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RCN’s regional leader says internet speed will drive, shape business

There’s no question the cable television industry has been changing dramatically in recent years. While most now offer phone and internet service in addition to television access, the demand for its original core service is decreasing.

More customers are “cutting the cord” on cable television, instead choosing streaming services.

Although some say the death of traditional cable television is inevitable, Sanford O. Ames Jr., senior vice president/general manager for RCN’s Pennsylvania and Washington, D.C. metro markets, said its death is not occurring anytime soon.

And it’s also not his biggest concern. In an industry that’s quickly getting used to constant change, Ames said, traditional cable television service, while still popular, now isn’t RCN’s principal offering, and neither is home phone service.

Speed is. Specifically, internet speed.

“Our mantra has been to offer the fastest service at the best price,” he said in an exclusive interview with Lehigh Valley Business.

While consumers can choose from different bundles of internet, television and phone options, 90 percent of all customers have internet service as part of their plan.

For both residential and business clients, internet speed and bandwidth will become a primary concern to keep their devices and operations running, Ames said.


The way people watching television is transforming.

“Streaming is the wave of the future,” Ames said.

He cited the July 16 season premiere of “Game of Thrones,” when the premium network’s two streaming options – HBO GO and HBO Now – crashed because of the number of users trying to log on. That illustrates the significance of demand.

To succeed, companies such as RCN – which has 400 employees in the Lehigh Valley – need to adapt to that and prepare for the new and different ways people will be seeking entertainment.


RCN soon will debut 1 gigabyte internet service for residential customers – a threefold increase over the 330 megabytes now offered.

As the demand for bandwidth increases, that additional capacity will allow multiple people in a home to stream video, watch live television and surf the web at the same time without losing speed.

That makes internet service, as well as maintaining its speed and quality, the company’s most important offering.

That doesn’t mean phone and cable television service aren’t important.


While nationally many households are getting rid of telephone landlines, the same isn’t true in the Lehigh Valley market, said Ames, who is based in Bethlehem.

Many other markets have seen decreased demand for phone service, but the number of phone service contracts RCN has in Lehigh and Northampton counties has remained flat for the last several years.

He said many consumers who keep the landline have expressed that they feel the “home phone” is more secure and reliable than a mobile phone, which can be broken or lost.


Sure, Ames said, people can give up cable for streaming services, and many do. He acknowledged it’s a great way to save money. A consumer only has to pay for the internet service and any streaming service, such as Netflix, Amazon or Hulu they would desire.

But, he said, those customers also get less. They don’t have access to live programming, such as news or sports, and they must wait for sitcoms or dramas to go online – sometimes with a significant delay.

For some, the trade-off is worth it.

However, that’s also kept many customers using cable television for their main source of viewing. Only about 30 percent of RCN’s residential customers are internet-only, though the number is growing.


Another option that some cable companies have been trying has been a la carte programming.

Companies offer different packages of programming so customers can save money by choosing a smaller bundle of channels versus the entire lineup.

There is a limit to how far that can go, though. Ames said less-expensive channels help offset the cost of some of the more costly channel contracts.

“Folks are not prepared to pay for ESPN, and what they would need to pay for it by itself,” Ames said. “It would be more expensive than HBO if we billed it as a single channel.”


While business internet services are only about 10 percent of RCN’s business, it’s a growing segment – and it’s expected to continue to grow.

With more business services and software options switching to the cloud, entire offices now operate off of the cloud, demanding high bandwidth and speed.

Because of the need for speed, RCN’s business internet offerings already are significantly faster than what is offered to residential consumers.

The top tier of business service is 10 GB of downloading speed compared to 1 GB of residential speed, and Ames doesn’t expect 10 GB to be the cap for long as more business services use cloud-based computing.

“It’s not too far off that we could be at 40 G or 100 G purchased by commercial customers,” Ames said. “… Our networks are scalable, so we can add gigs on demand.”


One of the driving forces behind RCN’s business services has been the migration of area hospitals and health care providers to electronic record management.

Entire health networks are wired to share patient information from dietary needs to surgery schedules on its computer network.

That means a demand for high speed and reliability of service, as patients’ care hangs in the balance.


Ames also predicts growth in the consumer arena in the region.

New housing and apartment developments are popping up all around and both RCN and competitors such as Service Electric are extending access to those neighborhoods on a regular basis.

RCN, like its competitors, is laying down the infrastructure to pave the way for new customers in those areas – as well as ensure its offerings are up to speed to attract those potential customers to its service.

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