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RCN Reclaims Analog in Chicago

Cable overbuilder RCN Corp. is in the process of making a hard cutover in Chicago to an all-digital cable TV service. That move will free up 80 analog channels and give it the bandwidth required to pipe in an expanded menu of high-definition channels and video-on-demand (VOD) services. (See RCN Reclaims Analog.)

Rather than recapturing a few analog channels here and there and redeploying them for digital services, RCN has made the decision in the Windy City to move its entire service portfolio to the digital domain.

"We have converted the first RCN hub and target completion in the entire Chicago market before the end of spring," said RCN CEO and president Peter Aquino, in a statement.

RCN plans to complete the migration by April 18, according to company spokeswoman Lisa Barder.

That will give RCN extra headroom for new bandwidth-eating services. RCN said the strategy will position it to eventually offer 100 linear HDTV channels. Today, the operator offers 49 HD networks in the Chicago area, Barder says. The operator also plans to use the reclaimed spectrum to expand its VOD offering, which today offers a mix of 2,400 "free" and pay titles.

RCN said it can fit in 10 standard-def digital channels or two digital HD channels into one 6 MHz channel slot.

RCN also serves parts of Boston, eastern Pennsylvania, New York, and Washington, D.C., but has no definitive plans to do a similar cut-over in those markets.

"This is the first step," Barder explains, adding that the MSO will try to learn from its experience in Chicago and see if there are any efficiencies to be gained from it before attempting similar strategies in other RCN service areas.

In Chicago, the decision to get rid of analog will require all RCN customers there to use digital set-top boxes in order to obtain video services, or to use a CableCARD in conjunction with a one-way Digital Cable Ready (DCR) TV set.

To fuel the effort, RCN is giving Chicago-area customers three options: RCN will mail requested boxes along with self-install instructions directly to customers; customers may pick up boxes at its 2640 W. Bradley Place location; or customers can schedule an appointment to have set-tops installed for a flat fee of $49.95.

The set-top installation strategy won't cost RCN as much as it might cost Comcast Corp. (Nasdaq: CMCSA, CMCSK) and other operators following the Federal Communications Commission (FCC) ban on integrated set-tops that went into effect last July. (See Countdown to 'Seven-Oh-Seven'.)

That's because RCN, based on "financial hardships," received a waiver last year from the FCC that permits the operator to continue buying and deploying entry-level Motorola Inc. (NYSE: MOT) DCT 700 set-tops through July 1, 2008. RCN had previously argued that Motorola's CableCARD equivalent to the DCT 700 costs the operator three times more per unit. (See Son of 'Waiver Central' .)

"Having the waiver definitely helps us be able to go through this conversion right now," Barder acknowledges.

Although RCN is likely to encounter some resistance from pockets of customers who don't want set-tops, the operator hopes they will be more amenable to the idea if they also gain access to more services, including VOD. In Chicago, RCN's "Signature" package of 80 channels will re-launch with 180 channels for the same price. RCN is promoting its basic package on the Web "for as little as $57 per month."

"I would expect that people would be very happy with it because there are so many more channels available," the spokeswoman says, noting that RCN has given been giving advanced word to customers in Chicago about the transition and what the expected benefits would be.

RCN is also making the move ahead of the February 2009 digital TV transition. Short of going all-digital and providing customers with the "necessary equipment" to view the content, most operators are expected, per FCC mandate, to deliver "must carry" TV broadcast channels in both analog and digital formats following the Feb. 17, 2009 transition. Rather than going completely digital right away, most operators are also expect to offer at least a "lifeline" analog video service tier for the foreseeable future. (See FCC OKs Dual TV Carriage Rules and Going 'Mostly' Digital .)

Across all its systems, RCN had roughly 413,000 customers as of Sept. 30, 2007. It was not immediately known how many of them are in the Chicago market or how many RCN subs there currently take the MSO's analog service.

— Jeff Baumgartner, Site Editor, Cable Digital News

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