- Charter gets hit with a lawsuit over its broadband losses from the Affordable Connectivity Program (ACP)
- The plaintiff claims Charter made “misleading statements” about how it was doing financially post-ACP
- Charter was reportedly the largest ACP provider with over 5 million customers on the subsidy
After some rough Q2 beats, Charter has found itself in legal hot water over its broadband subscriber losses.
A class action lawsuit, filed August 14 on behalf of Charter shareholders, alleged the company understated the impact of the Affordable Connectivity Program’s (ACP) demise. Charter has said it had over 5 million subscribers on ACP, which offered a $30/month broadband subsidy for low-income households before it ran out of funding in June 2024.
Given Charter had way more ACP subscribers than its peers (such as Comcast, Cox and Verizon), the company’s investors have been concerned about the toll the ACP’s end took on its broadband business.
The complaint, filed in a New York district court, comes after Charter posted worse-than-expected broadband losses of 117,000. The plaintiff claimed Charter execs “made materially false and misleading statements that conditioned investors to believe the Company could manage and reverse the causes of Internet customer declines.”
For Charter’s part, execs on the Q2 earnings call noted subscriber declines included “about 50,000 ACP-related disconnects.” CEO Chris Winfrey also mentioned the lack of ACP has driven up the “nonpay rate” of newer customers who weren’t on the subsidy but could have qualified if the program still existed.
“From a year-over-year standpoint, you have newly acquired customers, who would have qualified for the ACP, who don’t have ACP today and therefore, they have — those newly acquired customers have a higher nonpay rate than they would otherwise,” Winfrey stated in July.
Whether a jury will find the lawsuit substantial remains to be seen, but Recon Analytics Principal Roger Entner thinks Charter has been “reasonably transparent with their post-ACP losses.”
The company “had no reason not to be transparent because it identified that these losses were out of Charter’s control,” he said.
Cable operators continue to cope with legacy broadband declines amid rising competition from fiber and fixed wireless access (FWA) as well as slower household growth. New Street Research has predicted cable net adds may not turn positive for another four years due to a pending slowdown in U.S. immigration.
But Charter could see a short-term improvement in its broadband biz for Q3, Dell’Oro Group VP Jeff Heynen recently told Fierce. The operator has historically benefited from subscriber growth in the fall “with school starting [and] people getting settled into new homes,” he said.