RCN Urges Congress to Consider Views of Small Cable Operators, Conditions Needed to Protect Access to ``Must Have'' Programs.

HERNDON, Va. -- RCN President & CEO Peter Aquino Urges NATOA Keynote Audience To Stand Up Against 'Free Passes" for Bells in Local Cable Franchising

RCN Corporation (NASDAQ: RCNI), a leading provider of triple play cable, high-speed Internet and phone services, today urged lawmakers in both the House and Senate to invite the company to participate in Congressional hearings to represent the views of smaller, alternative cable and telecom competitors.

"Our company was born out of The Telecom Act of 1996 as a competitive alternative to both the incumbent cable and telecom providers. As the first and one of the few alternative competitive survivors we have gained very important insights into the state of competition and the effect of consolidation," RCN President & CEO Peter D. Aquino today told the National Association of Telecommunications Officers and Advisors annual conference keynote audience. "The truth is it will be impossible to have fair competition on a level playing field in the cable market if the field is tilted at both ends to the advantage of the RBOCs and incumbent cable operators over the rest of the competitors."

Aquino explained that Verizon has been pushing hard to get Congress to give them a free pass from the so-called "insurmountable burden" of going through the local franchise process. RCN doesn't believe franchising relief for the RBOCs is necessary or even appropriate.

"RCN, which started from scratch and without any pre-existing facilities and relationships with local regulators, successfully negotiated more than 130 local franchise agreements in two years," said Aquino. "If RCN can do this successfully, I'm sure the RBOCs can, too, and hopefully on a bigger scale given their infinitely bigger resources and their existing presence in all of their local communities."

Aquino said even if the RBOCs get the franchise relief that they want, there's certainly no guarantee that they'll enter a local market. He believes they only plan to enter markets that they currently serve, where they do not compete against other RBOCs or even any other incumbent telephone companies. As a result, communities would end up with a duopoly of telecom and cable giants ruling the local marketplace.

"One need only look at how stagnant the cellular phone industry was as a duopoly and what happened when true competition was introduced: lower prices ... more innovation ... more options," Aquino said.

The other important consideration for Congress according to RCN is the programming and pricing policies of the incumbent, large cable operators, who have busily spent the past 10 years entrenching their market power by mergers, clustering their systems, and acquiring control over vast amounts of programming and, in particular, "must have" regional sports networks.

"Cable incumbents control large amounts of "must have" programming. For example, 37 percent of our billings go to Comcast and Time Warner as programming fees," said RCN President & CEO Peter Aquino. "The incumbents can impede access to programming that they control, either by denying access outright or by slow-rolling negotiations."

And this consolidation and control will only increase if Comcast and Time Warner are permitted to acquire Adelphia without any safeguards -- those two companies alone will control almost half the market nationwide. Reasonable and non-discriminatory access to "must have" programming, such as regional sports and the film libraries of studios such as MGM, must be assured if meaningful cable competition is to survive.

"We've also seen how cable incumbents selectively target our customers as 'win backs,' by offering extremely deep and long term discounts that aren't offered to all their customers," he added. "While lower prices are a positive effect of competition, it is simply not in the public interest when such discounts are subsidized by other cable ratepayers, and are aimed solely at eliminating that very competition itself."

In addition, Aquino said that established pricing structures also favor the largest cable companies through so-called "volume discounts" and discriminate against smaller companies by charging them exorbitant rates.

About RCN Corporation

RCN Corporation, http://www.rcn.com, is one of the largest facilities-based competitive providers of bundled cable, high-speed internet and phone services delivered over its own fiber-optic local network to residential customers in the most densely populated markets in the U.S. RCN Business Solutions is a growing business that also provides bulk video, high-capacity and voice services to business customers. RCN provides service in the Boston, New York, Eastern Pennsylvania, Washington, D.C., Chicago, San Francisco and Los Angeles metropolitan markets. RCN also owns 49% of Megacable, one of the largest cable companies in Mexico.

(RCNI-G)