Whether its more fiber deployments by AT&T or T-Mobile offering fixed wireless broadband in rural areas, Charter is ready for the competition.
Charter CFO Chris Winfrey, speaking at Friday's Morgan Stanley investor conference, said Charter was well positioned to handle all types of competition across all infrastructures due to the continued investments it has made in its network.
Speaking at the same conference on the same day, AT&T CFO John Stephens touted the benefits of the telco's use of fiber to provision services such as AT&T TV and 5G while provisioning connectivity to business and residential broadband customers. Stephens said AT&T was actively looking to expand its fiber footprint. In response to AT&T's fiber claims, Winfrey repeated the cable axiom that DOCSIS and HFC still have a long runway left.
"We are growing against all competitors in all markets irrespective of the competitive infrastructure," Winfrey said. "And our results really demonstrate that when you compare that to the competition. I guess another point that we wanted to make is that DOCSIS 3.1, which is fully deployed across all of our network at a really low cost at $9 per passing, has a very long runway with many tools to continue to expand the capacity that we have within the existing DOCSIS 3.1 platform.
"We can get to multi gigabit speeds at one gig symmetrical just using DOCSIS 3.1 so it has a long runway for growth. There isn't a looming need for an upgrade to the plant."
Charter has deployed DOCSIS 3.0 modems across its footprint, and those modems can be converted to DOCSIS 3.1 to increase the upstream speeds by using a high-split to boost the capacity of the network from 850 megahertz to 1.2 gigahertz with a relatively easy upgrade, Winfrey said.
"We don't need to do that today," Winfrey replied when asked about the increased strain the Covid-19 pandemic has put on the upstream. "If we did, it might be targeted. But we have a bunch of tools available to us today at a very low cost to be able to go make those types of moves."
While the majority of Charter's plant is allocated to traditional video, Winfrey said Charter could use switched digital video, convert from MPEG-2 to MPEG-4 and shrink SD to increase the allocation of capacity to the broadband DOCSIS 3.1 platform.
"All of that gives you tremendous runway for bandwidth not only on the downstream, but also on the upstream," he said.
In parallel to DOCSIS 3.1, Charter is also separately investing in DOCSIS 4.0.
"When the time comes, when there's unique customer demand, when there are products and services and incremental revenue attached to it, then at a relatively low cost we can upgrade the network to DOCSIS 4.0," Winfrey said. "But there's no pressure to go do that today because of the significant capacity that we already have in DOCSIS 3.1."
Like other cable operators, Charter is using fiber for greenfield deployments, and it has combined fiber with HFC for years.
Charter has seen an 8.8% year-over-year increase in the number of its broadband subscribers, and Winfrey said he expects the company would continue to do well with broadband next year as well.
"There's no major upgrade that we need to do," he said. "And we have a path to upgrade at a lower cost than our competition to the extent that there's customer demand or new products or new revenue streams that command it."
Gearing up for T-Mobile
Charter is one of the bidders in the Federal Communications Commission's current Rural Digital Opportunity Fund (RDOF) auction. RDOF represents a $20 billion, 10-year opportunity for service providers and their vendor partners to build and connect faster broadband speeds in rural and unserved areas across the U.S. While not mentioning RDOF, Winfrey said Charter has been expanding its footprint into rural areas over the past several years.
"We've actually scaled our operation significantly to make this quite the machine. We've got gained a lot of confidence in our ability to go get penetration and in what the ultimate penetration curve looks like," he said. "That gives you confidence in your overall ROI.
"We're investing in areas where the economics and the payback are challenging to begin with for the first operator to come in, and there really isn't any ROI for a second operator to come in, which means that you can have a lot of confidence in where your penetration ultimately will land, and we've seen that already."
Winfrey said the return on investments for rural deployment projects were longer than what Charter typically sees.
Winfrey was asked about the threat that T-Mobile poses in rural areas with its fixed wireless home internet service.
Last month, T-Mobile said it was moving into the areas where AT&T announced it would no longer sell new DSL services to customers. Instead, AT&T said it wants to focus on building out its fiber-based broadband services, but it could take years for those deployments to hit some of the rural areas where the DSL customers are currently being served. Cable One has also expressed an interest in providing its broadband service to AT&T DSL subscribers in rural areas.
With the backdrop of T-Mobile possibly preparing a 5G-based home offering next year, Winfrey was asked how Charter will price its rural broadband products with an eye towards competitive threats.
"I think the fear that 5G fixed wireless could pick us off in certain areas is real even if it was only at the edge," Winfrey said. "The reality though is that we've always invested in our network. This concept of wireless threat isn't new. It existed with MMDS, LMDS, 3G, Wi-Fi, and WiMAX, and it existed with 4G.
"What happened is we always stayed ahead of the investment cycle and made sure that our network not only had faster speeds, but also could scale better. We are competing against very well capitalized, in many cases, much larger companies than us. We pay attention to competition, and we need to stay ahead of it."