News

Almost 300 call center employees will lose their jobs as RCN Corp. trims costs by outsourcing work done at its Plains Township facility.

Officials of the Herndon, Va.-based communications company told employees Wednesday, saying the work would transfer to third-party call centers in the United States as RCN seeks to improve efficiency in an increasingly competitive market.

About 300 workers will remain in the Plains Township facility, including information technology, customer service and some other back-office activities.The layoffs are the latest setback in a period of tough times for RCN, which provides cable, telephone and Internet service in select metropolitan markets.

Ten years ago, RCN thought it could be to communications what Microsoft is to software.“The ’90s were the heyday for them, when they had a unique product and were facing Baby Bells and cable companies who were just starting to improve their networks,” said telecommunications industry analyst Jeff Kagan. “Today, it’s a tougher market with more competition and declining prices.”

Once in the forefront of the industry, RCN was the first to deliver the so-called “Triple Play” — bundled high-speed Internet, television and telephone service on one wire. For a time, RCN owned C-TEC, then-parent company of Dallas-based Commonwealth Telephone.

Now the highly leveraged company faces a new breed of competition from phone and cable companies.Like many communications companies in the 1990s, RCN borrowed heavily and overbuilt its network, lacing promising metropolitan markets with fiber optic lines.

The so-called dot-com crash battered the company heavily.

By the time RCN began brushing off its financial woes, the competitive landscape had changed. Incumbent cable television providers such as Comcast began offering their own bundled services. More recently, telephone companies such as Verizon Corp. started cross-selling satellite television service with line-delivered phone and Internet service.

“They are copycats who stole our business model,” RCN spokeswoman Lisa Barder said. “But we are holding our own and working really hard.”

In May 2004, RCN filed for bankruptcy protection, emerging in December 2004.The company posted a net loss of $11.9 million in 2006, following a net loss of $136.1 million in 2005.Late last year, the company hired the Blackstone Group with the intention of identifying a buyer for the company, but that effort does not seem to have generated much interest. Though it was unique in the 1990s, RCN’s network today is just another line on the utility pole.

“The opportunities for them so vibrant in the 1990s are gone,” Kagan said. “There may not be an out for RCN.”

Approximately 300 RCN employees will be laid off gradually starting in June and will receive severance packages of at least one month’s pay and one month’s paid health insurance, company officials said.The average tenure of laid-off employees is two years, RCN spokeswoman Lisa Barder said. The company will have on-site job fairs featuring other local employers with call centers, she said.

©The Citizens Voice 2007