Charter’s CEO claims it’s winning the convergence war against wireless

Charter Communications CEO Chris Winfrey said at today’s MoffettNathanson conference that Charter will win the convergence wars against the mobile providers because it can offer both fixed broadband and mobile across its entire footprint.

“We have a convergence advantage,” said Winfrey. “Mobile will be an extension of our footprint.'

He said the big American wireless operators don't have the ability to provide both wireline internet and mobile in the exact same spot all the time. 

It should be noted that, while Winfrey’s characterization is true, Charter doesn’t have a national footprint. And the big wireless carriers do.

Charter is having success with its Mobile Virtual Network Operator (MVNO) offering. In the second quarter 2023 Charter added 686,000 new mobile lines.

A lot of its success with mobile is attributed to its Spectrum One bundle, which seems to be resonating well with its subscribers. Spectrum One bundles broadband, wireless and Wi-Fi for an appealing price.

Meanwhile, Verizon, T-Mobile and recently AT&T, have all gotten into the fixed wireless access (FWA) business, which encroaches on cable’s fixed broadband turf. But the wireless operators are only selling FWA in certain areas where they determine there’s demand for a better broadband product.

“Our competitors are going to continue to have to sell them as a silo, as a separate product,” said Winfrey.

To his point, Verizon this week announced new mobile plans, which don’t include any FWA component

“So by definition, we have a structural advantage across our entire market,” said Winfrey. “We can compete with a seamless connectivity product. We can also compete with standalone products as well, and we'll continue to do that because there will be a portion of the market and they still want to do that.”

Charter and CBRS

Charter and Comcast have both indicated that their MVNO contracts with Verizon are very good in terms of their financial margins. MoffettNathanson has estimated that the MVNO margins for Charter and Comcast might be as high as 70% over the cost of the product.

Winfrey today agreed that the MVNO margins are very good. “I think we're good for Verizon. I think they're good for us. It's been a successful relationship. And I think it will contribute to both of our P&L. As you think about those margins going forward, a big part of that story is how much traffic you can offload?” he said.

Charter and Comcast are sharing their Wi-Fi networks to offload mobile traffic from Verizon’s network, saving costs and increasing margins.

And Charter and Comcast also both own CBRS spectrum, which they eventually plan to deploy to offload even more of their wireless traffic.

But Winfrey said the MVNO deal with Verizon, combined with Wi-Fi offload is working so well that it’s dis-incentivizing Charter to go hard and fast with CBRS offload at this time.

“There are places in concentrated areas where we have a good ROI, and we'll do [CBRS] there,” he said. “The extent and depth to which we deploy CBRS is really just going to be a mathematical decision on what's the return calculation.”

He said when Charter does do CBRS offload it will be deployed using primarily strand-mounted aerial equipment. Craig Moffett mentioned Samsung as the vendor of the strand-mounted equipment. But Winfrey was non-committal and said Charter wants to use multiple vendors.