It's becoming fashionable for cable operators to distance themselves from pay-TV as they shift their focus to broadband, but Charter Communications is not about to go to that extreme just yet.
"We're not giving up" on video, Tom Rutledge, Charter's chairman and CEO, said today at Morgan Stanley's virtual Technology, Media & Telecom Conference.
"Television is becoming a broadband product, clearly," Rutledge said, but stressed that Charter has no plans to exit that business. Notably, Charter bucked the trend in 2020 by adding pay-TV subs, thanks to strong pull-through from massive broadband subscriber sign-ups (Charter added about 19,000 residential video subs for all of 2020). "I think live TV will continue to be sold in a linear package for a significant time."
But he does at least acknowledge that the pay-TV landscape is changing amid the rise of streaming options and the fact that many customers who still like pay-TV are being priced out of the market.
Charter, Rutledge said, is in position to manage its video relationships with customers by selling streaming packages and serving as a "storefront and an aggregator." Rutledge has recently talked up the potential of the company's IP-capable "Worldbox" as a device that can support both the legacy pay-TV world and the OTT world. Likewise, Charter's recent deals with Disney and NBCU factored in carriage and integration of the media giants' respective direct-to-consumer streaming services.
"Opportunities are there for content companies to make it good for them, and make it good for us," he said.
Rutledge noted that the proliferation of these premium streaming services can also add up and get expensive quickly, resulting in a bigger bill for consumers and potentially smaller distribution for the programmers. "That's the reality of it," he said.
Keen on network expansion
Rutledge also touted Charter's ambitious plan to expand its footprint, a plan that was recently amplified by its winnings from phase 1 of the Rural Digital Opportunity Fund (RDOF).
While it's more costly to deploy broadband in rural areas, Charter's move there is aided financially by the RDOF subsidy and partly justified by the expectation that bringing broadband to these areas in need will result in "very high" customer penetration.
It's a complicated and expensive process, but "you can make a return," Rutledge said.
While fiber-to-the-premises (FTTP) deployments are a big focus of Charter's RDOF-facing plan, Rutledge believes that Charter's HFC network, now fully upgraded to DOCSIS 3.1, has plenty of gas in the tank to handle fiber competition.
Charter has "just scratched the surface on the plant we have deployed," he said. The upstream piece of the network has lots of potential capacity through the use of "mid-split" or "high-split" upgrades that expand the amount of spectrum dedicated to the upstream, he added.
Rutledge views 5G-based fixed wireless as a potential threat, but believes operators will need to spend heavily to turn that into a true home broadband competitor and replacement service.
Rutledge was also asked if the US needs to be more aggressive with wired/wireless convergence. How that might manifest itself with respect to M&A and investment in the US "isn't fully clear," he said. "I'm not going to say we're going to buy T-Mobile or they're going to buy us."
- Charter plans $5B broadband expansion to 1M+ locations
- Charter-NBCU deal adds lift to Peacock
- Charter could target its 'Worldbox' to broadband-only subs
— Jeff Baumgartner, Senior Editor, Light Reading