Charter CEO Tom Rutledge remains a believer in the bundle — just with different parts.
In an interview Wednesday at Morgan Stanley’s Technology, Media & Telecom Conference, Rutledge said the vision behind Charter’s 2016 acquisition of Time Warner and Bright House Networks was that “we could put great products together, and packaged in a way that created value."
“We still view the business that way,” Rutledge told Morgan Stanley media analyst Ben Swinburne. “The opportunity going forward is very similar to where we’ve come from the last five years.”
But instead of traditional linear cable TV, Charter sees mobile — based on resold Verizon capacity augmented with the company’s network of Wi-Fi hotspots, and eventually its own licensed CBRS 5G spectrum—as the new counterpart to its core cable broadband service.
“We have an opportunity to package that with great broadband,” he said, and “actually save customers money at the household level.”
Mobile remains the smallest part of Charter’s residential business; at the end of 2021, it counted 28.1 million Spectrum broadband customers, 15.2 million Spectrum Video customers, 8.6 million Spectrum voice customers and 3.4 million Spectrum Mobile customers.
But Rutledge emphasized mobile’s potential upside, noting that its cable service footprint encompasses some 120 million people who subscribe to one wireless service or another: “120 million is still 117 million more than we have.”
Charter's fixed broadband
Swinburne also quizzed Rutledge about Charter’s competitive position relative to fiber-optic providers (without naming Verizon, its primary such rival and yet also the backbone of its mobile service). Rutledge replied that Charter, which already sees 25% of its broadband-only customers using a terabyte or more of data a month, felt no need to stage a matching fiber buildout.
“We have a lot of fiber in our network,” he said, citing its reliance on fiber in federally-subsidized rural buildouts. “That said, we have tremendous capacity in our existing infrastructure and a very cost-efficient way to continue to upgrade our capabilities.”
And although he touted this infrastructure’s ability to support symmetric upload and download speeds in the future, he rejected the idea that people need fast uploads in the next two to three years.
“It’s a marketing claim,” he said. “It’s a claim without much reality from a use perspective.”
(Charter does not advertise upload speeds to visitors at its Spectrum site, who instead have to consult a broadband-disclosure page to see that they range from 10 Mbps to 35 Mbps on consumer plans.)
In Rutledge’s view, broadband remains a download-first business, in which cable holds up well: “We can have very fast, very high-capacity networks at much lower cost than going all fiber.”
So what about the traditional video business that remains Charter’s second-biggest business by subscribers?
“Video is actually a big revenue business, under a lot of pressure, and we continue to sort of run that business like we have historically,” Rutledge said. “We pass through the cost increases and basically keep the same margin and customer base that we have.”
Those cost increases, he said later in the interview, mainly come from sports programming.
“There’s nothing to really constrain the cost of sports,” he said. “And that’s still the glue that holds all the linear business together.”