RCN to 'Crush' It in Beantown

[cablewithaview]

RCN Corp. says Boston is the next market it's targeting with the all-digital, bandwidth-reclamation strategy it calls "Project Analog Crush." (See RCN's 'Analog Crush' .)

RCN, a competitive cable overbuilder, has already completed its analog-to-digital migration in Chicago, where, just as in Boston, Comcast Corp. (Nasdaq: CMCSA, CMCSK) is the incumbent MSO.

RCN says its digital migration in Boston is already 82 percent complete, so it doesn't have that much left to go.

RCN president and CEO Peter Aquino relayed the analog-reclamation plans for Boston Thursday during the company's first quarter earnings call. (See RCN Posts Q1.)

RCN hopes its digital strategy will free up spectrum for high-definition (HD) television and other bandwidth-hungry services. The service provider already offers 39 linear HD channels in Boston, but believes that, with analog removed, it can offer about 100 HD channels, and complement its video service with its 20-Mbit/s (downstream) cable broadband service.

And its all-digial activity in Chicago and Boston will be just the beginning. "The acceptance rate in Chicago has exceeded our expectations and, given this success, we are committed to a complete roll-out, company-wide, over the next two years," Aquino said.

RCN, which has about 362,000 video subs, also serves parts of New York City, Philadelphia, Washington, D.C., and Lehigh Valley, Pa.

In an effort to help fuel its analog reclamation plans, RCN filed a request with the Federal Communications Commission (FCC) last week that seeks to extend its one-year waiver on the Motorola Inc. (NYSE: MOT - message board) DCT700, an all-digital set-top with integrated security.

In July 2007, the FCC put a new rule into effect that requires cable operators to deploy boxes with separate, decoupled security, typically via a removable CableCARD module. (See Countdown to 'Seven-Oh-Seven' and Son of 'Waiver Central' .)

"If our request is granted, we expect to complete our all-digital migration in all markets except Lehigh Valley by June 2009," noted RCN's CFO Michael Sicoli. He estimates that an all-digital migration would cost about $20 million more without the waiver.

In previous waiver requests and regulatory documents, RCN has stated that the lowest end CableCARD-based set-top box from Motorola costs about three times the unit price for the bare-bones DCT700 model. Sicoli said RCN doesn't expect an answer on its waiver extension request "until June, at the earliest."

Comcast, RCN's main video competition in Boston and Chicago, is also working on an all-digital startegy that's due to cover about 20 percent of its footprint by year end.

Although Comcast's approach reclaims about 40 analog channels, it's not abandoning analog altogether, and plans to continue delivering a small analog lineup of about 30 channels. Last week, Comcast confirmed plans to support its all-digital/mostly-digital plan using a simple one-way device called the Digital Terminal Adapter (DTA). (See Comcast Confirms Digital Dongle Project.)

Comcast's continued use of analog gave RCN's Aquino an opportunity to take a swipe at its rival. "By not reclaiming a significant amount of spectrum, Comcast may lag behind RCN... and we like our position here [in Chicago]," he said.


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