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Spectrum: Go Ahead and Cancel Cable TV, We’ll Make a Fortune Selling You $70 Broadband Instead

Phillip Dampier September 3, 2019 Charter Spectrum, Competition, Consumer News 23 Comments

Charter Communications has set the stage for a Wall Street-pleasing boost in average revenue per user (ARPU) with a major broadband rate hike planned for this fall.

The rate of U.S. broadband subscriber growth slowed significantly in the second quarter of 2019, as the marketplace for internet access remains saturated and current customers are largely staying with the provider they know.

A MoffettNathanson report to investors shared by Light Reading reported subscriber growth is down from 3% during the first three months of 2019 to 2.8% over the late spring and early summer. In total, cable and phone companies added 438,000 new broadband customers in the second quarter, a significant drop from the 570,000 they added at the same time last year.

The number of new household formations continues to decline in the United States, presumably because younger Americans saddled with student loan debt are having a tougher time buying property or justifying high rent payments. Providers also believe the ongoing shift away from copper telco DSL service to cable broadband has slowed to a trickle, with those still loyal to DSL not concerned about internet speed, are happy with lower cost service, or do not have any other option. Craig Moffett, chief analyst for MoffettNathanson believes much of the growth in cable broadband at this point is coming from customers switching from services like AT&T U-verse, which still offers top speeds of under 30 Mbps in some areas. Other phone companies still relying on fiber-to-the-neighborhood service are likely also seeing customer departures triggered by recent discontinuation of video service. In most areas, cable operators are still the largest beneficiaries of provider changes. Phone companies relying on DSL continue to report broadband subscriber losses. Last year during the second quarter, phone companies lost 127,000 subscribers (a 1.1% decline). This summer, they lost 172,000 subscribers (a 1.3% decline).

With slowing cable broadband growth, companies are still under pressure to report positive quarterly results to shareholders. Without a significant number of new customers, Moffett believes operators will raise broadband prices to deliver higher revenue, especially in light of ongoing video cord-cutting. Moffett points to Charter Communications’ Spectrum in particular. Spectrum has one of the cable industry’s lowest ARPU numbers, because it does not impose cable modem rental fees or usage caps. That may explain the company’s plans to hike general internet pricing 6% starting in October, soon collecting $69.99 for Standard 100 (or 200 Mbps) service and $75.99 a month for customers bundling Standard Internet with Wi-Fi.

“The broadband increases alone would suggest significant upside to Charter ARPU estimates,” Moffett said. He also noted Charter’s plan to dramatically increase video pricing also “underscores their recent pivot towards ‘letting’ video customers leave if they want, and repricing those who remain for profitability.”

That means customers outraged by Spectrum’s cable TV rate hikes will not get much sympathy from customer retention agents. Moffett believes customers will be invited to cancel cable television service, because Charter does not make as much profit on the service as it used to, and customers will probably still keep their Spectrum internet service, which is enormously profitable for the cable operator. Customers will also pay an even higher price for standalone internet service once they stop bundling television service, increasing Charter’s profits even more.

Ironically, the more Spectrum customers drop cable TV packages, the more profit Charter can report to shareholders. Those keeping cable television won’t hurt Charter’s bottom line either. Customers that readily agree to pay more with each cable TV rate hike are statistically the least likely to complain or cancel.

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LT
LT
1 year ago

Needs to be taken away from them.. nationalized. Don’t give them a nickel, just take it away like taking a loud toy from an annoying child.

Kevin Berger (@Pale_Flyer)

Check your facts. Most of the US has 4 choices for internet. Whatever ISP has hardlines, Satellite Internet at abismal speeds and data caps, “cellular broadband” or none. We can’t say “screw spectrum, I’m going to _____”, because THERE IS NO OPTION. Hell, there are LAWS in most places forcing you to stick with whatever crap ISP laid the lines 60 years ago.

Linda S Doyle
Linda S Doyle
1 year ago

Spectrum is the most rip off business there ever was, and they think they’re going to get by with it all. Boy do I got news for them!

DARRELL B. DAVIS
DARRELL B. DAVIS
1 year ago

PREACH LINDA!!!!!!

DeQui
DeQui
1 year ago

Spectrum has monopolized internet in my area they even convinced our city not to build our own internet services which would offer us more options. Ive been paying $71 for less than 100mb of wifi for the past 3 years the sh*t kicker is i only make $771 a month total income because im disabled but the $10 package they offer to low income families isn’t even good enough for the kids to do their homework on.

Fed up
Fed up
1 year ago

Internet costs $2-$3 a day. How many of you spend more than this a day on useless crap you don’t need; Soda, fast food, tobacco, candy, etc. Stop acting like spoiled entitled children.

Gypsy
Gypsy
1 year ago
Reply to  Fed up

Really, shut up. Because with as accessible as internet is and being that whether people notice it or not, we’re about to hit another recession, it’s already started.
Not everyone can afford internet, but it has become a necessity. So sit down and shut up because, some of us bust our butts to the point of paying for internet we get to use maybe once a week.

Understand Both Sides
Understand Both Sides
1 year ago
Reply to  Fed up

Folks missed your point Fed up. They took it personally and missed the point. Our egos in this day and time are very fragile and we have to be somewhat careful as to make a very valid point without bruising our fragile egos. I will also say that even though you have a valid point, other folks also have a valid point, in the sense that price hikes can cause issues on limited budgets. However, what most of us fail to realize and/or acknowledge is that these companies are in the business of making, not just money to maintain, but… Read more »

Matt
1 year ago

It’s ALL DONALD TRUMPS FAULT WE ARE IN THIS MESS..

thebla
thebla
1 year ago
Reply to  Matt

This isn’t even about fault, none of that matters when it comes to solving problems, focusing on fault just leads to mob mentality and pointless violence. I’d like some actual intellectual action which is actually respectful to life in general.

thebla
thebla
1 year ago

There is a legit issue though, some of us can’t even see well enough to drive and take a check every month to survive, our life depends on having internet big time. we can’t go places easily unless we are super lucky to walk where we need to go. getting directions would be difficult without internet or phone. i can’t afford a phone personally. My meals are rationed to 2.9 USD per day average. I’m having to switch back to my old isp praying to god they don’t hike the price up to. Cause if they do. I’m royally fu**ed.… Read more »

thebla
thebla
1 year ago

Why the heck was my reply gone? I just mentioned being pis poor, blind, and will be pretty much screwed if the ISP I changed back to would hike up the price as well. As for normal folks this will hurt you all as well if the monopoly continues, because this will cause your bill to eventually climb past 120 a month just for internet. What then? That’s a lot of money.

Jack
Jack
1 year ago

I started out with internet at 34.99 from twc before they were bought by spectrum, and by the time I a choice to switch to recently, it was costing me 65.99. They tried really hard to match the new providers price, but I guess there is a hard line the retention agents can’t cross. I wouldn’t have stayed with them anyway. They got the last laugh though as i switched about a 1/4 of the way through my service period thinking it would be prorated and it wasn’t. The agents sighted some policy change in May or something like that… Read more »

Gypsy
Gypsy
1 year ago

And it specifically stated they don’t charge modem rental fees??? 😂😂😂😂 oh yes they do because, about $12 of my bill is rental equipment

SJ
SJ
1 year ago
Reply to  Gypsy

It’s not required. You can buy your own. We got out from Costco. Eff them for upping the price though. And fed can shut his loud entitled ass. Some of us are barely making rent. We need the internet to do business and make rent and each of these price hike affects us.

Lassthatisgone1983
Lassthatisgone1983
1 year ago
Reply to  Gypsy

Your modem is free. DVR service and boxes, along with Hd boxes cost extra.

Fred
Fred
1 year ago

Love Spectrum, they have the best Streaming tv plans out there. The only ones with true. A la carte

Michael D
1 year ago

What are they going to do when the SpaceX satellites are operational. File chapter 11 I hope?

George Farquahar
George Farquahar
1 year ago
Reply to  Michael D

Sh*t-and I was going to sue them for monopolistic business practices-a no brainer-simple win-you just have to do it

thebla
thebla
1 year ago

I suppose replying here wont’ actually do good or change anything, am just hoping… But I hope people realize this isn’t just a service it’s a utility, basic living becomes a lot harder and sometimes impossible without it. Even more so than water. I’m blind, I can’t really go hardly anywhere and am lucky to have a store near me that can be reached on foot. I’m switching back to the old isp praying that they don’t hike the price back up to. Because if my internet bill goes past 50 a month, i’m screwed, it’s already hard enough trying… Read more »

Roger Ross
Roger Ross
1 year ago

In spite of what you are saying, this strategy will ultimately fail, and it is sad they cannot see it coming. What they should have done was lower prices, which would have retained customers, and then aggressively pushed for new growth. This is the same attitude the networks had when cable was evolving. That didn’t work for them either. There are alternatives, and there will be more. Because of their foolish choice, they are tipping the paradigm so that the cable cutting will happen faster, and the other alternatives will evolve along with them. I was able to switch and… Read more »

john
john
11 months ago

Not everyone can afford internet, but it has become a necessity. So sit down and shut up because, some of us bust our butts to the point of paying for internet we get to use maybe once a week.
see more at http://www.qualitybacklink.net/special-tips-to-increase-traffic-for-your-website/

Paul Houle
Paul Houle
11 months ago
Reply to  john

This is a spam link, delete it!

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