RCN, which is building a telecommunications network to deliver cable TV, telephone and high-speed Internet service to residential customers, said during a conference call that it would concentrate on getting more customers and revenues out of its already built markets, which include some Philadelphia suburbs, and that it had the financing in place to reach 4 million customers within 10 years.
That is far less than its target of 4 million homes by 2002 and an eventual 15 million homes. RCN said the plan for 15 million homes would have to be put on hold until it raised more money.
"In the old environment, we could finance it. Now we have taken a more conservative approach," Timothy Stoklosa, RCN's chief financial officer, said. "We will still grow our business pretty substantially over the next year . . . but it will not be as big a growth as if the capital markets were still open to us. We have to be cautious about the burn rate."
At risk under the stricter capital-spending budget could be RCN's plans to build a competitive cable and telecommunications network for residential customers in the city of Philadelphia. If the city does not approve an RCN cable-TV franchise agreement in the first quarter of 2001, and RCN does not raise more money, then RCN could shift the money now set aside for Philadelphia to the suburbs, or elsewhere in the country, Stoklosa said.
RCN has been trying for several years to win a cable-TV franchise for Philadelphia so it can compete against cable company Comcast Corp. and local-phone company Verizon Communications Inc. It has proposed spending $250 million to build its network in Northeast and Northwest Philadelphia over the next seven years. The company has said that would create 350 jobs in the city.
City Council's public-property committee is expected to hold a second hearing on RCN's proposal Feb. 1.
