Financials: Comcast, Charter shifting focus to broadband

Aug. 10, 2018
The message from the country's two biggest cable operators - Comcast and Charter - continues to shift to a strong emphasis on cable's role in broadband connectivity. In Comcast's (NASDAQ:CMCSA) second-quarter ...

The message from the country's two biggest cable operators - Comcast and Charter - continues to shift to a strong emphasis on cable's role in broadband connectivity.

In Comcast's (NASDAQ:CMCSA) second-quarter conference call, for example, CEO Brian Roberts said broadband Internet service has become "increasingly the focal point of our relationship with residential customers, the driving force behind our growth in business services," and "where we're investing our capital expenditure dollars to continue to differentiate and extend our network leadership position."

Tom Rutledge, CEO of Charter Communications (NASDAQ:CHTR), in his quarterly briefing, noted that long-term growth opportunity comes from a "powerful," "easy-to-upgrade network," that allows the company to offer data-rich wireline and wireless products.

Comcast had 260,000 broadband net adds during the quarter, while it experienced 140,000 video customer net losses during the same time period to continuing competition from virtual MVPDs. "We remain focused on segments that we can serve profitably as part of a broader relationship with the customer centered on a whole-home experience," Roberts said.

Roberts pointed to Comcast's X1 platform as enabling it to aggregate content from linear TV as well as third-party apps like Netflix, YouTube, and Pandora. Servces like xFi and Xfinity Home have already been integrated, and new features like a Fandango voice-activated movie ticketing experience have been added. More integrations are expected during the coming quarters, Roberts said.

Addressing the changing market approach, Roberts said Comcast is proactively marketing broadband-only packages and will continue doing so during the second half of the year.

"The increasing importance and value of broadband to our customers is clear. Our customers' median monthly data usage on our network now exceeds 150 Gbps for the first time," Roberts said, adding that xFi customers are connecting an average of 11 devices in the home daily.

For its part, Charter rolled out its gigabit speed offering to more than 20 million additional passings during the quarter, using DOCSIS 3.1 technology. More than 70% of the company's footprint now has access to gigabit service, and the plan is still on track to finish the full upgrade to DOCSIS 3.1 by the end of the year. Minimum Spectrum Internet speed has been raised to 200 Mbps to 40% of the company's footprint.

"We're raising our Internet speeds faster than originally planned in order to maintain our superior competitive position," Rutledge said.

While video drives less standalone profit over time, it remains an integral part of Charter's business strategy.

"That video relationship helps us market our connectivity services and advanced advertising to both new and existing customers. What a video subscriber is and how the video market is defined is changing while total video consumption is going up. If we execute well, no one is better positioned to service that video marketplace than we are," Rutledge said.

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