If there's one thing that Tom Rutledge worries about the most, it may be the lack of a skilled labor force for future cable and fiber construction.
Rutledge, the chairman and CEO of Charter Communications, is deeply concerned that the company won't be able to find all the workers it needs to build the 100,000 miles of network infrastructure Charter aims to put in place over the next few years. Speaking at the ninth annual MoffettNathanson Media and Communications Summit on Wednesday, he described the labor shortage as a major "constraint" on the giant US operator's broadband deployment ambitions.
"There is no labor pool there," Rutledge told interviewer Craig Moffett, a principal at MoffettNathanson. "There is no skilled labor force out there that can be repurposed. It has to be built and trained."
Charter emerged as one of the biggest winners from the federal government's Rural Digital Opportunity Fund (RDOF) auction in late 2020, qualifying for about $1.2 billion in federal subsidies to build wired and wireless networks in unserved and underserved areas throughout the US. All told, Charter plans to build fiber and offer gigabit services to more than 1 million rural and exurban locations.
"I thought it would be wise for us to be part of the solution," he said. "If you can build low-density cable systems economically, you can grow" and earn "a very good return ultimately."
But, with work now underway in all 24 states where Charter won bids in phase I of the RDOF auction, Rutledge isn't sure how the nation's second-biggest multiple system operator (MSO) will manage to get it all done. Those 100,000 miles of new network infrastructure would boost the size of Charter's current 800,000-mile plant by about 12%.
"It's going to be challenging," he said. "We have thousands of unfilled positions. There aren't enough people to get it done."
Eyeing more federal broadband aid
Rutledge offered no immediate solutions to the labor shortage problem in his talk with Moffett. Nevertheless, he said Charter intends to pursue broadband subsidies from the even bigger pool of federal funds available through the Infrastructure Investment and Jobs Act (IIJA), better known as the Bipartisan Infrastructure Bill, which Congress passed last fall.
"We're very interested [in the Jobs Act]," Rutledge said. "There's a significant amount of opportunity out there in that leverage range."
While he worries about America's labor pool, Rutledge is not too concerned about competition. Like Comcast Cable President and CEO Dave Watson, who spoke right after him at the MoffettNathanson conference, the Charter chief has not seen much serious competition from fiber and new fixed wireless access (FWA) providers in his company's markets yet.
While about 38% of Charter's regions are now covered by fiber overbuilds, Rutledge said, the industry has watched numerous overbuilders come and go over the years. "I've seen this movie before," he noted.
Although Charter, like most service providers, has seen broadband subscriber growth ebb since the pandemic-fueled heights of 2020 and 2021, Rutledge also insisted that he's not too worried about the slower pace. Taking the long view, he argued that cable operators still have the upper hand in deploying broadband at a lower cost than their rivals and creating value for customers.
"We have a very efficient capital structure," he said. "I don't see a significant difference today than I did three or four years ago."
Making more mobile moolah
Like Watson at Comcast, Rutledge can't say enough good things about his company's prospects in the wireless market. Charter netted 373,000 mobile lines in Q1 2022, beating Wall Street expectations of 328,000 lines and improving from its year-ago haul of 300,000 lines. As a result, the MSO closed out the winter quarter with nearly 4 million mobile lines.
Rutledge noted that subs pay an average of $132 a month for mobile service in Charter's territories, more than double the $60 a month average for broadband service. With still only 24% penetration of Charter's sub base, he sees plenty of runway ahead for mobile.
"We have a lot of upside in this ecosystem," he said, noting that mobile looks "very attractive" as even a standalone business right now. "We think it's a great business."
- Charter starts to book RDOF revenues
- Charter tops US cable's RDOF take
- Comcast not seeing 'material' churn from fixed wireless, but not taking it lightly
- Cable One isn't feeling T-Mobile's FWA heat yet
- Charter wraps buildout of mobile core as CBRS market trial nears
— Alan Breznick, Cable/Video Practice Leader, Light Reading