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On the whole, RCN Corp. would rather not be in Philadelphia.
The broadband cable system overbuilder last week gave up its attempts to get Philadelphia City Council approval to build a new fiber optic network in the City of Brotherly Love, in competition with incumbent cabler Comcast.
RCN has been seeking approval for more than two years to build in the city, and will continue building systems in Philadelphia-area suburbs.
The Princeton, N.J.-based company already has indicated it plans to cut its capital spending by 50 percent this year and scale back its ambitious buildout plans in order to conserve capital. "RCN can easily shift the money we had set aside for Philadelphia to the suburbs and to our other markets where we have already begun offering service and are actively building our Megaband Network," RCN's chief financial officer Timothy Stoklosa stated.
Nevertheless, terminating its plans for the city represent a disappointing and expensive failure. In the July 1999 announcement that RCN had begun construction in Philadelphia, chairman and CEO David McCourt called the city a natural extension of his company's Northeast Corridor footprint, and said it represented "an extremely receptive and lucrative market for RCN."
The decision also comes at a time when RCN, like many overbuilders, continues struggling financially. The company earlier this month posted an operating loss of $226 million for the fourth quarter, compared with an operating loss of $105 million in the year-earlier period.
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