The great rebranding has begun for the tens of millions of cable customers that Charter picked up from Time Warner Cable and Bright House Networks.

Less than six months after completing its twin purchases of those two cable companies and becoming the second largest US MSO, Charter Communications Inc. has started rolling out its Spectrum-branded pricing and packaging plans in former TWC territories. In its third-quarter earnings report released today, Charter said it introduced its Spectrum triple-play plans in "certain legacy TWC markets, including Texas and Southern California," in late September.

Under the Spectrum brand, which Charter has already rolled out in nearly all of its legacy cable footprint, the MSO is offering a video lineup of more than 200 HD channels, broadband speeds of up to 60 Mbit/s or 100 Mbit/s, VoIP service and its new cloud-based user guide for as little as $90 a month. That package has proven popular among Charter's existing customers, driving strong video and broadband customer growth over the past few years. But it may not perform as well in some of the former TWC and Bright House markets, where those two companies offered whole-home DVR service (not offered by Charter) and maximum broadband speeds of 300 Mbits. (See Post Acquisitions, Charter Posts Solid Q2 and Changes Ahead for New Charter Markets,)

Charter executives insist, though, that what has worked in their old markets will work in their new ones as well. So they plan to expand Spectrum to all other Time Warner Cable and Bright House territories over the next few months, starting with TWC's New York City base and Bright House's flagship Florida systems later this month.

Speaking on the company's earnings call this morning, Charter Chairman and CEO Tom Rutledge said the cable operator expects to make Spectrum available to more than 50% of former TWC and Bright House residential customers by the end of the year, and all of them by next spring. Charter also intends to start upgrading all of the former TWC and Bright House systems to all-digital service early next year, aiming to complete that process by the end of 2018.

Currently, just about 40% of the old TWC footprint and 50% of the old Bright House footprint are all-digital. Under its old management, TWC had launched an aggressive catchup program, called TWC Maxx, to upgrade its systems to all-digital and introduce broadband speeds as high as 300 Mbit/s. But Charter, which has already upgraded its legacy systems to all-digital, halted that upgrade program after it took over TWC in May.

These moves come as Charter continues to enjoy strong growth for its core residential video and broadband products in its legacy markets but is seeing much weaker results in the old TWC regions. In the third quarter, the combined company reported gaining 279,000 overall customers, up slightly from 269,000 on a pro forma basis a year ago, as its legacy systems and the old Bright House systems generally performed well. But the old TWC systems, as Charter executives had warned might be the case in earlier earnings calls, did not perform nearly as well as they did a year ago, dragging down the company's subscriber results.

On the video side, for instance, the old TWC systems lost 61,000 video customers in the summer quarter, after losing just 7,000 video subs a year earlier. That loss more than wiped out Charter's gain of 19,000 video customers in its legacy systems, producing an overall loss of 47,000 video patrons for the combined company.

Charter executives blamed the lackluster TWC results on heavy price discounting by that company a year ago as it sought to buoy its subscriber numbers before the deal closed. They indicated that it may take several quarters to restoke TWC's subscriber growth as they carry out their rebranding strategy.

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Besides repackaging its residential offerings under the Spectrum name, Charter has rebranded its business services under the same moniker. Plans call for introducing Spectrum pricing and packaging plans for small to midsized businesses (SMBs) in the former Time Warner Cable and Bright House regions in the middle of next year.

Estimating that the new Charter has a $20 billion enterprise opportunity in its combined markets, Rutledge said the MSO is eyeing ways to capitalize on that opportunity. He noted that Charter now captures less than 10% of that market. Although the MSO reported nearly $1.4 billion in commercial revenue for the third quarter, which translates to an annual run rate of more than $5.5 billion, most of that sum came from very small firms and SMBs, not larger enterprises.

Confirming recent reports of Charter's heightened wireless ambitions, Rutledge said the cableco is looking to invoke TWC's MVNO agreement with Verizon Communications Inc. (NYSE: VZ) to make a much bigger play in the mobile space. "We've had fruitful discussions with Verizon," he said, declining to elaborate. Rutledge also confirmed that Charter has filed a request with the Federal Communications Commission (FCC) to test millimeter-wave frequencies in several markets "so we can learn to use those technologies to our advantage competitively."

— Alan Breznick, Cable/Video Practice Leader, Light Reading