System of the Year: Cox Fairfax Is Rebuilt and Renewed

Cox’s Northern Virginia system isn’t the most technically advanced in the country. It’s not the most profitable. It doesn’t have the industry’s best penetration numbers. And it hasn’t rolled out telephony or VOD yet. In fact, Cox executives don’t even consider it one of the MSO’s crown-jewel systems. But Cox Northern Virginia has been named CableWORLD’s System of the Year in the large-market category because it’s close to being grouped with stellar Cox systems such as Orange County, San Diego, Omaha and Phoenix. And considering where the Northern Virginia system was just four years ago, when Cox bought it from Media General, that’s a remarkable achievement. One of the ironies of the cable industry has been that Washington, D.C.-area cable systems—the ones that count politically influential federal regulators as subscribers—historically have been among the poorest performers. It didn’t seem to matter who owned DC Cablevision (TCI, AT&T Broadband or, now, Comcast)—it always seemed to give the industry a black eye in a market where cable needed a particularly good showing.
Similarly, Media General’s stewardship of the Fairfax, Va., system in the mid-to-late 1990s left much to be desired. This left the D.C. market with systems that were rotting relics. These systems showed federal politicians why so many of their constituents hated their cable companies as much as the public utilities. That was the situation Cox faced when it picked up the Northern Virginia system from Media General in early 2000. With a subscriber base that includes FCC chairman Michael Powell, congressmen and Supreme Court justices, Cox identified its Northern Virginia system as one that it needed to improve drastically. System level executives felt that pressure to improve immediately. “We recognize that every day,” said Gary McCollum, VP and general manager of Cox’s Northern Virginia system, of being in the “front yard” of the nation’s capital. “We need to be a showcase in every single metric.” For McCollum, a GM who’s been known to make surprise visits to his customers’ homes to find out what they are thinking, that means getting up close and personal with some of Fairfax County’s most famous residents. During the four-year upgrade process, McCollum made a point of updating local politicians and U.S. congressmen. He also established a relationship with Chairman Powell, a noted techie who is “particularly interested in our DVR product,” McCollum said. McCollum’s charm offensive has been effective in turning around the community’s perception of its cable system. But the most effective measurement has been the system’s stats, which stand as proof of the community’s acceptance of Cox’s costly upgrade of 4,300 miles of plant ($500 million in the first three years). Among all Cox systems, Northern Virginia has experienced the fastest growth for digital cable and high-speed Internet in terms of net adds. It boasts the third-highest high-speed data penetration of all Cox systems. And it is battling with Orange County, Calif., for the highest penetration of digital-to-basic subs at 51.6%. It counts 255,000 basic subs and 375,000 homes passed for its 860-MHz system, which uses head-end equipment and set-tops from Scientific-Atlanta, execs said. And while it doesn’t offer telephony or VOD yet, the network upgrade makes launching those services in Northern Virginia more likely by 2005.
What’s particularly nice about Cox’s Northern Virginia story is that executives freely admit that the system is not yet where they want it to be. They are quick to point out that the system is in the fourth year of a five-year plan. “We’re not there yet,” McCollum told us. “I don’t want to kid you. But we’re nine months ahead of where I thought we’d be.” The Early Days To appreciate where Cox’s Northern Virginia system is today, you have to take a look at where it was four years ago when Cox bought it as a fixer-upper from Media General. “When we acquired it, it was in really rough shape,” said Cox corporate’s VP, operations, Claus Kroeger. “Employees were burned out. Our relationship with Fairfax County was very, very poor. All those things have turned around, and now Northern Virginia is finding its place among the best Cox systems.” Each member of the system’s management team talked about the community’s response to Cox in the early days of the MSO’s ownership, when employees were embarrassed to wear Cox paraphernalia and subscribers were unhappy and disappointed with the service. “Three years ago, we would go to events and all we heard about were problems,” said Clara Long, the system’s VP, sales and marketing. The problem was with the cable plant, which, according to Scott Broyles, the system’s VP, public affairs, “was literally rotting in the ground.” Media General had a state-of-the-art system in the mid-1980s. But when it decided to get out of the cable business in the mid-90s, it didn’t complete the upkeep or necessary upgrades to stay competitive. Cox knew what it was buying: a 20-year-old system desperately in need of an upgrade that served a market boasting some of the most affluent demographics in the country. “There was never any question that we needed to upgrade it quickly and completely,” Kroeger said. “It was a complex upgrade with a demanding customer base.” The first step was to rebuild the entire infrastructure, 94% of which had been upgraded by Thanksgiving of this year. The problem, according to Henry Schwab, VP, network development, was that the community, which hated the system at the time, had to put up with street closures and a seemingly endless stream of construction in an already traffic-clogged market. There also was the specter of active civic and home-owners associations, which made the MSO stick to a strict schedule. These groups put Cox on a September deadline to finish the upgrade. This fall, the system had 1,700 contractors working to complete the upgrade. In 2000, there were 200 contractors working on it. “We were constantly ripping up people’s yards,” Schwab said. “When you look at customer complaints, and then take a look at the take rates, it’s incredible.” Beyond the Upgrade With the upgrade under way, Cox had to address its community-relations problems. It tackled its customer service challenges by setting up a new phone system, complete with virtual home technology and an automated callback system. Cox Northern Virginia has made customer information available to CSR desktops for a better consumer experience during customer calls. “We’re at a 7 right now, but we’re always reaching for a 10,” VP customer care Johnny Benson said. “We’re not where we want to be. We’ve got to take it more personal when it comes to competition.” The system started putting mobile offices in neighborhoods to better explain to its subscribers the changes the system was making. The system would roll out these mobile offices each time it changed a channel lineup. “The key thing is instilling a culture of customer care and customer service in the mind-set of employees and customers,” McCollum agreed. “We need a relationship with our customers.” To better achieve that goal, the system integrated its operations (customer care, call center and technical operations) in a new facility it built in Herndon, Va. And it opted for some shortcuts to stay competitive during the upgrade. To speed up the upgrade, Cox set up a temporary fiber backbone so that it could roll out high-speed data. “We wanted to get most of the HSD market,” Schwab said. The system’s marketing plans also have gone through several changes. “Early on, we were trying to stem the bleeding by using offer-based promotions,” said Long. As the system matured under Cox, it started to move away from those types of promotions, relying instead on the two-product bundle. “We’re not giving it away like we were at one time to battle the competition,” she said. “The way we go about our marketing is not to react anymore. Our goal is not just to understand our customer base and why they do things, but to predict what they will do.” The system has seen a rejuvenation in its employee ranks, which has risen to 900 employees from 300 in 2000, when people were ashamed to admit they worked for the system. “In 1999 and 2000, we couldn’t get arrested,” Benson said. “Our upgrade is the driver of that.” Putting Down Roots Now that the upgrade is virtually complete and the community perception has been turned around, Cox Northern Virginia is emphasizing its local approach as a competitive advantage over satellite. “We’re in the community,” Broyles said. “We work, shop, send our kids to school in the community. The dish folks don’t.” To illustrate his point, Broyles rattled off several local initiatives Cox has completed, from donating $23,000 to Children’s Hospital to safe driving campaigns to a partnership with Mothers Against Drunk Driving. This kind of commitment to public affairs marks another switch from the lean Media General days. Under Media General’s stewardship, the system won a CTPAA Beacon Award in 1995. “Afterwards, it withdrew from the community,” Broyles said. “We brought it back to where we are today. It all centers around Cox’s mantra of giving back to the community.” It’s this kind of localism that satellite can’t offer, Benson said. “Satellite doesn’t provide a better service, but it has less touch points,” Benson said. “We have to overcome our legacy of bad service.” With one year to go on its 5-year turnaround plan, Cox Northern Virginia is well on its way to overcoming that legacy and becoming a system of which the entire industry can be proud.