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RCN arranges to offer SIP VoIP; reports Q2 loss

Thu, 08/09/2007 - 8:35am
Brian Santo

RCN will begin offering SIP-based voice-over-Internet Protocol (VoIP) service through an agreement with deltathree. Separately, the company reported second quarter results that included revenue that is growing, but not nearly enough to keep losses from mounting, too.

deltathree will provide RCN with its private-label consumer VoIP solution, enabling RCN to expand its phone service well beyond its service areas in New York, Boston, Chicago, Eastern Pennsylvania and metro Washington, D.C. RCN plans to begin marketing VoIP in nearby areas, however.

RCN said the VoIP services will not replace but rather will supplement the switch-based services it currently provides. 

The company is trying to expand out of the residential market into the commercial market. Being able to offer SIP-based VoIP outside its traditional footprint will help. The company’s pending acquisition of Neon Communications will also help; Neon runs an optical network in the Northeast and Mid-Atlantic.

RCN’s Q2 suggests the strategy is beginning to pay off. Commercial revenue was up 13 percent from a year ago, growing from $20.2 million to $22.7 million. 

RCN’s revenue grew to $159 million, up from $149 million a year ago, and up from $153 million in Q1. The company’s loss widened from $25.3 million a year ago to $79.7 million in the quarter just completed. A big expense was an increase in capex.

The company added 2,000 customers in Q2, to reach 409,000. Over the last year, RCN tallied 10,000 customer adds – and 27,000 RGUs - yet more evidence of the value of bundling, if any, was still needed.

RCN chairman James F. Mooney stressed the positive. "Revenue from our core operations, which includes both our core residential and commercial businesses, grew five percent from last year as we further strengthened operating metrics, including higher residential ARPC, strong bundle rate and lower churn, and expanded our commercial business,” he said. He added, “RCN's progressive execution of our strategy positions us very well to capture revenue and profit growth opportunities in both our residential and commercial businesses and deliver another strong year.”

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