Charter Sees Broad Wireless Offering by Early 2018

The company is looking to develop various small cell and 5G products, which may be tied to the Verizon mobile virtual network operator (MVNO) it's activating (see 1608090034), Rutledge said Thursday. He said Charter is looking at developing a small cell technology platform that can work both with a mobile service and as "wireless drops" that mimic physical connections and operate as line extension devices or in-home devices. The cable company also plans to develop various new services as higher-frequency licensed and unlicensed spectrum becomes available, Rutledge said.

The cable provider's wireless plans involve expanding its existing Wi-Fi network, "work[ing] with MVNO partners and, at the appropriate time, invest[ing] in its own licensed spectrum based wireless network," the company said this week in spectrum frontiers comments in docket 14-177. It also said it's seeking approval for experimentation with millimeter wave bands "to identify technologies and methods that will provide our customers with ubiquitous advanced communications services both inside and outside the home." Replies posted this week show carriers and satellite companies at odds over technical rules for high-band spectrum (see 1611010044)

The Time Warner Cable and Bright House Networks brands will be gone by spring 2017, Rutledge said. The company in September began deploying its Spectrum pricing, packaging and brand in the former TWC footprint. Spectrum will roll out later this month in New York City and Florida, he said. Charter also plans to start small and mid-sized business pricing and packaging in mid-2017 in the TWC and BHN footprints, Rutledge said. The operator also said it would restart the all-digital conversion efforts in the legacy TWC/BHN markets starting in 2017, with the conversion to be done by late 2018. Charter bought TWC and BHN earlier this year.

Meanwhile, cable stocks have been hurt by "unfounded investor concerns" about AT&T's $35 per month DirecTV Now streaming service offering (see 1610260048), higher-than-expected programming costs at Comcast, and expectations of wireless spending or acquisitions, said Pivotal Research Group analyst Jeff Wlodarczak in a note. The programming lineups of over-the-top offerings like DirecTV Now "are consistent with the price," Rutledge said. "[But] I don't think they are full packages" since they lack broadcast signals. Wlodarczak said he hopes Charter and Comcast will make a bid for T-Mobile, which would combine "the best fixed data pipe with a solid growing disruptive wireless business.”

For the quarter, Charter had revenue of $10 billion, up 7.4 percent on a pro forma basis. Its residential video losses, at 47,000, were up from the 20,000 lost in the same pro forma quarter a year earlier, with higher losses at legacy TWC offsetting improvements at legacy Charter and BHN. It added 350,000 Internet customers for the quarter, compared with 369,000 adds the same quarter a year ago. Its 33,000 residential voice adds for the quarter -- vs. 256,000 adds a year earlier -- were driven by a legacy TWC promotion in Q3 2015, Charter said. Pointing to a string of quarters of subscriber growth at TWC before its takeover was completed, MoffettNathanson analyst Craig Moffett wrote investors that "one is left to wonder the extent to which those results were aided by more aggressive discounting than was widely understood at the time." Charter stock closed Thursday at $247.42, down 2.2 percent.

When asked about the possibility of launching skinnier bundle offerings, Rutledge said such video product sets "are available to us," but customer trends show increased demand for full packages. He said Charter would be interested in a bundle "that satisfies a segment of the market that is currently unserved … [but] so far, we haven't found that magic mixture.”