RCN CORP /DE/
10-Q, 2000-11-14
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>

                         UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C. 20549


                            FORM 10-Q


        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
              OF THE SECURITIES EXCHANGE ACT OF 1934



       For the quarterly period ended              September 30, 2000

                                OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
              OF THE SECURITIES EXCHANGE ACT OF 1934

     For the transition periods from                   to
     Commission file number                          0-22825


                        RCN CORPORATION
      (Exact name of registrant as specified in its charter)


         Delaware                                         22-3498533
(State of other jurisdiction of                          (IRS Employer
incorporation or organization)                         Identification No.)


                           105 Carnegie Center
                      Princeton, New Jersey 08540
                (Address of principal executive offices)
                              (Zip Code)

                           (609) 734-3700
         (Registrant's telephone number, including area code)

         (Former name, former address and former fiscal year,
          if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.

YES  X      NO

Indicate the number of shares outstanding of each of the issuer's classes of
common stock ($1.00 par value), as of September 30, 2000.

Common Stock                    86,492,217













<PAGE>

RCN CORPORATION


INDEX


PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

              Consolidated Statements of
              Operations- for the Quarters and Nine
              Months Ended September 30, 2000 and 1999

              Consolidated Balance Sheets-
              September 30, 2000 and December 31, 1999

              Condensed Consolidated Statements of
              Cash Flows- for the Nine Months Ended
              September 30, 2000 and 1999

              Notes to Condensed Consolidated Financial
              Statements

Item 2.       Management's Discussion and Analysis of
              Results of Operations and Financial
              Condition

Item 3.       Quantitative and Qualitative Disclosures
              About Market Risk

PART II.      OTHER INFORMATION


SIGNATURE















<PAGE>


PART I.   FINANCIAL INFORMATION
  Item 1. Financial Statements

                           RCN CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in Thousands, Except Share and Per Share Data)
                                     (Unaudited)

<TABLE>
<CAPTION>
                                                                    Quarters  Ended                           Nine Months
                                                                     September 30,                           September 30,
                                                           ---------------------------------       ---------------------------------
                                                                2000               1999                 2000               1999
                                                           --------------     --------------       --------------     --------------
<S>                                                        <C>                <C>                  <C>                <C>
Sales                                                      $      88,245      $      69,622        $     238,454      $     203,939
Costs and expenses, excluding non-cash stock based
  compensation, depreciation and amortization                    171,392            102,209              460,684            283,381
Non-cash stock based compensation                                 16,185                  -               27,632                  -
Depreciation and amortization                                     83,059             36,133              196,274             98,948
                                                           --------------     --------------       --------------     --------------
Operating (loss)                                                (182,391)           (68,720)            (446,136)          (178,390)
Interest income                                                   38,190             23,729              105,531             56,222
Interest expense                                                 (55,638)           (44,822)            (164,337)          (112,285)
Gain on the sale of subsidiary                                         -                  -                                   8,930
Other income (expense), net                                        1,522               (941)                (996)              (467)
                                                           --------------     --------------       --------------     --------------
(Loss) before income taxes                                      (198,317)           (90,754)            (505,938)          (225,990)
(Benefit) for income taxes                                          (880)            (1,437)              (2,401)            (3,971)
                                                           --------------     --------------       --------------     --------------
(Loss) before equity in unconsolidated
  entities and minority interest                                (197,437)           (89,317)            (503,537)          (222,019)
Equity in (loss) of unconsolidated entities                       (7,030)           (10,198)             (22,170)           (20,714)
Minority interest in loss of
  consolidated entities                                            6,429              7,741               16,688             19,847
                                                           --------------     --------------       --------------     --------------
Net (loss) before extraordinary item                            (198,038)           (91,774)            (509,019)          (222,886)
Extraordinary item: Debt prepayment costs                              -                  -                    -               (424)
                                                           --------------     --------------       --------------     --------------
Net (loss)                                                      (198,038)           (91,774)            (509,019)          (223,310)
Preferred dividend and accretion requirements                     35,760              4,446               86,392              8,529
                                                           --------------     --------------       --------------     --------------
Net (loss) to common shareholders                          $    (233,798)     $     (96,220)       $    (595,411)     $    (231,839)
                                                           ==============     ==============       ==============     ==============

Basic and Diluted (loss) per average common share:
  Net (loss) before extraordinary item                     $       (2.70)     $       (1.26)       $       (7.14)     $       (3.28)
                                                           ==============     ==============       ==============     ==============
  Extraordinary item: Debt prepayment costs                $           -      $           -        $           -      $       (0.01)
                                                           ==============     ==============       ==============     ==============
  Net (loss) to common shareholders                        $       (2.70)     $       (1.26)       $       (7.14)     $       (3.29)
                                                           ==============     ==============       ==============     ==============
  Weighted average shares outstanding                         86,470,290         76,184,604           83,434,647         70,416,096
</TABLE>
See accompanying notes to Condensed Consolidated Financial Statements.












<PAGE>



                            RCN CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                                 (Dollars in Thousands)
                                      (Unaudited)
<TABLE>
<CAPTION>
                                                              September 30,         December 31,
                                                                   2000                 1999
                                                             ---------------       --------------
<S>                                                          <C>                   <C>
ASSETS
Current assets:
    Cash and temporary cash investments                      $     414,481         $     391,412
    Short-term investments                                       1,745,266             1,401,877
    Accounts receivable from related parties                        42,255                 8,015
    Accounts receivable, net of reserve for
      doubtful accounts of $15,222 at September 30,
      2000 and $12,258 at December 31, 1999                         35,501                28,434
    Unbilled Revenues                                                2,229                 2,124
    Interest and dividends receivable                               17,795                15,049
    Material and supply inventory, at average cost                  78,423                21,064
    Prepayments and other                                           24,995                13,853
    Investments restricted for debt service                         11,492                23,111
                                                             ---------------        --------------
Total current assets                                             2,372,437             1,904,939
 Property, plant and equipment, net of accumulated
   depreciation of $345,260 at September 30, 2000 and
   $230,581 at December 31, 1999                                 1,713,482               893,179
Investments restricted for debt service                              5,521                    48
Investments                                                        220,412               190,571
Intangible assets, net of accumulated amortization
   of $238,949 at September 30, 2000 and $158,384 at
   December 31, 1999                                               409,636               138,491
Deferred charges and other assets                                   74,723                64,886
                                                             ---------------        --------------
Total assets                                                 $   4,796,211         $   3,192,114
                                                             ===============        ==============




<PAGE>



LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt and
      capital lease obligations                              $         499         $       1,225
    Accounts payable                                                91,384                92,785
    Accounts payable to related parties                             77,712                35,809
    Advance billings and customer deposits                          21,030                16,901
    Deferred income taxes                                            1,487                 1,464
    Accrued expenses                                               141,499               101,261
                                                             ---------------       --------------
Total current liabilities                                          333,611               249,445
Long-term debt                                                   2,230,760             2,143,096
Other deferred credits                                              22,528                24,598
Minority interest                                                   83,059               129,234
Commitments and contingencies
Preferred stock, par value $1 per share: Authorized
   25,000,000 shares: Issued and outstanding                     1,954,253               253,438
   1,995,991 at September 30, 2000 and 263,053 at
   December 31, 1999
Common shareholders' equity:
   Common stock, par value $1 per share: Authorized
    200,000,000 shares: Issued and outstanding
    87,056,846 at September 30, 2000 and 77,724,070
    at December 31, 1999                                            87,057                77,724
   Class B Common stock, par value $1 per share:
   Authorized 400,000,000 shares: none issued                            -                     -
   Additional paid-in capital                                    1,310,247               923,340
   Cumulative translation adjustments                               (2,274)               (2,014)
   Unearned compensation expense                                   (29,577)                    -
   Unrealized appreciation/(depreciation) on investments             2,679                (6,228)
   Treasury stock, 564,629 shares and 562,000 shares at cost
    at September 30, 2000 and December 31, 1999, respectively       (9,591)               (9,391)
   Accumulated deficit                                          (1,186,541)             (591,128)
                                                             ---------------       --------------
Total common shareholders' equity                                  172,000               392,303
                                                             ---------------       --------------
Total liabilities and shareholders' equity                   $   4,796,211         $   3,192,114
                                                             ===============       ==============
</TABLE>
See accompanying notes to Consolidated Financial Statements.










<PAGE>


                            RCN CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Dollars in Thousands)
                                      (Unaudited)
<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                         September 30,
                                                              ----------------------------------
                                                                   2000                1999
                                                              --------------      --------------
<S>                                                           <C>                 <C>
NET CASH (USED IN) OPERATING ACTIVITIES                       $    (243,419)      $     (89,358)
                                                              --------------      --------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Additions to property, plant & equipment                        (733,063)           (339,726)
   Investment and advance to unconsolidated entities                (53,748)             (9,455)
   Short-term investments, net                                     (343,389)           (514,959)
   Acquisitions                                                    (290,844)            (55,137)
   Proceeds from the sale of subsidiary                                   -              23,711
   Other                                                             (1,291)             (3,198)
                                                              --------------      --------------
   Net cash (used in) investing activities                       (1,422,335)           (898,764)
                                                              --------------      --------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Issuance of long-term debt                                             -             500,000
   Redemption of long-term debt & capital lease obligation           (1,471)           (100,691)
   Purchase of treasury stock                                          (200)                (90)
   Interest paid on Senior Notes (reduction in restricted cash)      11,619              11,250
   Payments made for debt financing costs                            (2,823)            (31,781)
   Contribution to minority interest partner                         61,005                (122)
   Contribution from minority interest partner                            -              82,320
   Proceeds from the issuance of common stock                             -             344,342
   Proceeds from the issuance of preferred stock                  1,614,423             239,897
   Proceeds from the exercise of stock options                        6,270               3,929
                                                              --------------      --------------
   Net cash provided by financing activities                      1,688,823           1,049,054
                                                              --------------      --------------
   Net increase in cash and temporary
     cash investments                                                23,069              60,932
   Cash and temporary cash investments at beginning of year         391,412             120,126
                                                              --------------      --------------
   Cash and temporary cash investments at September 30        $     414,481       $     181,058
                                                              ==============      ==============
   Supplemental disclosures of cash flow information
   Cash paid during the periods for:
      Interest (net of amounts capitalized)                   $      61,190       $      46,880
                                                              ==============      ==============
      Income taxes                                            $         181       $         505
                                                              ==============      ==============
</TABLE>

See accompanying notes to Condensed Consolidated Financial Statements.









<PAGE>
                       RCN CORPORATION AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
               (Thousands of Dollars, Except Per Share Amounts)

1.  RCN Corporation (the "Company" or "RCN") provides a wide range of
telecommunications services through high speed, high capacity advanced fiber
optic networks.  RCN currently offers individual or bundled local and long
distance telephone, video and data services, including high speed Internet
access.  We provide our services primarily to residential customers in selected
markets with high levels of population density and favorable demographics.  We
are also the nation's first and largest single-source facilities-based provider
of bundled local and long distance phone, cable television and high-speed
internet services to the most densely populated residential markets in the
country.  RCN is currently delivering broadband services over its Megaband
Network or designing and building its network on the East and West coasts as
well as Chicago.

2.  The Condensed Consolidated Financial Statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.  However, in the opinion of the
management of the Company, the Condensed Consolidated Financial Statements
include all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial information.  The Condensed
Consolidated Financial Statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Form 10-K for
the year ended December 31, 1999.

3. The Company adopted the recognition provisions of SFAS No. 123, "Accounting
for Stock Based Compensation" ("SFAS No. 123") in 2000.  Under SFAS No. 123, the
fair value of an option (as computed in accordance with the Black Scholes
valuation model) on the date of grant is amortized over the vesting periods of
the options in accordance with FASB Interpretation No. 28 "Accounting For Stock
Appreciation Rights and Other Variable Stock Option or Award Plans" ("FIN 28").
The recognition provisions of SFAS No. 123 are applied prospectively upon
adoption.  As a result, the recognition provisions are applied to all stock
awards granted in the year of adoption and are not applied to awards granted in
previous years unless those awards are significantly modified or settled in cash
after adoption of the recognition provisions.

The Company believes that SFAS No. 123 will continue to result in material
non-cash charges to operations in 2000 and thereafter.  The amount of the
non-cash charges will be dependent upon a number of factors, including the
number of grants and the fair value of each grant estimated at the time of its
award.

The Company recognized a total of $27,632 of non-cash stock based compensation
for the nine months ended September 30, 2000.

Incentive Stock Options

The Company granted 4,312,150 Incentive Stock Options("ISO's") to employees
during the nine months ended September 30, 2000.  The expense recognized for the
three and nine months ended September 30, 2000 for ISO's outstanding at
September 30, 2000 in accordance with SFAS No. 123 was $3,622 and $6,008
respectively.

The fair value recognized under SFAS No. 123 for the ISO's granted to employees
for services performed prior to September 30, 2000 was approximately $26,483.
As of September 30, 2000, the Company had not reflected $22,861 of unamortized
compensation expense in its financial statements for options granted in 2000.

<PAGE>
Outperform Stock Option Plan

In June 2000, the Company adopted an outperform stock option ("OSO") program
pursuant to the Company's 1997 Equity Incentive Plan.  The OSO program was
designed so that the Company's stockholders would receive a market return on
their investment before OSO holders receive any return on their options.  The
Company believes that the OSO program aligns directly management's and
stockholders' interests by basing stock option value on the Company's ability
to outperform the market in general, as measured by the Standard & Poor's
("S&P") 500 Index.  Participants in the OSO program do not realize any value
from awards unless the Common Stock price outperforms the S&P 500 Index.
When the stock price gain is greater than the corresponding gain on the S&P 500
Index, the value received for awards under the OSO program is based on a formula
involving a multiplier related to the level by which the Common Stock
outperforms the S&P 500 Index.  To the extent that the Company's common stock
outperforms the S&P 500 Index, the value of the OSO's to a holder may exceed the
value of other stock options.

OSO grants are made to participants employed on the date of the grant.
Each award vests in equal installments over five years and has a
ten-year life.

The Company granted 3,000,000 OSO's to employees during the nine months ended
September 30, 2000.  The fair value recognized under SFAS No. 123 for the OSO's
granted to employees for services performed prior to September 30, 2000 was
approximately $67,234.  The Company recognized $8,607 of compensation expense in
the third quarter of 2000 for options granted in 2000.  As of September 30,
2000, the Company had not reflected $58,627 of unamortized compensation expense
in its financial statements for options granted in 2000.

Restricted Stock

On March 10, 2000, the Company issued 559,257 shares of restricted stock
with a fair value, on the date, of $67.00 per share.  During the performance
period the grantee may vote the shares, but the shares are subject to transfer
restrictions and are all or partially forfeited if a grantee terminates.  The
restricted stock vests over three years, 1/3 after year two and the remaining
2/3 after year three.  The restricted stock is considered issued and
outstanding.

The Company recorded $3,688 of non-cash compensation expense for the quarter
ended September 30, 2000 related to its restricted stock program.

As of September 30, 2000, the Company had unamortized compensation costs of
$29,577 which is being amortized to expense over the restriction period.

Stock Option Recap

During the third quarter of 2000, approximately 194,000 options were granted,
approximately 32,567 were exercised yielding cash proceeds of $382 and
approximately 166,204 options were canceled.  At September 30, 2000, there
are approximately 15,964,369 (including OSO's) options outstanding at exercise
prices ranging from $1.30 to $70.50 under RCN's 1997 Plan.

4.  Basic loss per share is computed based on net (loss) after preferred
stock dividend and accretion requirements divided by the weighted average
number of shares of common stock outstanding during the period.

<PAGE>
Diluted loss per share is computed based on net (loss) after preferred
stock dividend and accretion requirements divided by the weighted average
number of shares of common stock outstanding during the period after giving
effect to convertible securities considered to be dilutive common stock
equivalents.  The conversion of preferred stock and stock options during the
periods in which the Company incurs a loss from continuing operations is not
assumed since the effect is anti-dilutive.  The number of shares of preferred
stock and stock options which would have been assumed to be converted in the
quarters and nine months ended September 30, 2000 and have a dilutive effect
if the Company had income from continuing operations is 25,852,459 and
38,391,225, respectively.  The number of stock options which would have been
assumed to be converted in the quarter and nine months ended September 30, 1999
and have a dilutive effect if the Company had income from continuing
operations is 11,989,675 and 9,308,844, respectively.

<TABLE>
<CAPTION>
                                                 Quarter Ended September 30,      Nine Months Ended September 30,
                                               ------------------------------     --------------------------------
                                                   2000              1999              2000              1999
                                               ------------      ------------     -------------      -------------
<S>                                            <C>               <C>              <C>                <C>
Net (loss) from continuing operations          $  (198,038)      $   (91,774)     $   (509,019)      $   (222,886)
Extraordinary item: Debt prepayment costs                -                                  -                (424)
Preferred stock dividend and accretion
  requirements                                      35,760             4,446            86,392              8,529
                                               ------------      ------------     -------------      -------------
Net (loss) to common shareholders              $  (233,798)      $   (96,220)     $   (595,411)      $   (231,839)

Basic loss per average common share:
  Weighted average shares outstanding           86,470,290        76,184,604        83,434,647         70,416,096
  (Loss) from continuing operations            $     (2.70)      $     (1.26)     $      (7.14)      $      (3.28)
  Extraordinary item: Debt prepayment costs    $         -       $         -      $          -       $      (0.01)
  Loss per average common share                $     (2.70)      $     (1.26)     $      (7.14)      $      (3.29)

Diluted loss per average common share:
  Weighted average shares outstanding           86,470,290        76,184,604        83,434,647         70,416,096
  Dilutive shares resulting from stock options           -                 -                 -                 -
                                               ------------       -----------     -------------      -------------
  Weighted average shares and common stock
   equivalents outstanding                      86,470,290        76,184,604        83,434,647         70,416,096
                                               ============       ===========     =============      =============
  (Loss) from continuing operations            $     (2.70)       $    (1.26)     $      (7.14)      $      (3.28)
  Extraordinary item: Debt prepayment costs    $         -        $        -      $          -       $      (0.01)
  Loss per average common share                $     (2.70)       $    (1.26)     $      (7.14)      $      (3.29)
</TABLE>

5.  The Company primarily has two components of comprehensive income, cumulative
translation adjustments and unrealized appreciation/(depreciation) on
investments.  The amount of other comprehensive loss for the quarter and nine
months ended September 30, 2000 was ($191,650) and ($500,372), respectively.
The amount of other comprehensive loss for the quarter and nine months ended
September 30, 1999 was ($93,974) and ($231,058), respectively.

6.  On February 28, 2000, the Company and Vulcan Ventures Incorporated
("Vulcan"), the investment organization of Paul G. Allen, completed a
transaction which culminated in Vulcan acquiring a $1.65 billion investment in
the Company in the form of mandatorily convertible preferred stock (the
"Preferred Stock"), which will be converted into the Company's Common Stock,
("Common Stock"), no later than seven years after it is issued, if not
previously called or converted.  Vulcan purchased 1,650,000 shares of the
Preferred Stock.  The Preferred Stock has a liquidation preference of $1,000 per
share and is convertible into Common Stock at a price of $62 per share.  The
Preferred Stock has a dividend rate of 7% per annum.  All dividends will be paid
in additional shares of Preferred Stock.  At September 30, 2000 the Company paid
dividends in the amount of $68,885 in the form of additional shares of Series B
Preferred Stock.  At September 30, 2000 the number of common shares that would
be issued upon conversion of the Series B Preferred Stock was 27,723,952.

In connection with the investment, Vulcan was permitted to appoint two members
to the Company's Board of Directors.  On February 28, 2000 Vulcan appointed
William D. Savoy, President of Vulcan and Edward S. Harris, Investment Analyst
with Vulcan.

<PAGE>
7.  On April 28, 2000, the Company acquired 21st Century Telecom Group, Inc.
("21st Century").  21st Century is an integrated, facilities-based
communications company, which seeks to be the first provider of bundled voice,
video and high-speed Internet and data services in selected midwestern markets
beginning in Chicago.

The approximate consideration for the acquisition was $513,000 including out of
pocket costs of approximately $1,500, the assumption and repayment of debt of
approximately $303,000 and RCN common stock with a fair value of approximately
$208,000 at the time of issuance.  Additionally, the Company converted
approximately 1,621,000 21st Century stock options to approximately 587,000 RCN
incentive stock options in connection with the acquisition.  In connection with
the acquisition of 21st Century the Company's management is conducting a study
for the purpose of allocating the purchase price paid for 21st Century.  The
Company has preliminary recorded $300,000 excess cost over bookvalue to goodwill
and is amortizing it over four years.

8.  Pursuant to an exchange agreement between NSTAR Communications Securities
Corporation ("NSTAR Securities") and RCN, NSTAR Securities has the right, from
time to time, to convert portions of its ownership interest in RCN-BECOCOM into
shares of the Company's common stock, based on an appraised value of such
interest.  Shares issued upon such exchanges are issued to NSTAR Securities.
At the close of business on December 31, 1999, NSTAR Securities exchanged a
further portion of its interest for 2,989,543 shares of RCN common stock.  Such
portion of the interest was valued as of May 27, 1999.  Following such
exchanges, NSTAR Securities retains a 23.14% sharing ratio in the joint venture,
and the right to invest as if it owned a 49% interest.  Such investment
percentage will decrease to the extent NSTAR Securities disposes of such RCN
common stock.

In April 2000, NSTAR Communications gave notice of its intent to convert its
remaining ownership interest into shares of the Company's common stock.  In
October 2000, the Company and NSTAR Communications reached an agreement in
principle to settle the final valuation of that exchange and to amend certain
other agreements governing the RCN-BecoCom, LLC joint venture (the "Joint
Venture").  Under the agreement in principle, NSTAR Communications will receive
7.5 million shares of the Company's common stock in exchange for its remaining
membership interest in the Joint Venture, representing $152 million invested by
NSTAR Communications.  In addition, a new class of security in the Joint Venture
will be created.  NSTAR Communications will be permitted to invest up to $100
million in such security, which will carry a cash coupon rate of 1.84% per
month, guaranteed by the Company.  Such coupon will include amortization of
principal, which will be fully amortized over a fifteen year term (callable
after eight years, subject to certain make-whole requirements).  NSTAR
Communications, at its election, may choose to designate the amounts it
contributes under future capital calls as either common equity or the new
security in the Joint Venture.  Future investments by NSTAR Communications will
not be convertible into Company stock.  In addition, the Joint Venture and NSTAR
Communications will amend certain of their agreements to incorporate an
incentive and penalty provision for construction activities and expand the
relevant market in which the Joint Venture operates.

9.  In February 2000, the Company made a $5,000 loan to Juniornet in the form of
a convertible bridge loan, subsequently, in June 2000 the Company made an
additional $5,000 loan to Juniornet.  Such loans mature in December 2000.
JuniorNet's management is currently reviewing its business plan and financing
alternatives with respect to repayment and/or restructure of these loans as well
as long term capital strategy. The result of this review may impact the
Company's ultimate recovery of its investment.

10.  In September 2000, the Company acquired certain assets of OnePoint
Communication Corporation and OnePoint Communications ("OnePoint"), a private
cable operator serving the Chicago area, for a consideration of approximately
$10 million in cash.

<PAGE>
11.  In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities".  SFAS 133, as amended by SFAS 138, becomes
effective for the Company beginning January 1, 2001.  This Statement establishes
standards for financial accounting and reporting for derivative instruments
and hedging activities.  The Company is in the process of evaluating all
contracts to determine whether they will be subject to the guidelines set forth
under SFAS 133.



<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations
                (Thousands of Dollars, Except Per Share Data)

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements.  Certain information included in this Quarterly
Report is forward-looking, such as information relating to expected capital
expenditures, capital contributions to joint ventures by joint venture partners,
and expected trends in operating losses and cash flows associated with
investments in new markets.  Such forward-looking information involves important
risks and uncertainties that could significantly affect expected results in the
future differently from those expressed in any forward-looking statements made
by, or on behalf of, the Company.  These risks and uncertainties include, but
are not limited to, uncertainties relating to economic conditions, acquisitions
and divestitures, government and regulatory policies, the pricing and
availability of equipment, materials, inventories and programming, the
availability of capital in the public markets, technological developments and
changes in the competitive environment in which the Company operates.

The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the year ended
December 31, 1999 included in the Company's Form 10-K.

GENERAL

RCN Corporation (the "Company" or "RCN") is the nation's first and largest
single-source facilities-based provider of bundled local and long distance
phone, cable television and high-speed Internet services to the densest
residential markets in the country.  The Company is currently delivering
broadband services over its Megaband Network or designing and building its
network on both the East and West coasts as well as in Chicago.  In addition,
the Company is a leading Internet Service Provider in its markets.  RCN offers
individual or bundled service options, superior customer service and
competitive prices.  The Company is also constructing its networks with
significant excess capacity in order to accommodate expanded services in the
future.  The Company intends to expand the services provided to its customers
through strategic alliances and opportunistic development of complementary
products.  In addition, the Company expects to use the excess capacity in its
fiber optic networks to provide services to commercial customers located on or
near its networks.

RCN's Megaband Network is a unique broadband fiber-optic platform capable of
offering a full suite of communications services including fully featured
voice, video and high-speed Internet to residential customers.  The network
employs SONET ring backbone architecture, and localized nodes built to ensure
its state-of-the-art fiber optics travel to within 900 feet of the Company's
customers, with fewer electronics and lower maintenance costs than existing
local networks.  The Company's high-capacity local fiber-optic networks target
densely populated areas comprising 44% of the US residential communications
market spread over just 6% of its geography.

The Company expects that the operating and net losses from its business may rise
in the future as it expands and develops its network and customer base.

There can be no assurance that RCN will achieve or sustain profitability or
positive operating income in the future as it develops its advanced fiber
optic network.

<PAGE>
The operating losses have resulted primarily from expenditures associated with
the development of the Company's operational infrastructure, start up expenses
in new markets, and marketing expenses.  The Company expects it will continue
to experience negative operating income while it continues to invest in its
networks and until such time as revenue growth is sufficient to fund operating
expenses.  The Company expects to achieve positive operating margins over time
by (i) increasing the number of customers it serves, (ii) increasing the number
of connections per customer by cross marketing its services and promoting
bundled service options and therefore increasing the revenue per customer,
(iii) lowering the costs associated with new subscriber additions and (iv)
reducing the cost of providing services by capturing economies of scale.  The
Company expects its operating revenues will increase in future periods through
internal growth of its current advanced fiber optic networks, increases in
penetration, and increases in the number of services per customer; however, the
Company also expects that operating losses may increase for some period of time
as the Company initiates network development in new markets and expands its
current networks.  When the Company makes its initial investment in a new
market, the operating losses typically increase as the network and employee base
are expanded to facilitate growth.  The Company's ability to generate positive
cash flow in the future will depend on, among other things, the extent of
capital expenditures and other expenditures in current and additional markets,
the ability of the Company to generate revenues and generate customers,
competition in the Company's markets, penetration of the Company's services and
any potential adverse regulatory developments.  The Company will be dependent on
various financing sources to fund its growth as well as continued losses from
operations.  There can be no assurance that such funding will be available, or
available on terms acceptable to the Company.  See - "Liquidity and Capital
Resources."



<PAGE>
Results of Operations

Quarter Ended September 30, 2000 Compared to Quarter Ended September 30, 1999

For the quarter ended September 30, 2000, sales increased 26.7% to $88,245
from $69,622 for the same period in 1999.  Operating losses before
non-cash stock based compensation and depreciation and amortization was
$(83,147) as compared to $(32,587) for the same period in 1999.  This loss was
predominantly due to the increase in operating, selling and general and
administrative expenses resulting from the rapid expansion of the Company's
business plan.

Sales
-----
Voice sales include local telephone service fees consisting primarily of monthly
line charges, local toll, special features and long-distance telephone
service fees based on minutes of traffic and tariffed rates or contracted fees.
Voice sales include both resold services and traffic over the Company's own
switches.

Video sales are comprised primarily of subscription fees for basic, premium
and pay-per-view cable television services; all of RCN's networks can support
these services.  A digital tier of cable service is being deployed in selected
markets.

Data sales represent Internet access fees billed at contracted rates, as well
as related revenues including web hosting and dedicated access.  The Company
offers both dial-up and high speed cable modem services.

Total sales increased $18,623, or 26.7%, to $88,245 for the quarter ended
September 30, 2000 from $69,622 for the quarter ended September 30, 1999.  The
increase primarily resulted from average service connections, which increased
12.5% to approximately 1,035,000 for the quarter ended September 30, 2000
from approximately 920,000 for the quarter ended September 30, 1999 (including
connections of the Starpower joint venture).  The increase in average service
connections resulted principally from growth in average on-net connections,
which increased 106.6% from approximately 182,000 for the quarter ended
September 30, 1999 to approximately 376,000 for the quarter ended September 30,
2000.  Total advanced fiber connections increased 107.7% from 195,000 at
September 30, 1999 to 405,000 at September 30, 2000.  Advanced fiber units
passed increased 129.2% to 1,263,000 units at September 30, 2000 from 551,000
units at September 30, 1999.

Voice sales increased $4,191, or 32.1%, to $17,259 for the quarter ended
September 30, 2000 from $13,068 for the quarter ended September 30, 1999.
Average advanced fiber voice connections increased approximately 98.1% to
approximately 103,000 for the quarter ended September 30, 2000 (including
connections of the Starpower joint venture) from approximately 52,000 for the
quarter ended September 30, 1999.  Average off-net voice connections decreased
approximately 17.3% to approximately 43,000 for the quarter ended September 30,
2000 from approximately 52,000 for the quarter ended September 30, 1999.
Approximately $2,500 of the increase in voice sales is attributable to higher
average connections.  The remaining increase is principally due to higher
revenue per connection.  Although minutes, calls and average call length
increased, revenue per minute declined.

Video sales increased 8,491, or 27.0%, to $39,970 for the quarter ended
September 30, 2000 from $31,479 for the quarter ended September 30, 1999.  The
increase was primarily due to approximately 33,000 additional average video
connections for the quarter ended September 30, 2000 as compared to the quarter
ended September 30, 1999.  Average on-net video connections grew 112,000 or
97.4% to approximately 227,000 for the quarter ended September 30, 2000
(including connections of the Starpower joint venture) from approximately
115,000 for the quarter ended September 30, 1999.  Average off-net video
connections were approximately 135,000 and 211,000 for the quarter ended
September 30, 2000 and 1999, respectively.  Overall higher service connections
contributed approximately $2,900 to the increase in video sales and higher
average revenue per connection contributed the remainder.

<PAGE>
Data sales increased $4,572, or 26.6% to $21,749 for the quarter ended
September 30, 2000 from $17,177 for the quarter ended September 30, 1999.  While
data sales increased in the third quarter of 2000 over the same quarter in 1999
the Company experienced a decline in data revenue from off net dial-up
subscribers resulting from increased competition from free data sales increased
in the third quarter of 2000 over the same quarter in 1999 and off net dial-up
subscribers resulting from increased competition from free Internet and
broadband services from the fourth quarter of 1999 to the third quarter of 2000.
The Company expects that this trend will continue in the future.

For the quarter ended September 30, 2000, the Company had approximately 481,000
average off-net data connections and approximately 46,000 average advanced fiber
data connections, including connections of the Starpower joint venture.  For the
quarter ended September 30, 1999, the Company had approximately 521,000 average
off-net data connections and approximately 15,000 advanced fiber data
connections, including connections of the Starpower joint venture.  Overall
higher average service connections contributed approximately $6,800 to the
increase in data sales, which was offset by lower average revenue per
connection.

Other sales increased $1,369 or 17.3% to $9,267 for the quarter ended
September 30, 2000 from $7,898 for the quarter ended September 30, 1999.  The
increase was due primarily to higher reciprocal compensation.

The Company recognizes that managing customer turnover is an important factor in
maximizing revenues and cash flow.  For the quarter ended September 30, 2000,
the Company's average monthly churn rate was approximately 2.3%.

Costs and expenses, excluding depreciation and amortization
-----------------------------------------------------------
Costs and expenses, excluding depreciation and amortization, are comprised of
direct costs, and operating, selling and general and administrative expenses.

Direct expenses include direct costs of providing services, primarily video
programming, franchise costs and network access fees.

Direct expenses increased $8,942, or 24.6%, to $45,286 for the quarter ended
September 30, 2000 from $36,344 for the quarter ended September 30, 1999.  The
increase was principally the result of higher sales, a lower margin on
data sales due principally to higher network backbone costs offset by a higher
margin on voice sales due to a decline in resale telephony customers and an
increase in on-net voice customers.

Operating, selling, general and administrative expenses primarily include
customer service costs, advertising, sales, marketing, order processing,
telecommunications network maintenance and repair ("technical expenses")
general and administrative expenses, installation and provisioning expenses,
and other corporate overhead.

Operating, selling, general and administrative costs increased $60,241, or
91.5%, to $126,106 for the quarter ended September 30, 2000 from $65,865 for
the quarter ended September 30, 1999.

Customer services costs, including order processing, increased approximately
$18,000, or 200.0%, for the quarter ended September 30, 2000 as compared to the
quarter ended September 30, 1999.  The increase is primarily internal and
external personnel related to support the increase in average connections over
the comparable period in 1999 and to increase the level of service.  The
increases were primarily for customer service representatives and provisioners
which facilitated a "warm call" program which contacts customers within 48 hrs
after initiating services and a corresponding decline in the number of calls per
connection.  Additionally, personnel additions were made to support the
Company's target of a lower ratio of connections to customer service
representatives.  Higher telephone expense, directly resulting from higher call
volumes due to higher connections, of approximately $2,500, principally
comprised the remaining increase.

<PAGE>
Technical expense, including installation and provisioning, increased
approximately $8,500, or 58.0%, for the quarter ended September 30, 2000 as
compared to the quarter ended September 30, 1999.  Technical expense increases
of approximately $4,000 were due to engineering and construction headcount and
contract labor additions made to plan and execute network expansion and network
operations control center monitoring.  Network and equipment maintenance costs
increased approximately $2,400.  Rental and utility expense, primarily for
material storage and hub sites, increased approximately $700.

Sales and marketing costs increased approximately $11,600, or 116.0%, for the
quarter ended September 30, 2000 as compared to the quarter ended September 30,
1999.  The increase resulted principally from additional staff and related
commissions and benefits to cover increases in marketable homes, to increase
penetration in the Company's existing markets and to increase the number of
services per customer.  Additionally, event marketing activity has increased to
promote RCN brand awareness, community involvement and new products such as the
Resilink bundled product offering.

Advertising costs increased approximately $1,500, or 17.2%, for the quarter
ended September 30, 2000 as compared to the quarter ended September 30, 1999.
The increase is primarily due to the expansion into Chicago, California and
Philadelphia markets.

General and administrative expenses increased approximately $21,000, or 89.0%,
for the quarter ended September 30, 2000 as compared to the quarter ended
September 30, 1999.

Employee expenses increased approximately $5,800 as a result of increased
support staff while recruiting, training and other employee related costs
increased approximately $2,700.

Operating taxes, primarily property taxes and insurance, increased approximately
$1,600 as a result of expanded operations.  Rent and utility expense increased
approximately $5,200, primarily related to additional space required to support
the increase in headcount.  The remaining increase primarily represents
additional development and support expenses associated with expanding operations
and new markets.

Depreciation and amortization
-----------------------------
Depreciation and amortization was $83,059 for the quarter ended September 30,
2000 and $36,133 for the quarter ended September 30, 1999.  The increase of
$46,926, or 129.9%, was the result of a higher depreciable basis of property,
plant and equipment resulting primarily from expansion of the Company's advanced
fiber network.  The cost basis of property, plant and equipment at September
30, 2000 and 1999 was $2,058,742 and $942,754, respectively.  Depreciation
expense as a percentage of average gross property, plant and equipment,
excluding construction in progress, was 3.41% and 3.24% for the quarters ended
September 30, 2000 and 1999, respectively.  The basis of intangible assets was
$648,585 and $290,028 at September 30, 2000 and 1999, respectively, primarily
due to the acquisition of 21st Century.  Amortization expense as a percentage of
average intangible assets was 5.45% and 5.43% for the quarter ended September
30, 2000 and 1999, respectively.

The Company expects that depreciation expense will increase in future periods
due to the expansion of the Company's advanced fiber optic network.

<PAGE>
Interest income
----------------
Interest income was $38,190 and $23,729 for the quarters ended September 30,
2000 and 1999, respectively.  The increase of $14,461, or 60.9%, results from
higher average cash, temporary cash investments and short-term investments as
compared to the same period in 1999.  Cash, temporary cash investments and
short-term investments were approximately $2,160,000 at September 30, 2000 and
$1,593,000 at September 30, 1999.  During later periods of 1999, proceeds of
$375,000 from new borrowings increased cash, temporary cash investments and
short-term investments.  During the first quarter of 2000, net proceeds from the
investment by Vulcan Ventures Incorporated in RCN convertible preferred stock
were approximately $1,614,000.  These increases were partially offset by capital
expenditures and working capital requirements.

Interest expense
----------------
For the quarter ended September 30, 2000, interest expense was $55,638 as
compared to $44,822 for the quarter ended September 30, 1999.  The increase
resulted primarily from higher interest and commitment fees of $1,800 relating
to the Company's Credit Facility, which the Company entered into with Chase
Manhattan Bank in June 1999, of which $500,000 of the Term Loan B was borrowed
in June 1999.  Additionally, higher interest expense of $9,500 resulted from the
Company's $375,000 Senior Notes issued in December 1999 at 10.125%.  The
remaining increase is due to higher accretion on the senior discount notes of
$2,800 offset by higher capitalized interest aggregating approximately $3,000.

Income tax
----------
The Company's effective income tax rate was a benefit of .45% and 1.5% for the
quarters ended September 30, 2000 and September 30, 1999, respectively.  The
Company's cumulative losses have exceeded the tax effect of accelerated
deductions, primarily depreciation, which the Company has taken for federal
income tax purposes.  As a result, generally accepted accounting principles do
not permit the recognition of such excess losses in the financial statements.
This accounting treatment does not impact cash flows for taxes or the amounts
or expiration periods of actual net operating loss carryovers.

Minority interest
-----------------
For the quarters ended September 30, 2000 and 1999, minority interest of $6,429
and $7,741, respectively, primarily represents the interest of NSTAR Securities
in the loss of RCN-BECOCOM.

Equity in the loss of unconsolidated entities
---------------------------------------------
For the quarter ended September 30, 2000, equity in the loss of unconsolidated
entities primarily represents the Company's share of the (income)/losses and
amortization of excess cost over net assets of; Megacable of $(732), Starpower
of $4,786 and JuniorNet of $2,976.  For the quarter ended September 30, 1999,
equity in the loss of unconsolidated entities primarily represents the Company's
share of the losses and amortization of excess cost over net assets of;
Megacable of $1,197, Starpower of $2,816 and JuniorNet $6,185.



<PAGE>
Nine Months Ended September 30, 2000 Compared to Nine Months Ended
September 30, 1999

For the nine months ended September 30, 2000, sales increased 16.9% to $238,454
from $203,939 for the same period in 1999.  Operating losses before non-cash
stock based compensation, depreciation and amortization was $(222,230) as
compared to $(79,442) for the same period in 1999.

Sales
-----
Total sales increased $34,515, or 16.9% to $238,454 for the nine months ended
September 30, 2000 from $203,939 for the nine months ended September 30, 1999.
The increase was fueled by higher average service connections which increased
9.6% to approximately 983,000 for the nine months ended September 30, 2000
(including connections of the Starpower joint venture) from approximately
897,000 for the nine months ended September 30, 1999.  The increase in average
service connections resulted principally from growth in average advanced fiber
connections, which increased 93.0% from approximately 158,000 for the nine
months ended September 30, 1999 to approximately 305,000 for the nine months
ended September 30, 2000.  Total advanced fiber connections increased 107.7%
from approximately 195,000 at September 30, 1999 to approximately 405,000 at
September 30, 2000.  Advanced fiber units passed increased 129.2% to
approximately 1,263,000 units at September 30, 2000 from approximately 551,000
units at September 30, 1999.

Voice sales increased $5,106, or 12.5%, to $45,881 for the nine months ended
September 30, 2000 from $40,775 for the nine months ended September 30, 1999.
Approximately $4,300 of the increase in voice sales is attributable to higher
average connections.  Average advanced fiber voice connections increased
approximately 88.6% to approximately 83,000 for the nine months ended September
30, 2000 (including connections of the Starpower joint venture) from
approximately 44,000 for the nine months ended September 30, 1999.  Average
off-net voice connections decreased approximately 24.1% to approximately 44,000
for the nine months ended September 30, 2000 from approximately 58,000 for the
nine months ended September 30, 1999.  The increase in voice sales from higher
average connections was offset by a decrease in revenue per connection of 3.3%.

Video sales increased $17,244, or 18.6% to $110,082 for the nine months ended
September 30, 2000 from $92,838 for the nine months ended September 30, 1999.
The increase was primarily due to approximately 43,000 additional average video
connections for the nine months ended September 30, 2000 as compared to the nine
months ended September 30, 1999.  Average on-net video connections grew 84,000
or 81.7% to approximately 187,000 for the nine months ended September 30, 2000
(including connections of the Starpower joint venture) from approximately
103,000 for the nine months ended September 30, 1999.  Average off-net video
connections were approximately 140,000 and 170,000 for the nine months ended
September 30, 2000 and 1999, respectively.  Overall higher service connections
contributed approximately $7,200 to the increase in video sales and higher
average revenue per connection principally contributed the remainder.

Data sales increased $5,583, or 11.3% to $55,153 for the nine months ended
September 30, 2000 from $49,570 for the nine months ended September 30, 1999.
The increase was primarily due to approximately 7,000 additional average data
connections for the nine months ended September 30, 2000 as compared to the nine
months ended September 30, 1999.

For the nine months ended September 30, 2000, the Company had approximately
495,000 average off-net data connections and approximately 34,000 average
advanced fiber data connections, including connections of the Starpower joint
venture.  For the nine months ended September 30, 1999, the Company had
approximately 510,000 average off-net data connections, including connections of
the Starpower joint venture and approximately 12,000 average advanced fiber data
connections.  Overall higher average service connections contributed
approximately $44,000 to the increase in data sales which was substantially
offset by lower average revenue per connection.  The decrease in off net dial-up
subscribers and in overall revenue per subscriber results from increased
competition from free Internet and broadband services.  The Company expects that
this trend will continue in the future.

<PAGE>
Other sales increased $6,582, or 31.7% to $27,338 for the nine months ended
September 30, 2000 from $20,756 for the nine months ended September 30, 1999.
The increase was due primarily to higher reciprocal compensation.  This increase
was partially offset by lower long distance revenue primarily attributable to a
rate reduction year over year.

The Company recognizes that managing customer turnover is an important factor in
maximizing revenues and cash flow.  For the nine months ended September 30,
2000, the Company's average monthly churn rate was approximately 2.3%.

Costs and expenses, excluding depreciation and amortization
-----------------------------------------------------------
Direct expenses increased $21,206, or 20.1% to $126,868 for the nine months
ended September 30, 2000 from $105,662 for the nine months ended September 30,
1999.  The increase was principally the result of higher sales, a lower margin
on data sales due principally to higher network backbone costs offset by a
higher margin on voice sales due to a decline in resale telephony customers
and an increase in on-net voice customers.

Operating, selling, general and administrative costs increased $156,097, or
87.8% to $333,816 for the nine months ended September 30, 2000 from $177,719 for
the nine months ended September 30, 1999.

Customer services costs, including order processing, increased approximately
$37,400, or 139.1%, for the nine months ended September 30, 2000 as compared to
the nine months ended September 30, 1999.  The increase is primarily personnel
related to support the increase in average connections over the comparable
period in 1999 and to increase the level of service.  The increases were
primarily for customer service representatives and provisioners which
facilitated a "warm call" program which contacts customers within 48 hrs after
initiating services and a corresponding decline in the number of calls per
connection.  Additionally, personnel additions were made to support the
Company's target of a lower ratio of connections to customer service
representatives.  Higher telephone expense, directly resulting from higher call
volumes due to higher connections, of approximately $4,900, principally
comprised the remaining increase.

Technical expense, including installation and provisioning, increased
approximately $35,000, or 95.7%, for the nine months ended September 30, 2000
as compared to the nine months ended September 30, 1999.  Technical expense
increases of approximately $21,800 were due to engineering and construction
headcount and contract labor additions made to plan and execute network
expansion and network operations control center monitoring.  Network and
equipment maintenance costs increased approximately $6,100.  Rental and utility
expense, primarily for material storage and hub sites, increased approximately
$2,600.

Sales and marketing costs increased approximately $25,600, or 97.8%, for the
nine months ended September 30, 2000 as compared to the nine months ended
September 30, 1999.  The increase resulted principally from additional staff
and related commissions and benefits, to cover increases in marketable homes,
to increase penetration in the Company's existing markets and to increase the
number of services per customer.  Additionally, event marketing activity has
increased to promote RCN brand awareness, community involvement and new products
such as the ResiLink bundled product offering.

General and administrative expenses increased approximately $57,600, or 86.9%,
for the nine months ended September 30, 2000 as compared to the nine months
ended September 30, 1999.  Information technology expenses increased
approximately $6,100.  The Company is in the process of developing information
technology systems which will provide a sophisticated customer care
infrastructure as well as other billing and administrative support systems.
Such systems include a tracking and billing system to support the Company's
ResiLink bundled service package.  These multiple systems are in various stages
of development and implementation.  The expense increases represent staff
additions to both support this effort and maintain the systems as well as
consulting expenses associated with the planning, analysis, data conversion and
training phases of these projects.  The Company expects that such charges may
increase in future periods.

<PAGE>
Employee expenses increased approximately $11,300 as a result of increased
support staff while recruiting, training and other employee related costs
increased approximately $6,700.

Operating taxes, primarily property taxes and insurance, increased approximately
$6,600 as a result of expanded operations.  Rent and utility expense increased
approximately $11,300, primarily related to additional space required to support
the increase in headcount.  The remaining increase primarily represents
additional development and support expenses associated with expanding operations
and new markets.

Depreciation and amortization
-----------------------------
Depreciation and amortization was $196,274 for the nine month period ending
September 30, 2000 and $98,948 for the nine month period ending September 30,
1999.  The increase of $97,326, or 98.4% was the result of a higher depreciable
basis of plant resulting primarily from expansion of the Company's advanced
fiber network.  The cost basis of property, plant and equipment at September
30, 2000 and 1999 was $2,058,742 and $942,754, respectively.  Depreciation
expense as a percentage of average gross property, plant and equipment,
excluding construction in progress, was 3.41% and 3.24% for the nine months
ended September 30, 2000 and 1999, respectively.  The basis of intangible assets
was $648,585 and $290,028 at September 30, 2000 and 1999, respectively,
primarily due to the acquisition of 21st Century.  Amortization expense as a
percentage of average intangible assets was 5.45% and 5.43% for the nine months
ended September 30, 2000 and 1999, respectively.

Interest income
----------------
Interest income was $105,531 and $56,222 for the nine month periods ended
September 30, 2000 and 1999, respectively.  The increase of $49,309, or 87.7%,
results from higher average cash, temporary cash investments and short-term
investments as compared to the same period in 1999.  Cash, temporary cash
investments and short-term investments were approximately $2,160,000 at
September 30, 2000 and approximately $1,593,000 at September 30, 1999.  During
later periods of 1999, proceeds from the following significant financing
transactions increased cash, temporary cash investments and short-term
investments: (1) the issuance of 250,000 shares of a new issue of the Company's
Series A Preferred Stock in April 1999, which yielded net proceeds of
approximately $240,000, (2) the issuance of 9,200,000 shares of the Company's
common stock, in May 1999, which yielded net proceeds of approximately $344,000
and (3) $875,000 from new borrowings, partially offset by the repayment of the
Company's $100,000 term loan.  During the first quarter of 2000, net proceeds
from the investment by Vulcan Ventures Incorporated in RCN convertible preferred
stock were approximately $1,614,000.  These increases were partially offset by
capital expenditures of approximately $733,000 and working capital requirements.

Interest expense
----------------
For the nine months ended September 30, 2000, interest expense was $164,337 as
compared to $112,285 for the nine months ended September 30, 1999.  The increase
resulted primarily from higher interest and commitment fees of $23,200 relating
to the Company's Credit Facility, which the Company entered into with Chase
Manhattan Bank in June 1999, of which $500,000 of the Term Loan B was borrowed
in June 1999.  Additionally, higher interest expense of $28,500 resulted from
the Company's $375,000 Senior Notes issued in December 1999 at 10.125%.  The
remaining increase is due to higher accretion on the senior discount notes of
$8,200 and to higher amortization of debt issuance costs of approximately
$2,900.  These increases were partially offset primarily by lower interest of
approximately $2,625 relating to the prepayment of the $100,000 term loan and
higher capitalized interest aggregating approximately $10,000.

<PAGE>
Income tax
----------
The Company's effective income tax rate was a benefit of .48% and 1.8% for the
nine months ended September 30, 2000 and September 30, 1999, respectively.  The
primary reason for the difference is that the tax effect of the Company's
cumulative losses has exceeded the tax effect of accelerated deductions,
primarily depreciation, which the Company has taken for federal income tax
purposes.  As a result, generally accepted accounting principles do not permit
the recognition of such excess losses in the financial statements.  This
accounting treatment does not impact cash flows for taxes or the amounts or
expiration periods of actual net operating loss carryovers.

Minority interest
-----------------
For the nine months ended September 30, 2000 and 1999 minority interest of
$16,688 and $19,847, respectively, primarily represents the interest of Boston
Edison Company ("NSTAR") in the loss of RCN-BECOCOM.

Equity in the loss of unconsolidated entities
---------------------------------------------
For the nine months ended September 30, 2000, equity in the loss of
unconsolidated entities primarily represents the Company's share of the losses
and amortization of excess cost over net assets of; Megacable of $(3,199),
Starpower $13,673 and JuniorNet of $11,696.  For the nine months ended September
30, 1999, equity in the loss of unconsolidated entities primarily represents the
Company's share of the losses and amortization of excess cost over net assets
of; Megacable of $1,662 and Starpower of $8,724 and JuniorNet of $10,328.



<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Because our network development plan involves relatively low fixed costs, we
are able to schedule capital expenditures to meet expected subscriber growth
in each major market.  Our principal fixed costs in each such market are
incurred in connection with the establishment of a video transmission and
telephone switching facility.  To make each market economically viable, it is
then necessary to construct infrastructure to connect a minimum number of
subscribers to the transmission and switching facility.  We phase our market
entry projects to ensure that we have sufficient cash on hand to fund this
construction.

The Company's business plan will require a substantial amount of capital
expenditures, a substantial portion of which will be incurred before any
significant  related revenues are expected to be realized.  These expenditures,
together with associated early operating expenses, may result in substantial
negative operating cash flow and substantial net operating losses for the
Company for the foreseeable future.  The Company's spending will be primarily
to fund the construction of its advanced fiber optic networks, upgrade its
Hybrid Fiber/Coaxial plant, fund operating losses and repay its debts.  The
Company currently estimates that its capital requirements for the period from
January 1, 2000 through 2001 will be approximately $3.6 billion, which include
capital expenditures of approximately $1.4 billion in 2000 and approximately
$1.6 billion in 2001.  The increase in capital expenditures is the result of
expansion of the Company's network into new and existing markets.  These capital
expenditures will be used principally to fund additional construction to the
Company's fiber optic network in high density areas in the Boston, New York,
Washington, D.C. and San Francisco Bay markets as well as to expand into new
markets including Chicago, Philadelphia and Los Angeles, and to develop its
information technology systems.  The Company believes its currently available
funds are sufficient to fund development of the markets the Company has
committed to entering.  The implementation of the Company's business plan in new
markets will require substantial additional capital.  The Company expects to
meet additional capital requirements with the proceeds from sales or the
issuance of additional equity securities, credit facilities and borrowings, or
additional debt securities.

The Company may not be successful in producing sufficient cash flow, raising
sufficient debt or equity capital on terms that it will consider acceptable,
or selling voice, video and data services.  Further, expenses may exceed the
Company's estimates and the financing needs may be higher than estimated.
Failure to generate sufficient funds may require the Company to delay or
abandon some of its future expansion or expenditures, which could have a
material adverse effect on the implementation of the Company's business
plan.  The Company may not be able to obtain such financing if and when it is
needed or that, if available, will be on terms unacceptable to the Company.

As of the end of the quarter, the Company had $2.7 billion in cash and available
funds.  These estimates are forward-looking statements that may change if
circumstances related to construction, the availability of capital, the
availability and cost of resources, equipment and personnel, timing or receipt
of regulatory approvals and opportunities to accelerate the deployment of the
Company's networks do not occur as expected.  In addition to the Company's
available cash, its joint venture partners are expected to contribute
approximately $400 million, of which approximately $364 million has been
contributed, to the joint ventures through 2000 in connection with development
of the Boston and Washington, D.C. markets.

The Company expects to supplement its existing available credit facilities,
available cash and operating cash flow by continuing to seek to raise capital to
increase its network coverage and pay for other capital expenditures, working
capital, debt service requirements, anticipated future operating losses and
acquisitions.

<PAGE>
The Company's current joint venture agreements reduce the amount of expenditures
required by RCN to develop the network due both to access to the joint venture
partners' existing facilities and to the anticipated joint venture partners'
equity contributions.  However, the joint venture arrangements will also reduce
the potential cash flows to be realized from operation of the networks in the
markets in which the joint ventures operate and restrict the Company's access
to cash flow generated by the joint ventures (which would be paid in the form of
dividends).  The Company may enter into additional joint ventures in the future
as the Company begins to develop new markets.

On February 28, 2000, the Company and Vulcan Ventures Incorporated
("Vulcan"), the investment organization of Paul G. Allen, completed a
transaction which culminated in Vulcan acquiring a $1.65 billion investment in
the Company in the form of mandatorily convertible preferred stock (the
"Preferred Stock"), which will be converted into the Company's Common Stock,
("Common Stock"), no later than seven years after it is issued, if not
previously called or converted.  Vulcan purchased 1,650,000 shares of the
Preferred Stock.  The Preferred Stock has a liquidation preference of $1,000
per share and is convertible into Common Stock at a price of $62 per share.  The
Preferred Stock has a dividend rate of 7% per annum. All dividends will be paid
in additional shares of Preferred Stock.  At September 30, 2000 the Company paid
dividends in the amount of $68,885 in the form of additional shares of Series B
Preferred Stock.  At September 30, 2000 the number of common shares that would
be issued upon conversion of the Series B Preferred Stock was 27,723,952.

In connection with the investment, Vulcan was permitted to appoint two members
to the Company's Board of Directors.  On February 28, 2000 Vulcan appointed
William D. Savoy, President of Vulcan and Edward S. Harris, Investment Analyst
with Vulcan.

Pursuant to an exchange agreement between NSTAR Communications Securities
Corporation ("NSTAR Securities") and RCN, NSTAR Securities has the right, from
time to time, to convert portions of its ownership interest in RCN-BECOCOM into
shares of the Company's common stock, based on an appraised value of such
interest.  Shares issued upon such exchanges are issued to NSTAR Securities.
At the close of business on December 31, 1999, NSTAR Securities exchanged a
further portion of its interest for 2,989,543 shares of RCN common stock.  Such
portion of the interest was valued as of May 27, 1999.  Following such
exchanges, NSTAR Securities retains a 23.14% sharing ratio in the joint
venture, and the right to invest as if it owned a 49% interest.  Such investment
percentage will decrease to the extent NSTAR Securities disposes of such RCN
common stock.

In April 2000, NSTAR Communications gave notice of its intent to convert its
remaining ownership interest into shares of the Company's common stock.  In
October 2000, the Company and NSTAR Communications reached an agreement in
principle to settle the final valuation of that exchange and to amend certain
other agreements governing the RCN-BecoCom, LLC joint venture (the "Joint
Venture").  Under the agreement in principle, NSTAR Communications will receive
7.5 million shares of the Company's common stock in exchange for its remaining
membership interest in the Joint Venture, representing $152 million invested by
NSTAR Communications.  In addition, a new class of security in the Joint Venture
will be created.  NSTAR Communications will be permitted to invest up to $100
million in such security, which will carry a cash coupon rate of 1.84% per
month, guaranteed by the Company.  Such coupon will include amortization of
principal, which will be fully amortized over a fifteen year term (callable
after eight years, subject to certain make-whole requirements).  NSTAR
Communications, at its election, may choose to designate the amounts it
contributes under future capital calls as either common equity or the new
security in the Joint Venture.  Future investments by NSTAR Communications will
not be convertible into Company stock.  In addition, the Joint Venture and NSTAR
Communications will amend certain of their agreements to incorporate an
incentive and penalty provision for construction activities and expand the
relevant market in which the Joint Venture operates.

<PAGE>
Sources of funding for the Company's further financing requirements may
include vendor financing, public offerings or private placements of equity
and/or debt securities, and bank loans.  There can be no assurance that
sufficient additional financing will continue to be available to the Company
or, if available, that it can be obtained on a timely basis and on acceptable
terms.  Failure to obtain such financing could result in the delay or
curtailment of the Company's development and expansion plans and expenditures.
Any of these events could impair the Company's ability to meet its debt service
requirements and could have a material adverse effect on its business.

The Company has completed the following debt and equity offerings:

    Date            Description                   Proceeds       Maturity
--------------  ------------------------------   ----------  -----------------
October 1997    10% Senior Notes                  $225,000   October 5, 2007
October 1997    11.125% Senior Discount Notes     $350,000   October 5, 2007
February 1998   9.8% Senior Discount Notes        $350,587   February 15, 2008
June 1998       11% Senior Discount Notes         $149,999   June 1, 2008
December 1999   10.125% Senior Notes              $375,000   January 15, 2010


    Date        Description/Price   Class/Series   Proceeds    Number of Shares
--------------  ------------------  ------------  ----------  ------------------
June 1998       Equity Offering     Common        $  112,866       6,098,355
April 1999      Equity Offering     Preferred A   $  239,897         250,000
May 1999        Equity Offering     Common        $  344,043       9,200,000
February 2000   Equity Offering     Preferred B   $1,614,428       1,650,000


The Indentures for the Notes referred to above all contain similar provisions.
The Chase Manhattan Bank acts as Trustee for each of the Indentures.  All the
aforementioned Notes are general senior unsecured obligations of RCN.  The
Senior Discount Notes do not bear cash interest for the first five years from
the offering.  Thereafter, cash interest on the notes will accrue at the
respective interest rate per annum and will be payable semi-annually in arrears
every six months.

The Senior Discount Notes are not callable for five years, and are redeemable in
whole or in part, at any time on or after the fifth year, at the option of RCN.
The Senior Notes are not callable for five years, and are redeemable in whole or
in part, at any time on or after the fifth year, at the option of RCN.  Both the
Senior Discount Notes and the Senior Notes may be redeemed after year five at
redemption prices starting at approximately 105% of the principal amount and
declining to 100% of the principal amount, plus any accrued and unpaid interest.

RCN may, at its option, use the net proceeds of certain offerings of RCN Common
Stock to redeem up to an aggregate of 35% of the aggregate principal amount at
maturity of the debt securities issued under the Indentures at a certain
premium.  Upon the occurrence of a change of control, RCN must make an offer to
purchase all of the debt securities issued under the Indentures then outstanding
at a premium.

The Indentures contain certain covenants that, among other things, limit the
ability of RCN and its subsidiaries to incur indebtedness, pay dividends, prepay
subordinated indebtedness, repurchase capital stock, engage in transactions
with stockholders and affiliates, create liens, sell assets and engage in
mergers and consolidations.

<PAGE>
On April 7, 1999, Hicks, Muse, Tate & Furst, through Hicks Muse Fund IV
purchased 250,000 shares of Series A Preferred Stock,  par value $1 per share,
for gross proceeds of $250,000.  The Series A Preferred Stock is cumulative
and has an annual dividend rate of 7% payable quarterly in cash or additional
shares of Series A Preferred Stock and has an initial conversion price of $39.00
per share.  The Series A Preferred Stock is convertible into common stock at
any time.  The Series A Preferred Stock is subject to a mandatory redemption
on March 31, 2014 at $1,000 per share, plus accrued and unpaid dividends, but
may be called by the Company after four years.  At September 30, 2000 the
Company paid dividends in the amount of $27,107 in the form of additional
shares of Series A Preferred Stock.  At September 30, 2000 the number of common
shares that would be issued upon conversion of the Series A Preferred Stock was
7,105,282.

The Company and certain of its subsidiaries together, (the "Borrowers") entered
into a $1,000,000 Senior Secured Credit Facility (the "Credit Facility") with
the Chase Manhattan Bank and certain other lenders.  The collateralized
facilities are comprised of a $250,000 seven-year revolving credit facility
(the "Revolver"), a $250,000 seven-year multi-draw term loan facility (the
"Term Loan A") and a $500,000 eight-year term loan facility (the "Term Loan
B").  All three facilities are governed by a single credit agreement dated as
of June 3, 1999 (the "Credit Agreement").

The Revolver may be borrowed and repaid from time to time.  Up to $150,000 of
the Revolver may be used to fund working capital needs and for general
corporate purposes.  The remaining $100,000 of the Revolver as well as the
term loans may be used solely to finance telecommunications assets.  The amount
of the commitments under the Revolver automatically reduces to $175,000 on June
3, 2005 and the remaining commitments are reduced quarterly in equal
installments through to maturity at June 3, 2006.  The Revolver can also be
utilized for letters of credit up to a maximum of $15,000.  As of September 30,
2000, there were no letters of credit outstanding under the Revolver.  As of
September 30, 2000 the Company also had letters of credit outside the Revolver
of approximately $13,550.

The Term Loan A is available for drawing until December 3, 2001, at which time
any undrawn commitments expire.  At September 30, 2000 there were no outstanding
loans under the Term Loan A.  Any outstanding borrowings under the Term Loan
A at September 3, 2002 will be repaid in quarterly installments based on
percentage increments of the Term Loan A that start at 3.75% per quarter on
September 3, 2002 and increase in steps to a maximum of 10% per quarter on
September 3, 2005 through to maturity at June 3, 2006.

As of September 30, 2000, $500,000 of the Term Loan B was outstanding.  The Term
Loan B was fully drawn at closing.  Amortization of the Term Loan B starts on
September 3, 2002 with quarterly installments of $1,000 per quarter until
September 3, 2006 when the quarterly installments increase to $121,000 per
quarter through to maturity at June 3, 2007.

The interest rate on the Credit Facility is, at the election of the
Borrowers, based on either a LIBOR or an alternate base rate.  For a Revolver
or Term Loan A borrowing, the interest rate will be LIBOR plus a spread of up
to 300 basis points or the base rate plus a spread of 200 basis points,
depending upon financial covenant calculations.  In the case of the Revolver and
the Term Loan A, a fee of 125 basis points on the unused commitment accrues
until the Company's earnings before income tax, depreciation and amortization
("EBITDA") has become positive and thereafter at up to 125 basis points
depending upon the Company's utilization of the commitments.  For all Term Loan
B borrowings the interest includes a spread that is fixed at 350 basis points
over the LIBOR or 250 basis points over the alternate base rate.

The Credit Agreement contains conditions precedent to borrowing, events of
default (including change of control) and covenants customary for facilities
of this nature.  The Credit Facility is secured by substantially all of the
assets of the Company and its subsidiaries.

Prepayments of the eight-year term loan require payment of a fee of 2% of the
amount of such prepayment if made on or prior to June 3, 2000 and 1% of such
prepayment if made thereafter but on or prior to June 3, 2001.

<PAGE>
The foregoing summary of certain provisions of the Credit Agreement does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the Credit Agreement.

The Company has indebtedness that is substantial in relation to its
shareholders' equity and cash flow.  At September 30, 2000 the Company had an
aggregate of approximately $2,231,259 of indebtedness outstanding, and the
ability to borrow up to an additional $500,000 under the Credit Agreement.
The Company also has cash, temporary cash investments and short-term investments
aggregating approximately $2,159,747 and a current ratio of approximately
7.11:1.

As a result of the substantial indebtedness of the Company, the Company's fixed
charges are expected to exceed its earnings for the foreseeable future. Based
on its current plans, the Company will require substantial additional capital
particularly in connection with the buildout of the Company's networks and the
introduction of its telecommunications services to new markets.  The leveraged
nature of the Company could limit its ability to effect future financing or may
otherwise restrict the Company's business activities.

The extent of the Company's leverage may have the following consequences: (i)
limit the ability of the Company to obtain necessary financing in the future for
working capital, capital expenditures, debt service requirements or other
purposes; (ii) require that a substantial portion of the Company's cash flows
from operations be dedicated to the payment of principal and interest on its
indebtedness and therefore not be available for other purposes; (iii) limit the
Company's flexibility in planning for, or reacting to, changes in its business;
(iv) place the Company at a competitive disadvantage as compared with less
leveraged competitors; and (v) render the Company more vulnerable in the event
of a downturn in its business.

The objective of the Company's "other than trading portfolio" is to invest in
high quality securities, to preserve principal, meet liquidity needs,
and deliver a suitable return in relationship to these guidelines.

For the nine months ended September 30, 2000, the Company's net cash used in
operating activities was $243,419 comprised primarily of a net loss of
($509,019) adjusted by non-cash depreciation and amortization of $196,274, other
non-cash items totaling $126,639 and working capital changes of $(57,313).  Net
cash used in investing activities of $1,422,335 consisted primarily of additions
to property, plant and equipment of $733,063, acquisitions of $290,844,
short-term investments, net of $343,389, and investment and advances in
unconsolidated joint venture of $53,748.  Net cash provided by financing
activities of $1,688,823 included proceeds from the issuance of preferred stock
of $1,614,423, contribution from minority interest partner of $61,005 and
proceeds from the exercise of stock options of $6,270.



<PAGE>
Item 3.  Quantitative & qualitative disclosures about market risk.

The Company has adopted Item 305 of Regulation S-K "Quantitative & qualitative
disclosures about market risk" which is effective in financial statements for
fiscal years ending after June 15, 1998.  The Company currently has no items
that relate to "trading portfolios".  Under the "other than trading portfolios"
the Company does have short-term investment portfolios categorized as available
for sale securities that are stated at cost, which approximates market, and
which are re-evaluated at each balance sheet date and one portfolio that is
categorized as held to maturity which is an escrow account against a defined
number of future interest payments related to the Company's (10% Senior
Discount Notes).  These portfolios consist of Federal Agency notes, Commercial
Paper, Corporate Debt Securities, Certificates of Deposit, U.S. Treasury notes,
and Asset Backed Securities.  The Company believes there is limited exposure to
market risk due primarily to the small amount of market sensitive investments
that have the potential to create material market risk.  Furthermore, the
Company's internal investment policies have set maturity limits, concentration
limits, and credit quality limits to minimize risk and promote liquidity.  The
Company did not include trade accounts payable and trade accounts receivable in
the "other than trading portfolio" because their carrying amounts approximate
fair value.

The objective of the company's "other than trading portfolio" is to invest in
high quality securities and seeks to preserve principal, meet liquidity needs,
and deliver a suitable return in relationship to these guidelines.  RCN may
from time to time enter into interest rate protection agreements.









<PAGE>

   Part II - OTHER INFORMATION
   ---------------------------


Item 2.  Changes in Securities and Use of Proceeds

         NONE

Item 6.  Exhibits and Reports on Form 8-K

(a.)  Exhibits

      (27)   Financial Data Schedule

(b.)  Reports on Form 8-K

      NONE


SIGNATURES



<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                                 RCN Corporation
Date: November 14, 2000

                                                 /s/ Timothy J. Stoklosa
                                                 -----------------------------
                                                 Timothy J. Stoklosa
                                                 Executive Vice President and
                                                 Chief Financial Officer








<PAGE>



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