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RCN Tests Home Fiber, Awaits Financial Model

Chicago— RCN Corp. has conducted a fiber-to-the-home trial for the last year and a half, but so far hasn't found an economical deployment method.

During a press briefing at last week's National Show here, RCN officials said that before fiber can replace coaxial cable as the last leg to the consumer's home, operators will need to either find new revenue streams or drive down deployment costs.

Experts say overbuilders like RCN and Denver-based Western Integrated Networks can pursue a fiber-to-the-home strategy because they're building their networks from scratch. Incumbent cable operators have dismissed such a scheme, arguing that it would be prohibitively expensive to extend the reach of their fiber.

RCN executives declined to reveal the location of the ongoing test. But sources indicated the trial was launched 18 months ago in Brookline, Mass., a densely populated, affluent community where fiber was deployed to approximately 90 homes.

"It's very a ritzy area," said a source familiar with the project. "And it's very dense. You don't have 300 feet between homes. It's more like 15 feet of grass between homes."

Participants were given computers and set-top transmitter/receiver units that can convert an optical signal into a radio frequency that is delivered to the computer via a Cat5 wire.

If economically feasible, fiber-to-the-home architecture would allow RCN to deliver data services at speeds of up to 100 megabits per second, and virtually an infinite number of cable channels.

"It's a challenge, but it's doable," said Richard D. Rioboli, RCN vice president for technology development. "It's not there yet, but we're probably going to keep going until we find a fiber-to-the-home strategy that we're comfortable with."

At present, it costs RCN about $900 per household passed to run cable, Internet access, local and long-distance phone service over its existing hybrid fiber/coaxial network, with another $300 in capital costs for each of its services.

Rioboli said RCN's current infrastructure consists of 10 fibers per node, compared to the two fibers deployed by the incumbent operator. The dark fiber will allow the company to deliver speeds well beyond the needs of residential or commercial customers.

RCN networks passed 1.5 million homes at the end of the first quarter. It reported 450,000 cable customers; 81,000 Internet subscribers; and 164,000 voice customers.

The company serves seven of the 10 most dense and lucrative markets in the nation, including Boston, Chicago, Los Angeles, New York, the Philadelphia suburbs, San Francisco and Washington D.C.

Its bundled products run from a $65 package that includes a cable modem, phone service with four features and unlimited regional calling time to a $160 package with analog and digital cable, two set-tops, multiplexed HBO, Cinemax, Starz and Encore premium channels, two phone lines with 16 features each and a cable modem.

But its most popular offering is a package that offers a second phone line in addition to the customer's existing line, said Lew Scharfberg, RCN vice president for video management and marketing.

"People keep their existing line, and we get the second line," he said.

Digital-to-the-home will produce a "whole new world," he added.

"It will be like turning a two-lane highway into a 12-lane highway," he said. "Think of the telecommunications services you'll be able to personalize with that much bandwidth. You'll be able to deliver the niche programming that each house is interested in."

Rioboli said he doesn't understand how WIN can deploy fiber to the home in Sacramento, Calif., at a total cost of $1,000 per household reached.

"I can't speak for WIN but I can't see how they're making the economics work," Rioboli said.