The Cable Show 2008

Cox Business Teams with Nortel to Bundle CPE with Voice Services

| May 20, 2008 | Business Network Services - U.S. | Show Update

| Analyst: Cindy Whelan

Current Perspective: Positive/Neutral Vendor Importance: Low/Moderate Market Impact: Low

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Event Summary

May 19, 2008 -- Cox Business announced that it has signed a multi-year agreement with Nortel in which Nortel Sales Center representatives will target small business customers in select Cox markets with voice, data, and equipment solutions. Cox Business customers will have access to a variety of Nortel products including the Business Communications Manager (BCM), Ethernet switches, routers, wireless access points, and phone handsets. Nortel will provide installation and post-sales technical support for customers that opt for a Cox/Nortel solution.

Analytical Summary

• Current Perspective: Slightly positive on Cox Business’ multi-year agreement with Nortel, because the partnership marks the first entry by a major incumbent cable operator to bundle telecom customer premise equipment (CPE) with voice and data services. Historically, businesses that were seeking bundles of telecom services and CPE had to look to traditional carriers such as AT&T and Verizon or large CLECs such as PAETEC. Cox will use Nortel’s recently announced Nortel Sales Center to reach customers with its new bundle offers.

• Vendor Importance: Low to moderate to Cox Business, because the initial offer focuses mostly on a single product: Nortel’s hybrid TDM-IP PBX known as Business Communications Manager (BCM) 50, which is being packaged with Cox’s traditional voice services and targeted to existing Cox Business Internet customers in markets in just two states. The agreement offers Cox a cost-effective means to reach existing customers with its new voice service options, and Cox can expand its business service bundles to include a range of Nortel products such as handsets, wireless products, routers, and Ethernet switches.

• Market Impact: Low on the business voice and data services markets, because the Cox-Nortel bundles will initially be marketed only to existing Cox Business Internet customers in markets in Kansas and northwestern Arkansas, which represents a relatively small percentage of Cox’ total of 240,000 business customers across its 18-market footprint. While Cox plans to launch the service in another market the end of 2008, the operator intends to offer the BCM-based solution only in markets where it is not offering its Business VoiceManager network-hosted voice service. This means the availability of the service is not likely to be widespread unless Cox changes this strategy. The agreement enables Cox to resell other Nortel products with its services; however, this will be done on an opportunistic basis, so it is difficult to tell how aggressive and successful Cox will be in this endeavor.

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Competitive Positives and Concerns

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