Cable firm wired for federal business

Cox Communications Inc., a company known best for its cable TV business, has made a foray into the federal market over the past year, bringing high-speed Internet connections to users in the Air Force and the General Services Administration.

The company - which has focused its federal business on providing local telecommunications services such as phone and videoconferencing and high-speed data network connections - has landed $17 million in federal contracts since mid-1998.

But with a $1.4 billion acquisition last month of Media General Inc., Cox landed Northern Virginia cable TV properties and a telecommunications infrastructure that it will be able to bring to Washington, D.C.-area federal agencies.

"They become one of the few [cable] companies that actually are building out to the end-user customer," said Jeanne Schaaf, a telecommunications analyst with Forrester Research Inc. Most telecom companies tend to focus on other pieces of the nation's sprawling telecommunications networks. "[Many telecommunications companies] don't really build in a ubiquitous way in a market," Schaaf said.

Cox already has inked contracts with Tinker Air Force Base in Oklahoma, Langley Air Force Base in Virginia and a General Services Administration office in Oklahoma.

For Cox, the specialty becomes "last mile" service - providing a community such as Tinker Air Force Base or a group of GSA-managed federal buildings with internal communications as well as a high-speed connection to the rest of the nation's telecommunications infrastructure.

Ron Hodges, manager of government and education access for Cox, said the company's business with the Air Force bases in Virginia and Oklahoma may provide an entree to other military installations. "Now we can make some logical connection to other military bases in the area," he said.

Similarly, the company's arrival in the Washington, D.C., area - through the acquisition of Media General properties - may give the company's federal business a boost, according to Hodges. He said federal employees could reasonably work from home using cable modems, and federal agencies likewise could share data using Cox's emerging D.C.-area infrastructure.

The company already has high-speed networks in place in several metropolitan areas, including San Diego, Phoenix, New Orleans, Hampton Roads, Va., and Orange County, Calif. The networks can deliver data via cable modems at a rate 100 times faster than a 28.8 kilobits/sec modem, Hodges said.

John Summers, telecommunications contracting officer for the Air Force, said the Air Force chose Cox because it was able to offer the same type of service offered by predecessor vendor Southwestern Bell at less cost and because the company could meet the Air Force's future technical requirements. Summers said Cox isn't subject to additional charges that states levy on Bell companies.

"[Cox] has the technical capacity to give us state-of-the-art requirements on demand," Summers said. "They weren't constrained by regulatory pricing.... What they're providing us is a connection into the public network."

Analysts say Cox and companies like it stand to gain much ground in offering local telecommunications services to the federal government.

"Many groups within the government are trying to create conditions to allow emerging competitors to compete," said telecom consultant Warren Suss, who explained that more competitors should result in lower prices for federal telecommunications buyers. "The government is aggressively seeking additional players."