Charter CFO says rural network expansion will begin later this year

Charter says that once the company can deliver better broadband services to a rural community it typically gets high penetration rates. (Image by David Mark from Pixabay)

Charter Communications CFO Chris Winfrey said that the company’s $5 billion multi-year rural broadband expansion plans will begin later this year but the bulk of the deployment will occur in 2022.

Speaking at the Deutsche Bank Media, Internet & Telecom conference this week, Winfrey provided some additional insight into the company’s plans to expand its broadband network into parts of 24 states.

Charter was a big winner in the Federal Communications Commission’s Rural Digital Opportunity Fund (RDOF) reverse auction that ended last year. Winners were announced in January. The company won $1.2 billion in funds from the auction and said it plans to spend a total of $5 billion on the expansion, which means it will be investing $3.8 billion of its own money on the buildout.

Winfrey said that the extension of its network into these additional markets comes with low risk but added that these types of rural buildouts can take longer to monetize than other projects. However, he added that once Charter can deliver better broadband services to a rural community it typically gets high penetration rates. He also said that the economics of this project aren’t that different than a cable merger and acquisition, it’s just in this case the company is building a network.

Related: Charter splashes some details on its fiber build outs across 24 states for RDOF

Plus, the RDOF project will provide a side benefit for the company —good public relations. Winfrey also said he believes this RDOF buildout is a good opportunity for Charter to be a part of the solution in terms of bringing more broadband to rural communities. “It’s an opportunity for us to look good and that doesn’t come along often,” he noted.

Fixed wireless isn’t a threat

Interestingly, Winfrey said that Charter isn’t worried about the fixed wireless offerings from companies like T-Mobile and Verizon, which are both offering customers home broadband services via their 4G and 5G networks. “We think of it as just another overbuild,” he said. “And we have always been able to compete and grow despite it.”

He added that wireless networks don’t really have the same throughput to handle the amount of data that cable subscribers typically need. He said that Charter’s customers typically average around 700 Gigs of data per month while wireless customers typically average around 10 Gigs of data per month. “The difference in the utilization of wireless networks vs. our network is significant. Current wireless networks aren’t designed to handle that,” he added.

Interestingly, on the MVNO front, Winfrey said that Charter isn’t expecting its MVNO Spectrum Mobile to grow as dramatically in 2021 that it did in 2020. In the fourth quarter of 2020 Spectum Mobile added 315,000 new subscribers for a total subscriber base of 1.3 million. Winfrey said that growth was driven by the growth in broadband sales that occurred in 2020 because of the Covid-19 pandemic. “It’s hard to imagine we will have the same internet sales opportunities that we did in 2020,” he said.