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Home Editor's Pick Charter rolls out new Spectrum pricing and internet speeds, aims to ‘be a better service operator’
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Charter rolls out new Spectrum pricing and internet speeds, aims to ‘be a better service operator’

by September 17, 2024
by September 17, 2024 0 comment
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Charter Communications CEO Chris Winfrey said he wants customers to think of reliability and credibility when they think of their cable and broadband provider.

The cable giant told CNBC it is unveiling a series of changes Monday to bolster that goal, including rolling out new bundles and pricing, increasing internet speeds, offering credits for service outages and promising heightened reliability for customers.

Charter — which provides broadband, cable TV and mobile services and is known to customers under the name of Spectrum — said it is also trying to make the company more approachable and remove the longtime negative connotations around cable companies by announcing Spectrum’s new “first-of-its-kind customer commitment,” branded as “Life Unlimited.”

The rollout comes as Charter and its industry peers contend with several trends: slowing broadband customer growth, continued defections from the cable TV bundle, and a young but speedily expanding mobile business.

“It is hard to be loved when you’re providing a critical service to the household that’s a physical infrastructure that charges over $100 a month,” Winfrey said in an interview with CNBC. “And to the extent there’s a problem, sometimes somebody has to enter your home … in the same vein that it is for an electrician or plumber.”

The first step to changing a less-favorable consumer view is with “pricing and packaging that creates more value than you can replicate anywhere else in the marketplace,” he said.

Spectrum said it will charge as low as $30 a month for its 500Mbps internet plan, or $40 a month for 1GB service, when either are bundled with two mobile lines or cable TV. The company is also increasing the baseline internet speed for current customers at no additional cost.

The company also said it’s planning to be upfront about costs. Under its new plan, taxes and fees are baked in, there are no annual contracts and pricing is guaranteed up to three years, it said. Charter even eliminated the 99 cents it had tacked on to most of Spectrum’s pricing in the past.

In addition, Spectrum pledged to give customers credits when the company’s customer service doesn’t live up to its promises, or for internet outages that are out of the customer’s control but are due to an issue on the company’s part and last more than two hours. Service issues such as those caused by weather, natural disasters or power outages don’t count.

Life Unlimited — a new platform for Spectrum’s internet, mobile and TV services — will roll out across its 41-state footprint this week, the company said.

“We wanted to make a bold statement about our commitment and our capabilities,” Winfrey said. “We also wanted to recognize that we’re not perfect and we’re putting ourselves under pressure, concrete pressure, to make sure that we can be a better service operator every month and every year from here on out.”

The announced changes are some of Charter’s biggest moves since Winfrey took the helm as CEO in December 2022.

He followed Tom Rutledge, who held the post for a decade and turned a relatively small cable operator into the second-largest cable company in the U.S. through the takeovers of Time Warner Cable and Bright House Networks in 2016. Winfrey was CFO at the time and spearheaded the mergers.

Winfrey recalled the various investments and advancements cable companies had made over the years: namely in broadband, but also in the pay TV bundle and the landline and mobile phone businesses.

“For all the value that the industry’s brought over the years, and the service and reliability investments that we’ve made, we haven’t always gotten the full credit that we deserve, and in some cases, we did get the credit we deserve because we could have done things better,” Winfrey said.

He entered the top job at a moment when it was clear growth was unlikely to return to the cable TV bundle.

Winfrey had been a low-key and not widely known executive in the media industry, but he started off swinging.

At an investor day in December 2022, Charter announced an aggressive capital investment plan that included putting $5.5 billion over three years in its broadband infrastructure network. The higher-than-expected spending during a time of growing competition from 5G wireless providers sent alarms through Wall Street, and the stock dropped.

Charter’s stock price has fluctuated greatly in recent years. On Sept. 12, 2021, the stock price was $787.12. It closed at $340.17 on Friday.

Charter’s stock has fluctuated in recent years as there’s been a slowdown in broadband subscriber growth.

That’s in part because broadband customer growth at providers including Charter and Comcast has struggled, according to the companies’ earnings reports. Increased competition from wireless companies such as AT&T and Verizon has also played a role in the stagnation, as has the slowdown in the buying and selling of houses due to high interest rates.

The third quarter was the worst ever for broadband industry subscriber losses, according to MoffettNathanson. Charter lost 149,000 subscribers and had a total of 30.4 million residential and small business broadband customers as of June 30, according to its second-quarter earnings report.

While the losses weren’t as substantial as analysts had feared, Charter’s growth bright spot is now its mobile business, which launched in 2018. Spectrum Mobile has 8.8 million total lines and has grown rapidly due to enticing promotional deals and increased mobile usage on reliable Wi-Fi networks, the company said.

In late 2022, Charter announced its “Spectrum One” plan, the first time it offered broadband, Wi-Fi and mobile in a bundle with promotions that included competitive rates and, in some cases, free mobile lines.

“For wireless, the ‘Spectrum One’ promotion will almost certainly turn out to have been a home run,” analyst Craig Moffett said in a research note in July. “Despite the fact that it was initially viewed as shockingly aggressive, it was, in fact, a rather modest offer.”

Moffett called mobile an “underappreciated growth engine” for Charter, not only because of customer additions but also growth in average revenue per user, or ARPU, which is a metric often used by cable companies.

Winfrey doesn’t expect ARPU to be affected by the new promotions.

“When I think about Wall Street, I think about the customer,” Winfrey said. “If you focus on the customer, provide great customer service, save them money, provide value, then your capital market strategy, your regulatory strategy, all of that just falls into place.”

Customers have been dropping pay TV rapidly across all providers, including Charter. But the company has been vocal about its efforts to preserve the business, especially under Winfrey’s leadership.

The biggest moment came in 2023 when Disney-owned networks went dark for Charter’s customers and Winfrey called the pay TV ecosystem “broken” as he pushed for a revamped deal with Disney.

While these disputes are common — Disney and DirecTV on Saturday ended a roughly two-week blackout fight — this one was different in the age of streaming.

For Charter, the sticking point wasn’t just the fees. The company wanted Disney’s ad-supported streaming options to be part of its TV offering.

Pay TV providers often say the rates that programming companies such as Disney seek from them are too high, especially since the programmers are also funneling much of their content into streaming platforms. Although the cable bundle loses customers, cable providers note it’s still a cash cow while streaming chases profitability.

“Credit to Disney, eventually they were willing to lean in and they understood their role in the industry,” Winfrey said, adding that ESPN is considered the linchpin of the cable TV bundle. “They had to be the leader in the space, and we knew that.”

The deal allowed for ad-supported Disney+ and ESPN+ to be included in “Spectrum TV Select” packages. In addition, when ESPN launches its direct-to-consumer streaming option — which is expected to debut in fall 2025 — these customers will receive access to it, too.

“I give Charter a ton of credit because they walked into the room and they had very specific ideas. They had a vision that they wanted to execute against, and again, it was a hard negotiation,” ESPN Chairman Jimmy Pitaro said on CNBC on Sept. 3 when discussing the blackout fight with DirecTV.

Depending on the tier a customer subscribes to, their package can include the ad-supported versions of streamers Disney+, ESPN+, Max, Discovery+, Paramount+, AMC+, BET+ and/or Televisa Univision’s Vix.

The deals have also given Charter the opportunity to sell and market the streaming services to its broadband-only customers — and includes a revenue share agreement.

The most recent deals with Warner Bros. Discovery and AMC Networks were early renewals. That’s relatively uncommon in an industry where carriage negotiations often come down to the wire.

Charter last year also started offering its own streaming devices, known as Xumo, through a joint venture with Comcast. The device gets rid of the cable box and gives consumers a way to access both their cable TV and streaming apps in one place.

“We still have hurdles to get through,” Winfrey said, noting that Charter’s goal is to offer all ad-supported streaming apps owned by the major programmers it negotiates with on the cable TV bundle in the first half of 2025.

NBCUniversal’s Peacock is still not part of that roster, however. A Charter representative said the company doesn’t discuss renewals and declined to comment.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.

This post appeared first on NBC NEWS
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