The chief executive of the nation’s second-largest cable operator had a one-word answer when asked to name his company’s biggest opportunity, and it didn’t involve wired connectivity at all.
“Mobile,” Charter Communications chairman and CEO Tom Rutledge told UBS equity research analyst John Hodulik in an interview Wednesday (pushed back a day by Tuesday’s AWS outage) at the asset-management firm’s UBS Global TMT Conference.
Rutledge described Spectrum Mobile, the MVNO Spectrum launched in July of 2018 based on Verizon Wireless capacity, as poised for growth in the new year now that the Stamford, Conn., firm has revamped a billing system that “didn’t really scale as well as we wanted to.”
Saying the company had held back marketing as a result, Rutledge predicted a brighter future: “We have an ability to accelerate growth in the mobile platform and do that in a logical way that fits our integration of those products with the traditional cord cable products of broadband, video and wireline voice.”
Spectrum’s 2022 agenda also includes moving forward with longstanding aspirations to move more traffic off resold Verizon capacity and onto its own WiFi hotspot network and recently-purchased CBRS spectrum.
“We’ve got a bunch of technology platforms we want to roll out to make the mobile experience better,” Rutledge said. “Meaning better than what you can get from a traditional mobile carrier.”
Video did not come up until 20 minutes into the roughly 45-minute interview, and Rutledge did not sound nearly as bullish about that line of business.
“Half of our customers don’t buy video from us anymore,” he said. Charter lost 121,000 video subscribers in Q3, leaving it with 15.9 million video customers and 29.9 million broadband customers. Some broadband providers have accepted cord cutting by decoupling broadband and TV pricing, but Charter still offers discounts on broadband-plus-TV packages.
Rutledge cited programming-cost inflation as Charter’s principal annoyance in video—“It’s still difficult for us to control those costs”—but added that the company wasn’t ready to walk away from selling traditional pay-TV bundles.
“I think there’s a continued opportunity in video for us,” he said. “The decline in full-package services will abate to some extent, because it’s still the primary way to get sports.”
Rutledge did, however, allow that at some point Charter would have to pivot towards connecting broadband customers with third-party video providers.
“I see us becoming more transactional at helping these direct to consumer businesses work,” he said, adding after a few minutes that “There is a point where it’s obvious where things are going.”
In terms of broadband, Charter will deploy a high-split architecture to deliver download speeds of multiple Gbps and upstream speeds of 1 Gbps; the latter would vault past Spectrum’s current uploads, which max out at 35 Mbps.
Rutledge voiced confidence in the ability of Charter—which, unlike many cable operators, does not impose a data cap—to keep up with broadband demand.
“We augment our network so it has plenty of headroom over it, so if we have rapid growth, it’s already deployed,” he said, adding that the pandemic proved the effectiveness of this investment. “We had a massive change in behavior almost overnight, and the networks held up very well.”