RCN: Tru2way Can Wait

Why do tru2way when you've got a fancy, integrated box from TiVo Inc. (Nasdaq: TIVO) on the way that will be brimming with bells and whistles? That appears to be the thinking at RCN Corp. , a competitive cable "overbuilder" as it gets ready to introduce a new TiVo device early next year that will offer customers access to a large library of "over-the-top" video from the Web and latches into the operator's legacy video-on-demand (VoD) system. (See RCN Makes TiVo Its Dominant DVR.) Tru2way was on RCN's roadmap, but those plans were shelved after the operator sealed up the TiVo deal, according to Jason Nealis, RCN's senior director of video products and operations, of the TiVo agreement. "This [TiVo box] is what we think tru2way should be in the endgame," Nealis says, noting that the new plan gives RCN an easy way to fuse the wonders of the Internet with the traditional walled garden of the cable set-top. "Everything that's been on my product roadmap is there," he asserts. But all of what's going to be there next year when RCN starts rolling out the product is still unknown. RCN evaluated the plan using the TiVo HD DVR, but the MSO-optimized version will use TiVo's "next-generation hardware." No one's spilling the beans on all those details, but Nealis says one those features will include up to 1 terabyte of storage, plus more traditional features such as multi-room DVRs (at least from the standpoint of TiVo boxes talking to other TiVo boxes on the home network). "Frankly, it's more of a leapfrog product for us," says RCN CFO and EVP Mike Sicoli. RCN's also glad that it will free itself somewhat from its legacy set-top box and guide vendors --- Motorola Inc. (NYSE: MOT) and Rovi Corp. (See Macrovision Resets as 'Rovi'.) RCN, says Nealis, is not really big enough to get those vendors to make changes or add features rapidly: "It's like trying to move a mountain." RCN has not locked in a final price customers can expect to pay for the TiVo option, but a spokesman confirmed a report that the operator is considering a monthly charge in the range of $3 to $5. RCN CFO and EVP Mike Sicoli said the TiVo deployment will likely start in New York, and then follow with RCN's other systems in Philadelphia, Boston, Chicago, and Washington, D.C. As far as tru2way goes, RCN has no concrete plans to support it, though it will monitor the situation and maybe introduce it when it "makes sense" for the operator, which has about 368,000 video customers. For now, most of the tru2way deployment commitments have involved the nation's largest MSOs, and even some of those are still getting their headends wired up. (See Tru2way at a Crossroads, No Penalties for Missing Tru2way Date, and MSOs to Miss Tru2way Date .) And RCN's not expected to be the only cable operator to resist tru2way in the short-term. Given the complexity and cost of supporting tru2way and the fact that feature development is driven by the larger MSOs, several Tier 2 and Tier 3 MSOs are said to be looking to TiVo or other partners for advanced set-top box options. Although Evolution Broadband LLC is developing a tru2way option for its small and mid-sized cable MSO customers, it's also offering operators a TiVo configuration that does not use tru2way's middleware and headend architecture. (See TiVo Covers Its Cable Bases .) TiVo has managed to open up a few more cable doors, but Brian Coyne, a director at Wedge Partners Corp. , doesn't think a deal with RCN, which might yield tens of thousands of new subs for TiVo in the coming years, will do much to help its broader growth challenges. "I don’t think any of these [cable deals] move the needle for TiVo's fundamentals," Coyne says of a company that has struggled to expand a subscriber base that totaled 3.2 million at the end of TiVo's fiscal first quarter. — Jeff Baumgartner, Site Editor, Cable Digital News

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