Charter nears launch of mobile contract buyouts

Charter Communications continues to steer clear of using handset subsidies for Spectrum Mobile, but the operator will soon introduce contract buyouts as a customer acquisition tool, said President and CEO Chris Winfrey.

Speaking Tuesday at the MoffettNathanson Media, Internet and Communications Conference, Winfrey didn't reveal the specifics of that coming option. But he said it will represent "our opportunity from a subscriber acquisition standpoint to rip out multiple lines that are stuck in contracts…by these large MNOs [mobile network operators] that have locked up these devices and tied up these consumers."

Winfrey reiterated that Charter will continue to refrain from using handset subsidies as a mobile customer acquisition tool. "We've never thought that being in the subsidies business for handsets was really a great business. I still think that's the case," he said.

The coming launch of Charter's contract buyout option comes on the heels of other mobile-focused programs the operator has recently introduced. Last month, Charter shifted some focus to the premium side of the mobile market with the launch of "anytime" device upgrades for customers on its "Unlimited Plus" plan, and the introduction of a device protection plan for a flat fee of $5 per month per device, undercutting similar programs from AT&T, T-Mobile and Verizon.

Related:Charter heads up-market with 'anytime' smartphone upgrades for Unlimited Plus subs

Charter has also made recent adjustments to its "by the gig" pricing.

Expanding CBRS

Charter's contract buyout option is also emerging as the company starts to see its rate of mobile line growth slow down as its base expands to more than 8.25 million lines. Charter added 486,000 mobile lines (473,000 residential and 13,000 business) in Q1 2024, down from adds of 666,000 mobile lines in the year-ago period.

Charter is also looking to expand its deployment of CBRS spectrum in high-traffic areas to help reduce its mobile virtual network operator (MVNO) costs with Verizon. Charter has initially rolled out CBRS radios in Charlotte, North Carolina, and intends to deploy CBRS in one additional, but still unnamed, market later this year.

Winfrey stressed that Charter is offloading about 88% of its mobile traffic on its own network – primarily through Charter-operated Wi-Fi access points – and is in no hurry to accelerate its CBRS deployment.

"We have a very good, attractive relationship with Verizon, so we can go at our own pace," he said. "We don't have to rush."

'High confidence' in future broadband sub growth

Charter offers Spectrum Mobile only to its home broadband customers. Winfrey said Charter has seen a "demonstrable improvement" in churn among customers who bundle mobile with home broadband.

Related:Charter sheds more broadband subs than expected as mobile line growth decelerates

However, Charter, like its US cable peers, is struggling to grow its broadband subscriber base – it lost 72,000 residential broadband customers in Q1. That's due in part to a slow housing market, more aggressive competition from fiber and fixed wireless access (FWA) service providers, the increased use of mobile for home broadband and the likely demise of the Affordable Connectivity Program (ACP).

Winfrey believes things will turnaround eventually as the pace of new housing construction returns to normal and as Charter helps customers manage through the possible end of the ACP with alternative low-cost broadband options along with an offer of a free mobile line for a year.

"We have very high confidence in our ability to return to normalized [broadband subscriber] growth," he said. But it's unclear when that will happen, he added, noting that timing will be determined in part by how competitors behave.

And Winfrey is still somewhat optimistic that the ACP will get more funding to survive.  

"We've so far been disappointed, but I haven't given up hope that leadership will actually do the right thing and try to preserve the 22, 23 million customers out there who have this [ACP] benefit today," Winfrey said.

Related:FCC data shows Charter is largest ACP provider at $910M