Charter CEO says Comcast video JV will be a boon for broadband

Charter Communications is stepping up high-split upgrades across its network to offer consumers higher symmetrical and multi-gigabit internet services. But CEO Tom Rutledge noted a video-focused joint venture with Comcast announced earlier this week will offer another avenue for it to boost broadband speeds.

The joint venture will see Charter and Comcast team on the development and rollout of an IP-based video streaming platform. During its Q1 2022 earnings call, Rutledge said that over time he expects “most of our customer base will be all IP,” a shift which will let Charter reclaim spectrum on its cable plant that is currently used to deliver video services.

As MoffettNathanson analysts noted, “That would save enormous amounts of capacity, allowing them to dramatically improve broadband speeds.”

While that transition will likely take some time, Charter is stepping up high-split rollouts in the short term to meet growing demand for more faster speeds and more throughput. Rutledge said “By expanding and reallocating plant capacity, we reduce our network augmentation capital spending, including node split spending going forward. And the vast majority of our deployed modems are already spectrum split capable, allowing us to provide faster service to our existing customers without swapping out their CPE.”

He added as cable technology develops further, it will “dynamically” adjust its approach to begin rolling out DOCSIS 4.0 to meet customer needs.

Revenue of $13.2 billion rose 5.4% year on year in Q1, with net income attributable to Charter shareholders rising from $807 million to $1.2 billion. The operator added 185,000 broadband subscribers, a figure which was down substantially from 355,000 in the year-ago period.

RDOF and competition

Charter has begun work in all of the 24 states where it won government funding in the Rural Digital Opportunity Fund (RDOF) Phase I auction. CFO Jessica Fischer said it began booking RDOF revenue in Q1, racking up a total of $19 million. Over the next 10 years, it expects to receive around $9 million in support each month from the program, she added.

Executives on the call reiterated Charter isn’t seeing any material impact from fixed wireless players and appeared somewhat dismissive of the long-term threat from smaller fiber overbuilders.

“The history of these tertiary overbuilders is pretty demonstrated…the history is that they all go bankrupt and they end up having to be recapitalized,” he argued. “And so I think there’s that repeat that takes place every so often in the marketplace. And so you see some of that. Our job is just to put our head down, be competitive like we always have and go dig out customers and develop new products pricing and packaging that people can’t replicate.”