Charter’s CEO: Our network evolution will touch our entire footprint

Charter maintains that one of its advantages over traditional telcos is that its network evolution to DOCSIS 4.0 will benefit every location in the territories it serves.

“Unlike telco companies that prioritize more attractive footprints for their upgrades, our deployment is across our entire footprint,” said Chris Winfrey, president and CEO of Charter, during its second-quarter earnings call. “The cable industry is the nearly ubiquitous deployment of a tremendous amount of spectrum to each home will provide the scaled platform for software and product developers to create new bandwidth-intensive, low latency, high compute services.”

This network evolution will provide benefits for customers and the way Charter operates. Consumers can access symmetrical multi-gigabit speeds via DOCSIS 4.0 and provide what Winfrey said will be “25, 50, or even 100 Gbps speeds with fiber on demand.”

From an operational standpoint, Charter can lower node spot capital because the path will open new capacity pathways.  

“This evolution path also creates fallow upstream and downstream capacity for years, driving lower node spot capital,” Winfrey said.  “And by upgrading the actives, amplifiers, and nodes and converting analog optics to digital, we lower our future operating and maintenance expenses at a meager cost, much of which was funded from capital and operating cost savings over time.”

Broadband, mobile bump

Charter continues to reign high in the broadband race. While not at the levels seen in the pandemic, Charter reported second-quarter internet revenues rose 3.1% year over year to $5.73 billion; it missed the consensus mark by 0.65%. It also added 77,000 Internet connections.

“We continue to benefit from our Spectrum One offering and our network expansion initiatives,” Winfrey said.

Residential revenue per residential customer totaled $120.25, down 0.3% year over year. The cable MSO also fared well in the mobile arena, adding 648,000 new Spectrum Mobile lines. Charter had over 6.6 million mobile lines at the end of the second quarter. It noted that 11% of its Internet customers now have mobile service.

Winfrey said Charter “expects mobile penetration to grow meaningfully over the next several years.”

But Charter sees mobile's role as the glue it can tie with its broadband services. It considers the Spectrum One bundle could be a driver. Spectrum One features high-speed Internet and Wi-Fi, delivering seamless connectivity across all your devices by combining with Spectrum home Internet, Advanced Wi-Fi and an Unlimited Mobile line all for one incredible price.

“We see mobile lines as an extension of our Wi-Fi and seamless connectivity service, and we expect our increasing convergence capabilities will contribute to further Internet growth,” Winfrey said.

Rural pursuits

Another key focus for Charter is further penetrating the rural market segment. During the quarter, the cable MSO’s subsidized rural passings accelerated, with 68,000 passing activated.

Jessica Fischer, CFO of Charter Communications, said it “expects approximately 300,000 new subsidized rural passings this year and that costs are coming in as planned and we have the labor, equipment, and supply necessary to execute our builds.”

Charter continues to bid on additional government broadband subsidy programs to support its rural broadband pursuits, including RDOF and state grants.

“In addition to RDOF, we've now won over $700 million in state subsidies for over 300,000 passings with a gross build cost of approximately $1.7 billion and a per passing cost to Charter net of subsidies of approximately $3,200,” Fischer said.

The next big round of funding will come through the $42 billion BEAD funding program.

Winfrey said Charter is confident it could gain a large portion of the new federal government broadband initiative. “Our scale and reputation as a rural builder positions us well for winning additional state and local funds, and we hope for significant BEAD infrastructure funding,” he said. “Although the rules and recommendations from NTIA on BEAD funding differ from successful programs currently deployed by the states in which we operate, we'll work with key stakeholders and government officials to reach a place where the rules are still conducive to private investment.”