January 7, 2008

RCN: In Middle of Plugging Away

By Jim Barthold

It promises to be an interesting year for RCN, a service provider that is neither fish (telco) nor fowl (cable). But then, every year is an interesting year for a company that makes its living trying to chip business away from much bigger competitors.

RCN this year will focus even more sharply on growing a new base of commercial services by incorporating recent acquisitions Con Ed Communications and Neon into the RCN Business Services unit.

"Con Ed brings a real strong fiber-rich regional network in metro New York, which clearly supplements and complements the residential network that we have in Manhattan and Queens. Neon brings a long haul network to the mix on the Boston to Washington corridor and beyond," said Rick Swiderski, vice president of engineering and network construction at RCN.

Those two elements, combined with RCN's incumbent large enterprise business structure should help the company migrate into the potentially lucrative smaller commercial space while at the same time enhancing its residential offerings.

"Look at all the assets we have," said Swiderski, pointing to "switches, headends (and) fiber. The high-end business is really focused on transport, TDM transport, Ethernet transport to carriers and large enterprises; the residential is focused on supporting the triple-play bundle to MDUs and single family residences."

Next up: SMBs

Those two areas of focus will converge to help the service provider attack the small-medium business (SMB) space.

"We see a piece of that community being serviced by the HFC network for multi-line phones, maybe some commercial video and some broadband services, and we're still evolving how the rest of that business looks or what that marketplace needs from the service provider," he said. "A lot of cable companies are toying with doing Ethernet overlay networks, but they're coming from a little bit different angle because we clearly have that market covered with our high-end carrier and large enterprise business."

Perhaps most challenging for RCN is maintaining a competitive position in a changing marketplace. RCN is like the small tailback that gets lost among the huge linemen in a football game, but once free and in the open, must move quickly to avoid being thrown to the ground by those bigger players.

"The last 10 years has awakened the giants," Swiderski agreed. "Verizon is spending billions of dollars to do an all-fiber network, and Comcast has clearly invested in their upgrades and new technologies. We don't have the resources to devote to technology development, but we can clearly be quick and nimble. We can remain competitive ... but we have to pick and choose our battles and spend capex wisely to make sure that we maintain our place in the market without going down a trial-and-experiment road needlessly."

- Jim Barthold