In Part I of this article, I gave my own impressions of RCN Metro’s position in the sector and where they are heading. In this part, Telecom Ramblings interviews Felipe Alvarez, President of RCN Metro. Mr. Alvarez has been in the telecommunications sector for 20 years, and he came to RCN Metro via the acquisition of ConEd Communications in 2006 where he had been Chief Operating Officer.
TR: What effect has RCN Metro seen on its sales pipeline from the economic crisis?
FA: RCN Metro’s results have not been negatively impacted by the recession. This is primarily due to the type of service we provide (it is not a discretionary spend that our customers look to cut back on when times are tight, our services are core to how our customers operate their business) as well as the type of customers we serve (large, blue chip organizations). The volatility in the financial markets has actually required more bandwidth to handle the trades, so some of our customers have needed to add bandwidth in a matter of hours and RCN Metro has been able to accommodate them. We have seen a slight lengthening in sales cycles on very large projects, and we have seen a little more price pressure – especially on renewals.
TR: Where does RCN see the greatest growth coming from in 2009?
So far in 2009, we have had tremendous demand from wireless carriers. However, all of our regions and customer segments continue to grow.
TR: How has the integration of the Con Ed and Neon fiber networks gone? Have they turned out as you hoped?
FA: We are proud to say that our NEON integration is complete, and we were able to accomplish this without negatively impacting our customers. The acquisition of Con Ed provided a great NY-based network and a strong financial services customer base. With the acquisition of NEON, we were able to tie together our Tier 1 metro markets to create a footprint that now extends from Maine to Virginia and out to Chicago. We also added a strong carrier customer base which balanced out our customer portfolio and revenue profile.
TR: According to RCN’s 10-K, the majority of your revenue comes from routes that are fully diverse from your parent’s routes. Is this because it came via the acquisitions? Is your growth in 2009 coming more from the acquired footprint or from the traditional RCN routes?
FA: While RCN Metro does, on occasion, leverage the fiber assets of its parent, it mostly uses its own resources to deliver services; Metro is essentially a fully operational stand-alone telecom company within RCN. The acquisition of CEC and NEON along with the fiber builds we announced in Chicago and Philadelphia put the company in a strong position to serve its customers – we are seeing growth across the entire network and expect that we will increasingly leverage the integrated company footprints in 2009.
TR: Neon had many small markets that were outside your traditional footprint, such as those in New Hampshire and Maine. Are you finding those markets attractive, or is the focus still on the larger cities.
FA: We have success both within the Tier 1 markets as well as selling into the Tier 2/3 markets. Our carrier customers still look to us to provide high capacity bandwidth between Tier 2/3 markets while our large, enterprise customers tend to look for services within the metro as well as between tier 1 cities.
TR: Where do you see your biggest challenges in 2009?
FA: Keeping up with the demand and ensuring that we have the services and locations lit that our customers demand.
TR: Valuations are inexpensive right now, do you think there will be another round of consolidation amongst metro fiber providers?
FA: I think that service providers are always on the look out for high quality assets to strengthen their network/company. The main challenge that could inhibit further consolidation is access to the capital markets.
Thank you, Mr. Alvarez, for taking the time to speak with Telecom Ramblings!
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