Charter Communications plans to upgrade its hybrid fiber/coax (HFC) network over the next three years at just $100 per household passed. As part of a broader connectivity convergence strategy, Charter plans to build a "Spectrum Mobile Network" that will feature its MVNO connection with Verizon, a growing Wi-Fi network, and a measured deployment of CBRS spectrum.

All of those elements will be part of an overarching "convergence and seamless connectivity" strategy underway at Charter that's designed to fuel the overall growth of the business, Chris Winfrey, Charter's new president and CEO, said Tuesday during Charter's investor day presentation.

Figure 1:
(Source: Charter Communications)

"We have a product set and a network capability that none of our competitors can really match," Winfrey boasted, holding that Charter's competitors might have national wireless coverage but lack a wireline footprint to "marry it up and provide that converged product."

He continued: "We have a structural advantage. We have the ability to go gigabit wireless everywhere we operate."

Multi-step network evolution

Charter used part of the event to detail its HFC upgrade plan. While it was already known that Charter was pursuing a strategy focused on a distributed access architecture (DAA) with a virtual cable modem termination system (vCMTS), the company's overall network upgrade plan is not entirely uniform. Some portions of its network will be upgraded to 1.2GHz, while others will be bumped up to 1.8GHz.

Figure 2: Charter President and CEO Chris Winfrey (far right) offers offers opening comments at the company's investor meeting. Joining him are Jessica Fischer, chief financial officer, and Rich DiGeronimo, president, product and technology.
(Source: Screen capture from Charter investor meeting. December 13, 2022)

Rich DiGeronimo, Charter's president of product and technology, outlined three steps that will encompass different parts of Charter's footprint of 55 million homes passed:

Step 1: Covering 15% of Charter's footprint, the operator will boost network spectrum to 1.2GHz, enabling multi-gigabit downstream speeds. That will be paired with a "high-split" upstream upgrade supporting speeds up to 1 Gbit/s. Charter has initiated this step in four "mid-sized" markets, DiGeronimo said.

Step 2: Encompassing 50% of Charter's footprint, the operator will upgrade HFC to 1.2GHz, deploy the remote PHY option of DAA and introduce a vCMTS. That step, which will get underway in early 2024, will deliver speeds up to 5 Gbit/s downstream when paired with a new DOCSIS 4.0 modem. DAA/remote PHY with a vCMTS is a "nearly identical architecture to Comcast and other cable operators, so we are collectively driving a global standard," DiGeronimo said.

Step 3: Starting in late 2024, 35% of Charter's remaining footprint will fully deploy DOCSIS 4.0 using remote PHY/DAA, a vCMTS and an upgrade of its nodes and amps to 1.8GHz. That will put Charter on a path to offer downstream speeds up to 10 Gbit/s.

Together, about 85% of Charter's footprint will be capable of offering up to 5 Gbit/s by the end of 2025 and the ability to offer up to 10 Gbit/s in some of its footprint.

It is not immediately clear which portions of Charter's footprint will be targeted for each network upgrade and if the decision is based on factors such as current plant conditions and the degree of area competition. Light Reading has asked Charter for further clarification.

Update: Charter said it is not providing any additional detail about which markets will be targeted for steps 1, 2 or 3 at this time.

Charter doesn't intend to go back and upgrade the Step 1 and Step 2 markets to 1.8GHz but will deploy new 1.8GHz components (such as amplifiers) in those markets as part of its normal replacement cycle. DiGeronimo said Charter expects the costs for 1.2GHz and 1.8GHz components to be the same.

Charter will also be able to use its DAA network to provide fiber-to-the-premises (FTTP) on a targeted basis using remote OLTs (optical line terminals) that can be snapped into fiber nodes. Charter is using that approach today for its rural fiber buildouts and will use it in its legacy networks to serve high-power users. "It's fiber on demand," DiGeronimo said.

Network upgrade target: $100 per home passed

Another big revelation is the expected cumulative cost of the Charter's network upgrade: $100 per household passed. That's about half of what Comcast is targeting for a full DOCSIS 4.0 upgrade that will use the Full Duplex DOCSIS (FDX) flavor of the specs.

Based on current cost projections, Charter expects to complete the job for about $5.5 billion in three years.

"We think it's worth it" on a cost/value basis, Winfrey said.

Those proposed network costs include remote PHY devices/modules, amp upgrades (to 1.2GHz or 1.8GHz), the vCMTS and labor. Not included in that number: new DOCSIS 4.0 customer premises equipment (CPE), which is expected to be about the same as today's DOCSIS 3.1 CPE, DiGeronimo said. Charter's DOCSIS 4.0 CPE cost expectation echoes that of Liberty Global CTO Enrique Rodriguez.

DiGeronimo reasoned that Charter could hit its cost target because the upgrade is focused chiefly on module changes in amps and nodes and doesn't require new construction or massive changeouts of legacy equipment. Charter will also use its employees to do the work (including work done in the "overnight window").

"The physical work, such as the node and the amp upgrades, can be done overnight – there is no construction required," DiGeronimo said. "This is a large-scale deployment that's going to be done over three years. So, this is going to be very lucrative for those vendors that choose to partner with us on this."

The Spectrum Mobile Network and 'Gig-powered wireless'

Charter also expanded on its wireless strategy and what will underpin its resulting "Spectrum Mobile Network."

DiGeronimo said the Spectrum Mobile Network is comprised of three components:

That three-part combo will provide the basis for what Charter is branding as "Gig-powered wireless." It's also the basis of Spectrum One, a new promotional bundle from Charter that ties together home broadband, advanced Wi-Fi and mobile lines.

Winfrey said Charter is pleased with the early results of Spectrum One, but acknowledged that the company is still educating the market about it. "It doesn't mean we're not going to pivot and modify it along the way," he said.

As for CBRS, Charter has deployed a "commercial-grade" employee trial in one major market using a mix of licensed and unlicensed CBRS spectrum and Charter's standalone 5G core and mobile backoffice.

Charter is evaluating the user experience and the amount of traffic that stays on that 5G/CBRS hybrid mobile network. "Based on this evaluation, we will then determine the number and locations and pace to deploy in 2024 and beyond," DiGeronimo said.

Charter, he added, will be looking to provide seamless handoffs between its network and the MVNO partner network and employ dual SIM capabilities.

Other nuggets from Charter's event:

Charter shares were down $25.68 (-6.54%) to $367 each in after-hours trading Tuesday on concerns about capital expenditures in 2023 rising to $10.5 billion to $10.8 billion ($4 billion for line extensions and $6.5 billion to $6.8 billion for core cable capex). Fischer said capex is expected to peak in either 2024 or 2025 and to decline thereafter.

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— Jeff Baumgartner, Senior Editor, Light Reading