When Marilyn Humphrey started at Cox’s Roanoke, Va., system as its new general manager last January, she was joining a team that was in the throes of launching a critical new product: VoIP telephone service. "It was something of a moving train by the time I arrived, and it was a matter of making sure it stays on the tracks," she recalls. "The beta test had started in October 2003, so a lot of the initial operating issues had been worked through and the really tough decisions about whether we were ready for prime time and ready to launch had [already] been made." Humphrey was tapped for her cable and telecom experience—a valuable mix when it came to managing the launchpad for Cox’s VoIP product. But she credits Roger Baiers, VP for Cox Business Services in Roanoke, for the trust Cox corporate in Atlanta placed in the Roanoke system’s ability to launch one of its most important services. She also credits Baiers for swiftly turning the trial into a local success story. "We are one of the smaller Cox systems, so Roger wears about three hats," says Humphrey. "He has responsibility for the Cox Business Services organization, for network engineering—everything from our head-end to the guys making sure fiber’s up and running properly—and for overseeing our VoIP launch, which also meant getting everyone here as knowledgeable as possible about every aspect of this new product." "We just happen to have been fortunate to have been selected as the site launch for the company," says Baiers. "We had a lot of help from our folks in Atlanta, and a lot of calls to make sure we were ready and we were all on the same page." The Nod From Corporate The Roanoke system "had telephony expertise in-house, not just me," says Baiers, who worked for the incumbent local exchange carrier for 26 years before joining Cox. "This location had been doing CAP [competitive access provider services] and quasi-CLEC [competitive local exchange carrier] business…so we had to go outside to hire very few people." Other factors that led to the selection of the Roanoke system as Cox’s VoIP leader: it was among the first of Cox’s systems to launch high-speed Internet; it had a fully upgraded plant; and its relative smallness meant a test would be manageable and scalable, so VoIP wouldn’t have to launch node by node, as would happen in a larger market, but across the entire system. "It’s not like launching in a San Diego or a Hampton Roads," Baiers says. Besides engaging its VoIP vendors (Cisco for the backbone plus Scientific-Atlanta, Nuera, Fujitsu, VeriSign and others), the system had to decide which resources would be local, which would come from Atlanta, and whether its soft switch would be local or based in the regional operations center in Hampton Roads. "We had to set up process flows and procedures between the three locations that would make the customer experience seamless," Baiers says. On the customer service side, Roanoke had to learn how to sell a phone product. "[For instance,] what are the hold times associated with processing a new phone customer?" Baiers says. "We heard horror stories from some of our other systems that you need to allow 45 minutes to take a phone order. Well, we’ve found it’s only 20 or 25 minutes." Humphrey and her team sought advice from sister markets that already had launched circuit-switch telephony, a non-IP based service marketed as Cox Digital Phone. "Omaha was the first Cox system to launch [that product] so we always look to them," she says. "What have their promotions been? What did they learn as they went from relatively low penetration to extremely high penetration rates? And how will we evolve over time?" Roanoke’s VoIP service will be sold as Cox Digital Telephone, a company-proven brand name that Humphrey believes distinguishes it from "extremely aggressive" competitors vying for Cox’s high-speed Internet, video and now phone customers. Dish Network launched a local channel last year; 10.6% of Roanoke homes passed by Cox subscribe to satellite, according to Media Business Corp. estimates. Selling "Cox," Not "VoIP" "On the marketing, new product packaging and positioning standpoint the Cox Digital Phone brand is of huge value," says Humphrey. "Our experience here with phone service is absolutely the same as it’s been in other [Cox] circuit-switch markets. The penetration rates occurred just as quickly, customers adopt it just as quickly, they’re just as satisfied—there just is not that much difference from a deployment standpoint. So it has become the model, and Cox has made the decision to quietly expand deploying [VoIP] service to other markets." There’s still some confusion between Cox’s service and the VoIP services that are Internet-based, like Vonage or AT&T. "But it’s just not that interesting to customers to have to figure out that difference, which is why from our customers’ perspective here in Roanoke we don’t even talk about this as a VoIP service," Humphrey says. Even before the marketing efforts started in June, the competition started sharpening its knives. "Verizon did come out with a very aggressive campaign on their bundled, unlimited long-distance phone service with the high-speed data product for $79.99," says Humphrey. "They were running full-page ads, so until we were able to launch our full-blown marketing efforts that was frustrating to watch, because we could just see our market evaporating." Since then, the Roanoke team has stayed focused on getting the word out. "The challenge has not just been keeping our message out there, but keeping it simple enough that customers believe it’s worth calling us to ask about the service," she says. "All our research shows that people don’t care about the technology of the product—it’s the benefits of the product. And that’s our advantage." Three Simple Phone Packages With the next phase of Cox’s VoIP rollout—including a launch in Tulsa, Okla., Baton Rouge, La., west Texas and southwest Louisiana—starting this fall, Humphrey is loathe to divulge results from her launch for companywide competitive reasons. Using insights gleaned from other Cox systems, Roanoke tested different price points for VoIP before settling on the final three-package lineup that launched to customers June 1, when the system started the all-out marketing efforts for the product, she adds. The packages are straightforward. "Connection Unlimited" offers unlimited long-distance and nationwide minutes plus local service for $49.95 a month. "Connection 60" offers the same set of 14 features plus voicemail, but only 60 long-distance minutes, and costs $34.90. "Basic Line" costs $12.20 for existing Cox customers, who must pay extra for features such as voicemail ($4.95) or caller ID ($7.40). Basic Line subscribers not taking any other Cox services pay $13.59 per month. As with all of Cox’s pricing, the deals are better for bundled phone customers, who save $10 each month on their Cox phone bill by also taking video and Internet services, or $5 a month for subscribing to just one of them. A current promotion shaves 50% off either Connection phone package for three months, including free installation. Next Up: Business Phone Service Although Roanoke recently introduced DVR service and last year launched high-definition TV channels, the focus is on picking up the phone biz. Next up: launching a commercial VoIP-based solution to Cox Business Service customers this fall—another company first. "We’re in beta for that through the end of October and in November/December," says Baiers. Cox will position it much like it did residential: small business bundles with data, video and voice. "We won’t launch larger business voice service until phase two, likely first quarter next year, which depends on devices that are yet to be manufactured and approved by Cox. [This will] go into universities, large businesses, call centers and the like. We’re working with the vendors so they’re making what we need. "We’re still moderately limited by the hardware and gear that the vendors have for us," he adds. "We have some vendors that we’re testing, but for now we’re capping our offering at 16 lines or less." The Roanoke team is keeping a close eye on other phone services, such as wireless. "We’re definitely interested and watching, although that’s a question for Cox in Atlanta," says Humphrey. "Verizon just came out with an integrated product that crosses wired and wireless boundaries, and of course that’s something that competitively we have to look at." That said, Humphrey understands that Cox Roanoke can’t tackle everything at the same time. "With [commercial VoIP] launching and residential VoIP under way, we’re really focused on this phone product and doing it right," she says. "[This] was a launch year with a tremendous amount of technical learnings, operational learnings and new methods and procedures; 2005 and beyond is when we show the company how the promises will be kept with the same kind of market results that have been experienced in circuit-switch markets."

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