Cable creeps into the corporation

Computer World –

Honolulu -- The cable guy may soon be coming to your office.

When First Hawaiian Bank decided to roll out high-speed Internet access to its 56 branches throughout the four major Hawaiian islands this spring, it made a carrier choice that might seem strange to anyone frustrated with poor service from his cable TV company. The bank chose Oceanic Cable, the local cable affiliate of New York-based Time Warner Inc.

According to Mark Taylor, vice president of retail information and planning at First Hawaiian, a division of BancWest Corp. in Honolulu, the easiest and most economical way for the bank to obtain broadband Internet access was to subscribe, through Oceanic, to a corporate high-speed cable LAN service called Road Runner.

The message is clear: Cable is going corporate.

Ernest Takahashi, information systems director at Honolulu-based Wilson, Okamoto & Associates Inc., a civil and structural engineering firm, said he decided to use Oceanic's cable LAN service because it provided the wide bandwidth the company needs to "send large CAD drawing files that are megabytes in size . . . not just on the island, but to the mainland as well."

Over the past five months, First Hawaiian has connected 600 desktops to the high-speed (10M bit/sec.) Oceanic service. It expects to have 1,000 desktops hooked into the cable system by the end of the year.

Takahashi said Oceanic provides him with faster and more reliable service at a lower cost than similar offerings from the local phone company, a subsidiary of New York-based Verizon Communications. Takahashi said that when his company priced comparable high-speed services from Verizon 18 months ago, the phone company's rates were "almost double" those of Oceanic.

Verizon failed to return calls for comment by press time.

Homegrown Demand

Oceanic spent $75 million eight years ago to upgrade its cable network to support two-way, high-speed data service for its 300,000 residential subscribers. It initially had no intention of serving the corporate market because it didn't anticipate that there would be any demand, said Kiman Wong, the company's general manager of Internet services.

But "once people had [Road Runner] at home, they wanted it at work," Wong said. The company now services 1,300 commercial accounts. To beef up its commercial business, Oceanic developed a suite of corporate access products, offers Web hosting services and plans to extend its commercial reach by wiring the urban core of Honolulu, Wong added.

Cox Business Services, a division of Cox Communications Inc. in Atlanta, is another cable company that is pushing toward providing high-speed Internet access for businesses. Users said they're pleased to find a cheaper alternative to the local phone company.

Jim English, chief financial officer at Lopez Foods Inc. in Oklahoma City, said Cox's "aggressive" pricing for its high-speed service was a key factor in choosing Cox over Southwestern Bell Telephone Co., a subsidiary of SBC Communications Inc. in San Antonio.

Lopez, which produces hamburgers, sausage and Canadian bacon for McDonald's restaurants, has 75 users hooked up to the Cox service and plans to use it in its new executive office building. The high-speed connection "means people are not sitting here twiddling their thumbs waiting for their e-mail," English said.

Cox, which operates as a competitive local exchange carrier in Oklahoma City, offered Lopez a package of services that included high-speed data and phone service priced 41% below Southwestern Bell, which subsequently made a counteroffer. But Cox still charges 12.5% less than the deal offered by Southwestern Bell, English said.

Ken Tysell, director of DSL business/retail at SBC, acknowledged growing competition with cable TV companies for the corporate market. "They're munching at our business, but we're also munching away at theirs," Tysell said. "Clearly, competition is increasing in broadband . . . but we believe we have as good or better offerings as theirs."

David Barnes, an information systems manager at National Loan Investors LP, a mortgage servicing company in Oklahoma City, said connectivity, not price, prompted him to choose Cox over Southwestern Bell. "We're at the end of their copper plant, and they could not offer us the service we needed," he explained.

National Loan is in the process of upgrading its service to a dedicated T1 line and a hardware virtual private network. It's sticking with Cox, Barnes said.

Barnes said he uses his residential Road Runner service to manage batch processing on office servers at night. "It's much more convenient from home," he said. "And I can do everything I need to do, [including running] diagnostics."

The business of providing high-speed cable services to corporate America is in such a stage of infancy that The Insight Research Corp. in Parsippany, N.J., was "surprised" to discover the inroads it has started to make, said Christopher Whitely, project manager for a recent study on Digital Subscriber Line vs. cable.

"We started the study with the preconceived notion that cable provided only residential service . . . but we quickly got an indication that there was also a business market," Whitely said. "It's still in its early stages but should grow over the next five to 10 years."

By 2005, Insight predicts, the U.S. will have an installed base of 32 million cable modems, generating $11.5 billion per year in revenue. The research firm didn't break out business vs. residential data.

Road Runner LLC in Herndon, Va., owned by AT&T Corp., Time Warner, Microsoft Corp., Compaq Computer Corp. and Advanced Communications-Newhouse, foresees growth in package plans for businesses that want high-speed access for teleworkers.

Mark Mercer, vice president of commercial services at Road Runner, said he intends to pursue as much corporate business as he can land. But, he added, he believes that growth will come even more quickly from package deals for remote workers or telecommuters in the 44 Road Runner markets nationwide.

"We're going after national accounts for telecommuters," Mercer said, "with a great deal on a bulk price for corporate accounts."

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