Featured Story
AT&T snaps up T-Mobile's unwanted midband spectrum from UScellular
T-Mobile has determined 3.45GHz spectrum is not suitable for its 5G network. But AT&T continues to use C-band and 3.45GHz spectrum for its 5G midband network buildout.
Increase of $5 per month won't apply to Charter customers who bundle broadband with the operator's traditional pay-TV service.
In a move to drive up average revenue per unit (ARPU) that could possibly stir up some consumer ire, Charter Communications confirmed that it will soon raise high-speed Internet service fees by $5 per month to a subset of customers – broadband-only subscribers as well as customers who bundle broadband with one of the cable operator's streaming-based video services.
Charter customers who bundle broadband with the cable operator's traditional pay-TV service won't get hit by the price hike.
StopTheCap, the first to report the price hike, said new pricing will take effect December 2. Citing an internal customer service document, the report noted that Charter broadband-only subs and those who combine broadband with a streaming TV package from the operator, such as Spectrum Choice, Essentials or Stream, are subject to the $5 increase.
Charter said the price increase follows product enhancements (it completed the bulk of its DOCSIS 3.1 network deployment in the fall of 2018) and comes as the price per megabit is falling (Charter's entry-level downstream speeds in many markets is now 200 Mbit/s).
"Spectrum is committed to continuously enhancing our communication products, providing superior connectivity services with the best overall competitive value in the marketplace," a Charter official said in a statement. "We are delivering faster broadband speeds and improved performance – all as the average price per megabit per second and per gig consumed declines dramatically."
Anticipated ARPU boost
While the price increase could receive some consumer and political backlash, analysts at New Street Research view Charter's move as a "positive" because it will apply to a sizable portion of Charter's broadband base and produce a lift to the operator's ARPU. They also noted there had been some skepticism that Charter would try to implement a price increase amid suggestions by the company earlier in the year that it might have to forgo a hike amid the pandemic.
The analysts estimate that Charter had 10.7 million broadband-only subs at the end of Q3 2020, but that only 7.5 million of them would be subject to the price increase, which doesn't apply to customers on promotions. They also estimate that 10% of all Charter double-play customers take a streaming TV product from the operator, but admit that their estimate is a "wild guess." With everything rolled up, they believe that roughly 8.2 million Charter broadband customers would be subject to the coming $5 price hike (Charter ended Q3 with 26.8 million total residential broadband subs).
The New Street analysts expect Charter's price boost to raise ARPU by $1.46, or 2%, roughly twice the financial impact of the price increase for broadband-only subs implemented last fall.
"A larger broadband price increase, coupled with the easing of pandemic impacts, should drive an acceleration in ARPU growth in 2021," the analysts explained in a research note distributed today.
Broadband power
Charter's broadband and pay-TV subscriber results have been strong during the pandemic. A rate increase on a subset of its broadband base indicates that Charter feels confident that the trend can continue even in the face of it. In Q3, Charter raked in 416,000 residential broadband subs and bucked the industry trend by expanding its pay-TV base for a second consecutive quarter.
Charter currently does not receive any ARPU benefit from usage-based broadband policies in place today by US cable operators such as Comcast and Cable One/Sparklight. Conditions tied to Charter's 2016 acquisition of Time Warner Cable and Bright House Networks prevent the operator from implementing data caps or other types of usage-based broadband policies.
Charter has asked the FCC to consider dropping that condition (along with one that still prohibits Charter from striking paid interconnection deals) on May 18, 2021, rather than to extend the conditions for an additional two years.
Despite arguments by Roku that the FCC should extend the conditions for a full seven years, Charter has argued that the conditions are no longer necessary given the competitive state of the video streaming market. And while Charter says it has no plans to implement usage policies, it also argues that it should be allowed to operate under the same rules and conditions as other broadband service providers.
"We wanted to put ourselves from an opportunity perspective on the same even playing field as all of our competitors," Tom Rutledge, Charter's chairman and CEO, said on the company's Q2 earnings call in August.
Related posts:
— Jeff Baumgartner, Senior Editor, Light Reading
You May Also Like