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RCN Will Follow TiVo's Path

RCN will be the first cable provider to take TiVo's high-definition digital video recorders — essentially the same ones sold on retail shelves — and offer them to subscribers as the de facto DVRs.

The operator is aiming to begin offering TiVo HD DVRs to customers in the first quarter of 2010, as early as Jan. 1, for between $3 and $5 per month in addition to the regular DVR fee of $14.95. The co-branded boxes will provide integrated access to DVR recordings, broadband-delivered content and RCN's video-on-demand library, based on SeaChange International equipment.

The main rationale for offering TiVos as the primary DVR to customers is to be able to capitalize on bringing broadband-delivered content to the TV, said RCN executive vice president and chief financial officer Mike Sicoli.

“Companies that are beholden to Motorola and Scientific Atlanta are not truly going to be able to embrace the convergence of TV and the Internet,” Sicoli said.

Moreover, RCN claims, the TiVo DVRs will cost less per unit than the Motorola DCX 3416 HD DVRs running the Aptiv guide (now owned by Rovi) it currently offers.

“It's a pretty substantial savings as it relates to the upfront box” compared with the Motorola DVRs, Sicoli said, declining to provide pricing details. He added that RCN will pay an ongoing per-subscriber fee to TiVo, which the operator expects to recover by charging the $3 to $5 premium.

“We hope TiVo continues to give us choice relative to the Motorolas of the world,” Sicoli said.

Still, most RCN customers will continue to use Motorola set-tops with the Aptiv guide for the foreseeable future. About 27% of RCN's video customers today have a DVR and 10% have an HD DVR, according to Sicoli.

Separately, TiVo has a longstanding agreement with Comcast, which offers the service on Motorola set-tops in New England and expects to make TiVo the “primary” DVR option to customers in a yet-to-be-announced market. Cox Communications also has been testing TiVo service in its New England division, and DirecTV is working with TiVo to offer an HD DVR.

But RCN's deal with TiVo goes further than those with other pay TV providers in offering the full suite of broadband-delivered services, including the VOD store and Rhapsody's music-subscription service.

In addition, the TiVo DVR from RCN will let users access trademark TiVo features such as Season Pass and WishList (to automatically record shows based on keywords or other parameters) and receive personalized suggestions. Subscribers will be able to schedule recordings via the Web or with mobile devices.

As for whether Amazon will compete with RCN's own VOD service, Sicoli said the TiVo DVRs will be configured to prominently display the operator's on-demand titles first. RCN also has the latitude to negotiate deals with other broadband content providers.

“It's a portal-like platform that gives us new revenue opportunities,” Sicoli said. “This is stuff we've been drooling over on our road map and the applications are launched on Day One.”

Herndon, Va.-based RCN's primary service areas include New York, Washington, D.C., Philadelphia, Boston and Chicago. As of June 30, the company had approximately 430,000 residential and small-business subscribers. RCN last week reported $192.3 million in revenue and a net loss of $9.4 million for the second quarter.