Softbank CEO Masayoshi Son

Japan’s SoftBank “has laid the groundwork” for a $100 billion bid to acquire Charter Communications, better known to its customers as Spectrum, and merge it with Sprint, the American wireless company it controls, according to a report this morning in the Times of London.

London financial district sources leaked information early Monday morning that SoftBank’s billionaire CEO Masayoshi Son has already quietly purchased nearly 5% of Charter Communications stock, a prerequisite for launching a takeover bid. By purchasing a solid stake in Charter, the company hopes to be to taken more seriously about its proposition to combine America’s second largest cable company with the country’s fourth largest wireless carrier.

This isn’t the first time SoftBank has expressed an interest in a merger with Charter. Late in 2017, Masayoshi approached both Charter and its largest shareholder, Dr. John Malone, about the prospect of a merger. Malone was reportedly lukewarm about the deal, while Charter CEO Thomas Rutledge and the rest of his management team opposed the deal. But apart from Malone and Rutledge, many of Charter’s top shareholders were in favor of a merger — particularly the Newhouse family, which sold its interests in Bright House Networks, a mid-sized cable operator, to Charter in 2016.

Masayoshi has been a strong advocate of consolidation in the wireless industry, and has repeatedly lobbied for permission to acquire T-Mobile USA to combine it with Sprint. But regulator concerns during the Obama Administration made such a deal impossible. By targeting the acquisition of a cable operator, SoftBank can argue the transaction will have no material impact on competition because Sprint and Charter Communications operate different businesses.

Spectrum markets where gigabit speed is already available.

Charter Communications is accelerating the deployment of the next generation cable broadband standard DOCSIS 3.1 so that it can offer almost every customer gigabit download speed by the end of this year.

“We plan to be 1 Gbps everywhere and marketing 1 Gbps everywhere this year, which is [also includes] taking up a significant portion of our business to minimum speeds of 200 Mbps at the same price we were charging for 60 Mbps a year ago,” said Thomas Rutledge, CEO of Charter Communications, on a Feb. 2 investor conference call. “And we plan to do that as quickly as we can, but because of the all-digital rollout and some of the other operational issues we have, we haven’t fully planned out [200 Mbps speed for] the whole country yet.”

Charter’s biggest challenge is expected to be swapping legacy modems inadequate for the task of delivering 200 Mbps and higher speeds to residential customers. Many Charter customers are still using modems originally provided by Time Warner Cable and Bright House Networks, generally considered adequate for supporting top speeds only between 50-100 Mbps. But Charter is planning to offer faster internet speeds to position itself as a viable broadband competitor in markets where fiber competitors have poached subscribers and the future threat of 5G speeds up to 1 Gbps are on the horizon. That could require a substantial modem exchange program, especially in cities that were never upgraded to Time Warner Cable Maxx before Charter acquired Time Warner Cable.

Charter’s migration for Time Warner Cable/Bright House customers continues, while Charter Legacy markets stall

In 2017, Charter intentionally focused most of its time and money integrating its acquired Time Warner Cable and Bright House Networks customers into Charter’s billing, provisioning, service, and retention systems. This came, Rutledge admitted, at the expense of long-time Charter customers who saw new product launches and upgrades delayed because of the ongoing integration effort.

It will take until 2019 to fully integrate all of Charter’s customers onto a single platform that will no longer distinguish if a customer was a long-standing Charter customer or a former TWC or BH subscriber.

Customers willing to abandon their legacy Time Warner Cable or Bright House plans in favor of a Spectrum plan are also dragging their feet. As of the end of 2017, 51% of TWC and Bright House customers were still sticking with their original plan, refusing to switch to Spectrum pricing and packaging. As customers face Spectrum’s new plans, some are canceling service. Time Warner Cable residential video customers dropped by 2.5% over 2017. Charter Legacy customers dropped by 1%, while legacy Bright House customers declined by 0.5%.

Legacy Charter areas saw subscribers running out of patience. The company lost 10,000 video customers in the last quarter versus a gain of 20,000 customers a year ago. Company officials blame the complications associated with absorbing millions of acquired customers for the results.

“In 2016 and 2017, we delayed a number of new product launches through the integration, particularly at legacy Charter within our fundamental structured operating model and business rules now in place, we will more aggressively launch new products nationwide,” said Rutledge.

Charter is also spending a considerable amount of its financial resources buying back its stock. During the fourth quarter, Charter accelerated its buyback program repurchasing 13.5 million shares in Charter Holdings stock totaling $4.7 billion at an average price of $347 per share. For all of 2017, Charter bought back $13.2 billion worth of its own stock.

Digital television conversions drag on…

Charter did not restart its digital television conversion program until June of 2017, and 30% of Time Warner Cable and 50% of Bright House Networks customers are still watching analog cable television as a result. Company officials promise digital conversion will be completed nationwide by the end of this year, the first step the company will take to make dramatic broadband speed increases possible.

“Our video products in those markets will improve,” Rutledge said. “Internet speeds will increase further and all-digital will drive more efficient operations in the field including electronic disconnects, self-installation and a reduction of unauthorized connections.”

Among the most significant improvements is the introduction of the Worldbox set-top box, which will be available nationwide by the end of 2018, but generally only to new video customers. The new box runs faster and is less expensive than the traditional set-top box, and better integrates on-demand and streaming video services.

Worldbox will also highlight Spectrum’s new Spectrum Guide, an improved on-screen program guide and content portal. The new guide will also include support for third-party streaming services like Netflix.

Charter has also begun to deploy an improved Wi-Fi router known as Wave 2, which claims to offer faster speeds and better signals throughout a customer’s home. Availability is reportedly spotty, but improving.

[Clarification 1/15/2018: This list only covers customer-owned modems approved by Charter Communications. It is not a comprehensive list of modems that may have been supplied directly by Charter/Spectrum, or its predecessors Time Warner Cable or Bright House Networks, which are obviously also acceptable. However, if you have a modem supplied by Time Warner or Bright House, it might not support the upgraded faster speeds Spectrum now offers. You might want to contact customer service to verify whether your current modem is capable of performing at the speeds now provided.]

Charter Communications recently increased broadband speeds for most of their customers, and many cable modems that are still in use from the days of Time Warner Cable and Bright House Networks cannot support the company’s fastest speed tiers. As a result, Charter has updated their approved/recommended cable modem list to help customers obtain a modem that can support faster speeds.

Those customers who have moved away from a legacy Time Warner Cable or Bright House internet plan can get a free cable modem from a local Spectrum cable store. If you prefer to still own your own, here is the updated listing. We recommend choosing a model capable of supporting up to 300 Mbps speed because additional speed upgrades are likely in the future. Most customers now receive at least 100 Mbps service, so at least choose a model that can support that speed.

Gigabit (940 Mbps) Tier

At this time there are no modems that have passed certification testing for the Spectrum Internet 1 Gig speed tier (940Mbps). You need to use a cable modem supplied by Charter/Spectrum.

400 Mbps

300 Mbps

100 Mbps

60 Mbps

These modems are NOT RECOMMENDED, but are still allowed on the Charter/Spectrum network.

Most Charter Communications customers should now be experiencing Spectrum’s free holiday season speed upgrade as the company rolls out speed tiers ranging from 100-1,000Mbps. Customers have been sharing their stories about the speed changes, especially for former Time Warner Cable and Bright House customers that, in many areas, languished with maximum speeds of around 50Mbps for years.

Most of the changes were noticed by customers around mid-December when Charter reprovisioned customer modems to reflect the new speed tiers. But some customers have had to call to get their modems refreshed to get the new speed upgrades. Others may need a new modem to take advantage of faster speeds. Since Spectrum does not charge a customer modem rental fee, if your speeds are inadequate with your current modem, it may not hurt to try one of theirs. Just remember they will often attempt to sell you added Wi-Fi service which you may not need for an additional $5 a month. This feature can be disabled to avoid the fee on any modem they provide if you already have your own router.

There has also been confusion because some cities are not yet fully upgraded to receive some of Spectrum’s fastest tiers and some current customers will not automatically qualify for speed upgrades until they talk to Spectrum customer service.

Premium Speed Price Reductions Arrive

Some good news — the premium prices Spectrum charges for its highest speed tiers are dropping to make room for the company’s new gigabit plan ($124.99), currently only available in a very limited service area. Spectrum Internet Ultra, which ranges in speed between 120-400Mbps depending on your service area is dropping from $104.99/mo to $89.99/mo ($79.99 if you have a television package). The original Spectrum Ultra upgrade setup fee – $199.99, has been reduced to $49.99.

If you subscribe to Internet Ultra, you may need to contact Spectrum to make sure they have provisioned your service at the new lower price. If you have any problems, refer them to Charter’s non-promotional rate card for your area, which should now show the new non-promotional/regular pricing.

Remember too that customers with legacy Time Warner Cable or Bright House packages and pricing will not receive speed upgrades.

Speed Changes in Select Areas

For many Spectrum customers, the speed increase introduces 100Mbps as the new Standard Spectrum internet speed, but in more than a dozen markets, even faster speeds are now available, at least for some customers.

In Austin, Tex., Charlotte, N.C., Cincinnati, Oh., Kansas City, Mo., New York, N.Y., Raleigh, N.C., and San Antonio, Tex.:

• Spectrum Internet Gig (up to 940/35Mbps) is now available
• Spectrum Internet Ultra (up to 400/20Mbps) for new customers (existing customers should check to see if they are still stuck at 300Mbps, the old speed)
• Spectrum Internet Standard (up to 200/10Mbps) for all customers, which includes a free speed boost.

Note: Current Internet Ultra customers may need to contact Spectrum to make arrangements for the speed upgrade. You may also need a new modem to qualify for 400Mbps speed.

In Bowling Green, Ky., Burlington, Vt., Dayton, Oh., Dallas-Ft. Worth, Tex., Evansville, Ind., Green Bay, Wisc., Greensboro, N.C., Greenville, N.C., Houston, Tex., Lexington, Ky., Los Angeles, Calif., Louisville, Ky., Milwaukee, Wisc., Palm Springs, Calif., San Diego, Calif., Syracuse, N.Y., Utica, N.Y., Waco, Tex., Watertown, N.Y., Wilmington, N.C., and Yuma, Ariz.: 

• Spectrum Internet Ultra (up to 400/20Mbps) for new customers
• Spectrum Internet Ultra (up to 300/20Mbps) for existing customers, which represents no change.

Note: Some existing customers claim they have been upgraded to 400Mbps speed automatically, but others have had to contact Spectrum to make arrangements for the upgrade. You may also need a new modem to qualify for 400Mbps speed.

Experiencing Spectrum’s Gigabit Service

Technicolor 4400 DOCSIS 3.1 modem

Upgrading to gigabit speed will take more than a phone call with customer service. For now, Charter Communications insists on an in-home service call and a setup fee that was originally set at $199.99 but may have recently dropped. Some customers report getting the fee waived by complaining about it on Twitter and referencing @Ask_Spectrum in the tweet.

We have heard from customers in Texas and Hawaii that signed up for gigabit service and their stories are similar.

• Expect a service call lasting up to two hours. A technician, or more likely a few of them will be thoroughly testing the condition of your current cable lines, both inside and outside of the home. They have new testing equipment that is more sensitive than older testing equipment, and can spot signal problems, interference, or deteriorating infrastructure that will need to be repaired or replaced before service can be installed. In most cases, this can be done during the same service call.
• There are no authorized customer-owned modems for Spectrum’s gigabit internet at this time. Customers have received Technicolor TC4400-AM DOCSIS 3.1 modems during these early days of gigabit service. There will likely be others offered in the future.
• Customers can expect speeds to approach 940Mbps of download speed and close to 40Mbps for uploads if they own gigabit capable routers and reasonably modern computers. Expect wireless speeds to be significantly lower — sometimes by more than half, depending on the device, distance from the router, and the router itself. Spectrum technicians will probably strongly recommend the use of one of their routers.
• Faster speeds were noticeable downloading large files and streaming very high bandwidth multimedia, but average users may not notice a dramatic difference from gigabit speed while doing basic web browsing and other similar activities. But the larger installed base of gigabit-capable consumers will likely inspire future applications built to take advantage of that higher bandwidth.

Charter Communications cable TV customers will soon see sweeping rate increases on their cable bills as the cable company announces its 2018 “rate adjustments” that will begin to take effect as early as next month in some markets.

For many customers, it is the second substantial rate increase in a year. Among the most notable are a dramatic hike in equipment rental costs and surcharges.

As Charter Communications took control of Time Warner Cable and Bright House Networks and introduced Spectrum packages and pricing in 2016 and 2017, company spokesman Justin Venech promised that Spectrum packages were “a better value” for customers, in part because equipment rental fees were substantially lower. But the gap between what Time Warner Cable charged in early 2016 and what Spectrum customers will pay in 2018 is quickly narrowing.

In early 2017, a Spectrum set-top box was priced at $4.99 a month. In mid-2017, the company raised the price to $5.99 a month and starting next month, that rental price is increasing to $6.99 a month per box. Other equipment is getting more costly as well. Time Warner Cable introduced digital transport adapters (DTAs) for secondary analog television sets at $0.99 a month. In 2018, that equipment will cost $4.99 a month. DVR service also increases $1 to $12.99 a month.

Spectrum’s original bundled TV, phone and internet packages — Select, Silver, and Gold were priced at $109.94, $129.94, and $149 a month respectively in 2016, according to the Orange County Register. Los Angeles was among the first markets in the country to obtain new Spectrum packages and pricing in the fall of 2016. Just 15 months later, customers can now expect to pay rates starting at $139.99 for Select, $159.99 for Silver, and $179.99 for Gold.

The company’s hated Broadcast TV Surcharge, which applies to all promotional and regular-priced television packages is also being hiked from $7.50 a month to $8.85.

Among the first markets to see the 2018 rate hike is Lexington, Ky.,  which has had a year-long running battle with Charter Communications.

The mayor is not happy.

“I’m outraged,” Lexington Mayor Jim Gray told the Lexington Herald-Leader. “This is the second rate hike for Spectrum’s cable subscribers in a single year. And considering Spectrum’s record of poor customer service, it just confirms my decision to bring competition and more options to Lexington for cable TV services along with high-speed internet.”

Lexington residents will soon have a third option for cable service in addition to Spectrum, AT&T or CenturyLink: MetroNet — which promises to wire the city with fiber to the home service over the next 3-4 years.

Prices for internet and phone service are unchanged for now, but Charter has often announced rate hikes for those services later in the year, so do not expect rates to remain unchanged throughout 2018.

Spectrum 2018 Cable TV Rate Increases

• Limited Basic TV service: Current price: $15 New Price: $20
• Expanded Basic TV service: Current price: $54.99 New Price: $49.99
• Spectrum Receiver: Current price: $5.99 New Price: $6.99
• Broadcast TV Surcharge: Current price: $7.50 New Price: $8.85
• DTA: Current price: $4.00 New Price: $4.99
• Single DVR Service: Current price: $11.99 New Price: $12.99
• Sports Pass: Current price: $10.00 New Price: $12.00
• Movie Pass: Current price: $10.00 New Price: $12.00
• Triple Play Select: Current price: $129.99 New Price: $139.99
• Triple Play Silver: Current price: $149.99 New price: $159.99
• Triple Play Gold: Current price: $169.99 New Price: $179.99