimum impact on people’s lives.” They stuck with a plan of upgrading 75 miles a week and tried to limit service disruptions. Prior to construction, the company placed notices in the daily newspapers and then mailed notifications of service disruptions to customers. This was followed by the placement of door-hangers 24 hours before construction started on a particular street. The other big thing in keeping customers’ needs uppermost was to deploy new services as soon as they became available, Gardiner says. Test and commercial launches were done at the same time. Technicians then went in to clean and “sweep” each node to enable telephony deployment, which requires an impeccable plant. Plant maintenance becomes even more important when customers depend on cable lines for telephone service. Here technology has been a boon for the system. With the upgraded plant and new service offerings, Cox now runs a 24/7 maintenance operation, so any service interruption can easily be attended to. New tools designed to monitor the network’s status and pinpoint any trouble spots have been a tremendous help, Gardiner says. Right now Cox, which serves over 90% of the cable market in Rhode Island, is overbuilding the towns of Bristol, Barrington and Warren in Bristol County. That has caused contention with the local provider there, Full Channel, a small operator with about 10,000 subscribers that also offers a bundled package. Full Channel has taken Cox to court to try to stop it. “Full Channel had opposed our effort to compete at the outset,” says Cox spokesman John Wolfe VP of government and public affairs. “The state’s division of public utilities and carriers, which licenses cable operators [in Rhode Island, cable franchises are granted by the state, rather than a municipality] spent two years evaluating our application to build out our network,” he adds, a decision that Full Channel appealed. Typically it is the upstart cable operator that enters the competitive fray by overbuilding an established provider rather than the other way around. Cox expects its build-out in Bristol County, the state’s smallest, sandwiched between Newport and Providence counties, to be completed this spring. As the fourth-largest MSO, Cox clearly has deeper pockets than Full Channel, but Cronin says it isn’t about the money or outspending competitors. “The fact is, we have a fully built broadband network with a bundle of services,” he says, noting that residents of the county are interested in such services. Right now about 25% of new Cox customers from Bristol County are either DBS or noncable customers, Cronin says. Full Channel execs could not be reached. Although DBS hasn’t made terribly big inroads in Rhode Island — satellite penetration is only around 8% — in Bristol it’s about 18%, according to industry tracker Guide Trend, notes Cronin. On the telephony side, it’s Cox who’s the little guy, competing with SBC and Verizon — two “very formidable competitors,” says Studley, whose background in telecom marketing, including stints at NYNEX and Bell Atlantic, has given her a deep understanding of the telephony product. Cox New England also offers telephony on the commercial side, one of several markets where Cox Business Services operates. CBS has been a boon for the state in helping to attract businesses to formerly run-down areas. One advantage Rhode Island has its geographic location in the middle of the Northeast business corridor. That makes it ideal for satellite offices, says Mark Scott, GM for Cox Business Services New England. The total market opportunity for telecom services in the area is about $900 million, according to Dun & Bradstreet estimates, he says. “Obviously you’re not going to be able to capture all of that market,” he says, “but just putting a dent in that is pretty significant.” CBS has worked with the state economic development office to make sure new developments are broadband-ready and has taken an active role in the business community under Scott’s tenure. That approach has been successful in areas such as the Jewelry District in Providence and the Quonset Davisville Port and Commerce Park in North Kingston, R.I., a former military base. Both are viable and attractive business communities today. Jim Winoker, chief executive of Belvoir Properties, which owns about 20 buildings in the Jewelry District, says the availability of broadband communications “is something that new tenants always ask about. We are right on top of that because we have broadband in the whole district, and it’s thanks to Cox.” He adds that although it took some persuading, once they jumped in, the company “came in with both feet.” The Rhode Island Economic Development Corporation calls Rhode Island the “jewelry capital of the world” because of the number of jewelry manufacturers there. But by the mid-1970s, Providence’s Jewelry District, which is near the downtown business district and minutes away from major highways, was run down. The renaissance of the area has picked up steam in the past few years, and is now one of the hottest in the city. Smart buildings, wired with high-tech fiber optics, have helped. One competitive edge CBS has on the incumbent phone providers, Verizon and SBC, is its extended Ethernet capability, which gives users more flexibility in designing networks. That’s appealing to the many universities and hospitals in the state. Scott expects the incremental investments Cox has had to make in CBS (as the system was upgraded Cox made sure it got close to big industrial areas) to pay off. After four years, the investments are starting to generate returns. The first two years were spent primarily in business development, but Scott says in the last two years business has grown 75% each year. Still, competition from the incumbents is stiff, he notes. The challenge for the business services group is in leveraging the current network as much as possible, a goal he says that can be accomplished by very targeted marketing to small- and medium-sized businesses. “Every sale is evaluated so that it is a profitable sale,” Scott says. “It’s a matter of managing capital to increase free cash flow.” Adam Hamblett, VP and GM of CableRep New England, which reports to Cox corporate and handles the division’s advertising, is also optimistic about advertising potential in the area, but just a tad less so than Scott. CableRep sells a total of ten zones in Connecticut and six in Rhode Island. It also represents systems serving about 4,000 subscribers in a deal set to expire at the end of this year. With some of the biggest advertisers in the area, such as the large car dealers, CableRep will compete on a cost-per-point basis with broadcast. But many of the smaller regional and mom-and-pop advertisers go for the targeting and efficiency of cable. Buyers, be they at agencies or at the local furniture retailer, used to think of radio as the first ad vehicle for their messages, Hamblett says, then broadcast, then cable. “It’s almost like we were what’s left over,” he says. “Now, we’re the first phone call.” Still, he notes, the biggest challenge for cable ad sales is to continually get the message out. There are a lot of converts who believe in the strength of cable as an advertising vehicle, but there are also a lot out there whose No. 1 speed dial is to the broadcasters. “My goal,” says Hamblett, “is to get 100% of the people to call cable first.” Cronin used to run the division’s customer care operation. In between that job and his current one he served as interim VP/GM of Cox New Orleans, where he negotiated and secured exclusive NBA programming rights as part of the Charlotte Hornets relocation to New Orleans. Cronin had plenty of experience as director of field services at MediaOne in Massachusetts, and before that as GM of Continental Cablevision’s Wilmington and Marlboro systems. He started in cable in sales and held sales manager positions at New England Cablevision and Continental Cablevision. Scott came to Cox in 1998 after 24 years with NYNEX, where for a time he was director of system engineering at NYNEX Video Services. Before being named to his current position, Scott was VP of network development, where he oversaw the rollout of the full service network. As VP of Cox Business Services, Scott is ultimately responsible for sales, support, service delivery, service assurance and overall customer satisfaction. A native of Galway, Ireland, Gardiner helped run his family’s cable business overseas before coming stateside. Now he knows Cox New England’s cable plant like the back of his hand. He should. He oversaw the completion of the upgrade that allows the network to offer Cox’s full complement of services — video, voice and data. In his current role Gardiner is responsible for running the network, as well as engineering, design and construction. With more than 15 years of marketing experience in the telephony field, Studley knows the subject. She currently leads the development and execution of all marketing and sales strategies for Cox’s telephone offerings as well as video and data. She also played a key role in getting the company’s bundling strategy off the ground and launched multiple product sales campaigns. She came to Cox from a Verizon-affiliated e-commerce company. Hamblett’s track record includes a couple of eye-popping statistics, such as the 34% increase in revenue from 1997 to 1999, to over $7 million, and the increase in cable advertising market share to 23% of all local advertising. He also helped integrate TCI Media Services after its acquisition by Cox and helped transition Colony Communications to CableRep. While an account manager at National Cellular Telephone from 1986 to 1988, he won salesperson of the month eight times. EMPLOYEES: 1,500 MILES OF PLANT: 7,654 PERCENT UPGRADED: 100% HOMES PASSED: 640,000 BASIC SUBSCRIBERS: 448,000 (300,000 R.I.; 148,000 Conn.) ANALOG BASIC RATE: $40.99 DIGITAL RATES: $8.95 (standard service); current promotion offers $10 discount for three months, plus $10 off installation. HIGH-SPEED MODEM RATES: Cox customers, $39.95 with modem purchase; non-Cox customers, $49.95 with modem purchase TELEPHONY RATES: First line, $11.95/month; second line, $9.95/month; installation $29.95. Rates do not include long distance. LOCAL AVAILS: 42 channels SOURCE: COX COMMUNICATIONS Comparison of Cox subscribers in Rhode Island to the top 75 market average.

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