Like other cable operators, Charter Communications is eyeing competition from fiber and fixed wireless access (FWA).
In the case of fiber, Charter CFO Jessica Fischer said the company sees the most impact from a provider “when they’re newly upgraded in the market.”
“Fiber in particular didn’t get here all at once,” she said at the UBS Global Media and Communication Conference on Tuesday. “Pacing really matters, so how fast fiber is getting built.”
So, the fiber competitive landscape is a mix of “where [Charter] has a brand new competitor versus where [Charter is] competing against existing fiber.” But once Charter gets past a “splash period” of having a new competitor, “then we really hold our own.”
Similar to what Comcast President Mike Cavanaugh said this week, Fischer noted Charter is “compet[ing] well against fiber.”
Fixed wireless on the other hand is a newer technology and “was lit up with a larger swath of customers all at once.”
“It’s a lower quality but also a lower cost product for a lot of consumers,” said Fischer. “We see the brunt of that impact in our non fiber overbuilt footprint.”
In terms of how FWA impacts Charter’s net additions, she said the company is seeing “relatively small variations” in gross additions and gross churn across its markets.
“Eventually [fixed wireless] is going to be capacity limited. And from a product usage perspective, as data usage continues to increase, I think we’ll continue to see customers recognizing that quality does matter,” Fischer added.
“So we think we’ll get those customers back,” she said, noting while fixed wireless’s impact is “temporary,” it still has “an impact in the short term.”
Network upgrades
As for how Charter’s progressing on its “network evolution,” or upgrades to prepare for DOCSIS 4.0, Fischer said the company has “initiated all our step one markets at this point.”
The first phase of network upgrades will see Charter implement high-split architecture to increase its usable spectrum to 1.2 GHz across 15% of its footprint. This will help Charter eventually deploy extended spectrum (ESD) DOCSIS 4.0.
Fischer said Charter will complete some phase one upgrades by the end of this year and “finish the rest of them inside of 2024.”
On the Q3 earnings call, CEO Chris Winfrey mentioned Charter may consider “modestly slowing [its] network evolution plan” as the company eyes more subsidized rural builds.
Fischer said she anticipates a “few months delay” in Phase 2, which will see Charter continue its high-split upgrades but modify its approach to roll out distributed access architecture (DAA) using Remote PHY.
The Phase 2 upgrades will cover another 50% of Charter’s footprint.
Commenting on the delay, Fischer said, “Some of that is to manage our total capital spend…some of it is also to manage vendors and make sure we have the staging ready, so that when we do start those step two markets, our plan continues to be to go quite fast to get them completed.”