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RCN: Subs Like Digital Cutover

11:00 AM -- Now that Comcast Corp. (Nasdaq: CMCSA, CMCSK) is starting to ramp up an "all-digital" strategy by giving away gobs of set-tops and simple digital-to-analog adapters, the largest MSO in the land can only hope that customer backlash is as muted as it's apparently been for RCN Corp. , a competitive overbuilder that's swinging all its video services to the digital domain. (See Comcast Seeds Digital Shift With Free Boxes and Comcast IDs First DTA Market.)

RCN's initiative is dubbed "Project Analog Crush," and the MSO hopes to have all its "metro" markets (New York, Washington, Philly suburbs, and Boston) cut-over to digital by early 2009. (See RCN's 'Analog Crush' and RCN to 'Crush' It in Beantown .)

Thanks to an extended waiver from the Federal Communications Commission (FCC) , RCN is fueling migrations with all-digital Motorola Inc. (NYSE: MOT) DCT700 set-tops, which use integrated security. Unlike Comcast, RCN is not leaving an entry-level basic video tier in analog. Per the conditions of RCN's set-top waiver, the operator is moving everything to digital in concert with the broadcast TV digital transition.

But, like Comcast, RCN is goosing the migration by giving away set-tops and positioning it as a service "upgrade" that's not peppered with added fees, enabling RCN to clear headroom for more than 100 high-definition television channels and an expanded slate of niche programming and video-on-demand (VOD) content. And for those Wideband watchers out there, RCN expects super-speedy Docsis 3.0 Internet services to go live sometime in 2009.

"In our experience... customer acceptance of [Project Analog Crush] so far has been excellent," RCN president and CEO Pete Aquino said on yesterday's earnings call. (See RCN Posts Q3.) "Customers realize that RCN is making major upgrades for their benefit. There's a lot of good energy in the field as we roll through town by town."

Operators beyond RCN can only hope that this "energy" exists in markets where they are making similar migrations and giving away set-tops. This week, the FCC opened a probe into pricing practices tied to moving analog channels to digital, or not giving customers enough notice of those changes.

The irony here is that the FCC has encouraged operators to move everything to digital. Now operators get to have the the very same agency pat them down to make they are cutting things over without hamstringing consumers. The regulatory fun never ends for the cable industry.

In addition to RCN and Comcast, the letter was sent to Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. , Charter Communications Inc. , Cablevision Systems Corp. (NYSE: CVC), Bright House Networks , Suddenlink Communications , BendBroadband , General Communication Inc. (GCI) (Nasdaq: GNCMA), and Harron Entertainment.

— Jeff Baumgartner, Site Editor, Cable Digital News

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