Charter Communications has allocated about $1 billion this year to fund its array of rural construction projects, including unserved areas that will benefit from the operator's take in the first Rural Digital Opportunity Fund (RDOF) auction.

Charter also intends to slice off a chunk of the $7.1 billion to $7.3 billion tagged for cable capex in 2022 to fuel an expanding rollout of "high-split" upgrades on existing DOCSIS 3.1 networks that will pump up the capacity dedicated to the upstream.

Figure 1: Expect to see Charter bucket trucks on the roads as the operator pushes ahead with HFC upstream upgrades and rural fiber network buildouts.
(Image source: Charter Communications)

Those high-split upgrades will beef up dedicated upstream spectrum on hybrid fiber/coax (HFC) networks from a range of 5MHz-42MHz to a broader range of 5MHz-204MHz. That will put Charter in position to offer symmetrical 1-Gig broadband services.

Speaking on Charter's Q4 2021 call on Friday, Chairman and CEO Tom Rutledge said the operator will increase the number of high-split projects in 2022, but didn't specify where or how broadly those upgrades will be spread about during the year. Those high-splits will reduce Charter's spending on other network augmentation projects, including node splits, he added.

Charter, Rutledge said, is also developing its technology and rollout strategy for DOCSIS 4.0, a new set of specs for HFC that will support multi-gig symmetrical speeds, enhanced security and lower latencies. Charter recently conducted D4.0 lab trials that delivered 8 Gbit/s downstream and 6 Gbit/s in the upstream.

"There's more to come from that technology," Rutledge said of DOCSIS 4.0.

The high-splits and D4.0-facing plans are taking shape as Charter sees usage on its networks climb. In December, broadband subs that don't take Charter's pay-TV service used more than 700 gigabytes per month, and nearly 25% of that group now consume more than 1 terabyte of data per month, according to Rutledge.

Rural ramp-up

Shifting to rural, the $1 billion set aside in 2022 for those construction projects is separate from the aforementioned $7.1 billion to $7.3 billion tagged for cable capex. That separate $1 billion will be spent on new builds to census blocks defined as rural, along with RDOF-related projects. Charter's first service launch resulting from RDOF is taking place in El Paso, Texas.

The $1 billion tagged for rural builds could go higher in 2022 as Charter explores other opportunities to receive broadband stimulus funds tied to the American Rescue Plan Act and the Infrastructure and Jobs Act, Rutledge said.

"If we're really successful in the subsidized build space, you might see even more," Jessica Fischer, Charter's CFO, added. "We view our rural construction initiative as similar to or equivalent to acquiring a rural cable operator."

Update: A large batch of Charter markets were included in another tranche of RDOF funding approvals announced Friday. That latest round authorized a total of more than $1.2 billion in parts of 32 states.

Footprint expansion in 2021

Looking back at 2021, Charter expanded its footprint to about 1.1 million incremental passings, up 2.1% from 2020's expansion total. Charter's footprint expansion in 2021 was above the rate of new household formation, Craig Moffett, analyst with MoffettNathanson, explained in a research note.

"Those 1.1M incremental passings over the past year provide a significant cushion for broadband subscriber growth, and go a long way towards explaining Charter's still-healthy customer relationship and broadband growth rates," Moffett wrote.

Charter, like other operators, is looking for footprint expansion to help fuel growth opportunities as the pace of broadband subscriber acquisitions starts to slow down.

Charter added about 190,000 broadband subs in Q4 2021, below an expected 224,000 sub gain.

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— Jeff Baumgartner, Senior Editor, Light Reading