Taking On Telecom Goliaths

By Arshad Mohammed
Washington Post Staff Writer
Monday, June 5, 2006

Peter D. Aquino's company is a dwarf in a land of cable TV and telephone giants, but the chief executive of RCN Corp. does not lack for confidence or aggressiveness.

Posing atop a Hummer emblazoned with the company's blue, green and white logo, he joked: "We should put Verizon and Comcast . . . underneath the tires."

Crushing Verizon Communications Inc. and Comcast Corp. -- each of which is more than 30 times RCN's size -- is an unlikely outcome, industry analysts say. Just surviving as an alternative to the communications behemoths would make a success story of the Herndon-based company with a checkered past.

RCN hopes to beat the big cable and phone companies by exploiting its experience in giving customers a bundle of voice, video and high-speed Internet service -- a "triple play" that it has offered for years but that its competitors are only now rolling out on a large scale.

Company officials say they can carve out a profitable niche by offering more-appealing packages and pricing, better service, and an alternative for consumers who don't like dealing with powerful corporations like Comcast and Verizon.

"The consumer sees both of those guys as slow incumbents and monopolies. Those are the two people they are trying to get away from," Aquino said in a recent interview. "And here we come in with new technology, great pricing, a little pizzazz, locally focused. "

RCN's fate may say much about whether upstart communications companies can survive in an era of consolidation, providing consumers with alternatives to the dominant cable and telephone providers.

A product of the 1990s tech boom, when capital poured into Internet and technology ventures, RCN spent about $3 billion building its cable network. It was one of the first companies to offer customers cable-phone-Internet bundles, and it boasted it would drive the cable and phone "dinosaurs" into extinction.

Instead, RCN went through a near-death experience, spending seven months in Chapter 11 bankruptcy protection in 2004.

The company emerged with new management, much less debt, a leaner workforce and the conviction that it could still take on the big companies.

But Verizon, the nation's second-largest telephone company, has begun building a fiber-optic network to carry television, Internet service and phone calls under the Fios brand. And Comcast, the nation's largest cable company, is rolling out Internet telephone service as an addition to its video and Internet offerings.

That only makes life harder for RCN, said Josh Bernoff, a principal analyst at Forrester Research Inc.

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