Charter Spectrum’s broadband-only customers run up more than double the amount of broadband usage average customers subscribing to both cable TV and broadband use, and that consumption is growing fast.

“Data usage by residential internet customers is rising rapidly and monthly median data usage is over 200 GB per customer,” Charter CEO Thomas Rutledge said on a morning quarterly results conference call. “When you look at average monthly usage for customers that don’t subscribe to our traditional video product, usage climbs to over 400 GB per month.”

Last week, Comcast reported its average broadband customer also used over 200 GB a month, but did not break out the difference between those subscribing to cable TV and those who do not. If Comcast’s broadband-only customers are consuming a comparable amount of data, they could be nearing half of their monthly usage allowance (1 TB), in markets where Comcast caps its customers’ usage. But because that is only an average, it means many more Comcast customers are likely nearing or now exceeding Comcast’s data cap, exposing them to hefty overlimit penalties.

Spectrum does not impose any data allowances on its customers — all usage is unlimited.

Charter officials also reported their average mobile customers use “well under 10 GB a month.” The fact Charter did not get more specific about mobile usage is important because the new product is getting scrutiny from some on Wall Street concerned it will have a hard time becoming profitable because of its wholesale agreement with Verizon Wireless, which provides the 4G LTE service for Spectrum Mobile.

Subscribers have been primarily drawn to the $14/GB plan, which includes unlimited talk and texting, because it offers a very low entry price for a full-function wireless plan. But a customer only needs to use more than 3 GB of service per month to find their bill higher than what they would pay subscribing to Spectrum Mobile’s $45 unlimited usage plan. If Charter executives said the average mobile user consumed 5 GB of data, analysts could deduce what the average customer bill probably looked like. To maximize profits, Charter needs customers to select an unlimited data plan and keep data usage low to assure it can cover the wholesale costs Verizon Wireless charges the cable company for wireless connectivity.

Rutledge

Rutledge stressed he expects Spectrum Mobile to be profitable with the current Verizon Wireless MVNO contract in place — the service simply needs a larger user base to overcome its current losses.

Rutledge also announced Spectrum Mobile was testing dual SIM technology, which could allow it to eventually offload more of its 4G LTE traffic to its own (cheaper) network, which could eventually include mid-band wireless spectrum and the CBRS spectrum the company is already testing for fixed wireless service for rural areas. Spectrum could also follow Comcast with its own in-home network of publicly available Wi-Fi or innovate with unlicensed wireless mobile spectrum using small cells or external antennas.

Charter executives noted that customer data demands were pushing many to upgrade to higher speed internet products.

“Over 80% of our internet customers are now in packages that deliver 100 Mbps of speed or more and 30% of our customers are getting 200 Mbps or more,” Rutledge said. “We’re also seeing strong demand for our Ultra product, which delivers 400 Mbps, and we have gigabit service available everywhere.”

The costs to continue upgrading service for broadband customers are negligible on the company’s current platform, Rutledge admits. In the future, Charter Spectrum is considering offering 10 Gbps and 25 Gbps symmetrical service to customers, and it can scale up upgrades very quickly.

“For example, in only 14 months we launched DOCSIS 3.1, which took our speeds up to 1 Gbps across our entire footprint at a cost of just $9 per passing,” Rutledge said.

Virginia officials cannot get broadband providers to reveal full details about their actual service areas, so the state now believes cable and phone companies will be more forthcoming if they can quietly share that information with each other, keeping the state government in the dark.

Virginia Public Radio reports that there are more than 600,000 residents that have no access to high-speed internet, because the state’s dominant telecom companies — Verizon, Cox, and Comcast, choose not to provide service. But the state’s efforts to fund rural broadband projects to reach the unserved have been repeatedly complicated by the lack of accurate information about who actually has access to broadband, and who does not.

“If you call them and say, “I live at this address can I get connected?’ They can tell you yes or no. They will not share that information nationally,” Evan Feinman, Virginia’s chief broadband advisor, told VPR.

State officials cannot get straight answers because telecom companies treat their service areas as confidential and proprietary business information. Broadband availability maps have been criticized as inaccurate as well, with providers volunteering the information with little, if any, independent verification. That creates problems when a would-be provider for an unserved area completes a broadband grant application that results in immediate objections from incumbent providers that claim they already offer service in the proposed project’s service area.

Feinman believes that if the state steps out of any referee roll of verifying what areas actually get service, providers will suddenly begin sharing service information with each other.

Feinman

“Comcast is interested in helping us avoid having to fund an overbuild… if they don’t bid on covering the rest of the county then they’re not interested in covering the rest of the county,” Feinman explains. “So when another ISP comes in I have high confidence that when that ISP asks Comcast ‘Hey I want to cover the rest of this county, how much of that do I need to do?’ Comcast will share that information.”

That is not the experience of other states, where providers like Charter Communications treat any disclosure of their rural broadband service areas and intended expansion areas as “highly confidential information.” In New York, companies will share information with the state, especially when state taxpayers are helping to subsidize their costs, but under no circumstances will they share service and expansion intentions with other providers, calling them competitors.

That would leave Virginia taxpayers footing the bill for rural broadband funding, without the state being a fully informed partner, able to audit projects and their service areas.

This year, Virginia intends to spend $19 million on rural broadband funding, a comparatively tiny amount for the number of residents still lacking service (New York spent over a half billion dollars), but still an increase over earlier years. But where those funds are spent may now be up to the same cable and phone companies that have never been willing to offer service in those areas before, and may not be too interested in letting someone else serve those areas either.

The stakes are high, as Feinman pointed out.

“I have conversations with corporate leaders who say, ‘Well am I going to be able to get in touch with my manager at 1 am and will he or she be able to send me a document?’ If the answer is no that community’s off the list,” says Feinman.

Virginia could follow the lead of Wall Street analysts that have conducted detailed studies by using a provider’s own website to query service availability and information for each individual address in a proposed service area. It would be a labor intensive project, but one that would put providers on record about whether they actually offer service or not.

Virginia Public Radio reports the state’s goal for universal broadband has been hampered by a lack of accurate broadband mapping. Now the state proposes to allow cable and phone companies to sort it out themselves. (1:43)

The average Comcast broadband customer now consumes over 200 GB of online data per month, an increase of 34% over just one year ago, according to Dave Watson, president and CEO of Comcast Cable Communications.

The increased usage accelerated during the last quarter of 2018, Watson told investors on a quarterly conference call.

What remains unchanged is Comcast’s data cap, which remains fixed at 1 TB per month for many customers. To avoid overlimit penalty fees of $10 for each additional 50 GB block of data consumed (up to $200 per month), Comcast is still pitching its unlimited data option — insurance against Comcast’s own overlimit penalties, which costs a growing number of customers an extra $50 a month.

Watson knows data usage over Comcast’s network is about to grow exponentially, mostly thanks to streaming video.

“I think that we start with the central view that streaming is going to happen, video over the internet is more friend than foe. and we wish every bit was our bit,” Watson told investors this morning. “If people consume more bits and video clearly does that, and 4K video does even more than that, that is the sweet spot of where this company is going to grow.”

Translation: We intend to make a killing on usage growth. Comcast can market you a faster internet package at a higher price, or as your usage approaches the data cap, scare you into buying overlimit insurance.

Remember that Comcast drops usage caps for some customers willing to rent their latest network gateway (available only in some areas at this time).

FCC Chairman Ajit Pai drinking from his oversized mug.

Last fall, FCC Chairman Ajit Pai trumpeted claims that as a result of his successful efforts to rid the United States of net neutrality, the days of reduced investment from the nation’s cable and phone companies were over.

“Since my first day on the job, this agency has been focused on cutting through the regulatory red tape and increasing broadband investment, most importantly in rural America where the digital divide remains all too real,” Pai said in October 2018. “Today’s report confirms that the FCC’s policies to promote broadband deployment are working. After internet service providers reduced new investments in 2015 and 2016 under the prior Administration’s regulatory approach [ie. net neutrality], broadband investment increased in 2017 by $1.5 billion over the previous year. That’s real progress for American consumers, and another step toward better, faster, and cheaper broadband for all Americans.”

Of course, his claims were false last fall. Top executives at the nation’s largest telecom companies have repeatedly admitted that net neutrality had little, if any bearing on their spending plans. Much of the increased spending was, in fact, attributable to:

• AT&T’s required expansion of its fiber to the home network to meet its obligations from the acquisition of DirecTV.
• Charter Communications’ committed upgrades as part of its acquisition of Time Warner Cable and Bright House Networks, including switching off analog video and deploying DOCSIS 3.1.
• Comcast’s increased spending on DOCSIS 3.1 and pushing fiber optics deeper into its hybrid fiber-coax network.
• Wireless carrier investment in further 4G LTE deployments and network densification.

In the past six months, many of these companies have signaled investors the days of big spending are over, despite the fact the so-called regulatory shackles of net neutrality and other reform measures have been abolished under the Republican-led FCC.

Today, Comcast delivered the ultimate truth blow to Pai’s worthless promises, showing the lowest investment intensity in years. In fact, Comcast reported a huge 19.4% drop in capital expenditures, while achieving a 40.1% EBITDA margin — a signal the company is earning even bigger profits than ever, while at the same time literally slashing investment. One thing that did not decrease was Comcast’s total free cash flow, which rose to $4.592 billion dollars in the last quarter.

Verizon Communications has indefinitely suspended plans to charge customers an extra $10 a month for access to Verizon’s extremely spotty and uneven 5G service, which launched earlier this month in Chicago and Minneapolis.

Early adopters were told Verizon would waive the extra $10 fee for the first three months of service. But after receiving mixed reviews about Verizon’s 5G performance and very limited coverage area after launch, Verizon decided to withdraw the charge until further notice.

“This is some of the blowback you get from being first” in offering smartphone 5G service, John Hodulik, an analyst at UBS Group AG, told the Wall Street Journal. “It didn’t make sense to charge people extra money for a service that they’re rarely going to use.”

AT&T’s CEO Randall Stephenson sent signals to shareholders AT&T was also considering charging a premium rate for customers upgrading to 5G technology in the next two or three years.