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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 15 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.

Currently there are 15 comments on this Article:

  1. LT says:

    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.

  2. 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.

  3. Linda S Doyle says:

    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!

  4. DARRELL B. DAVIS says:

    PREACH LINDA!!!!!!

  5. DeQui says:

    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.

  6. Fed up says:

    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 says:

      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 says:

      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 big profits. We often forget that this country is one that’s built, maintained, and sustained on CAPITALISM!

      At the end of the day cable and internet are not a necessity as many of us think it is. It is a luxury, even for our businesses. One could always go to the public library and use free Wi-Fi there. Is it a convenience? No, but there again, our society has become one of convenience is a necessary.

      Sign of the [troubled] times!

  7. Jack says:

    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 which put an end to proration of monthly subscriptions.

  8. Gypsy says:

    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 says:

      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 says:

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

  9. Fred says:

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

  10. Michael D says:

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

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