Charter launches new Spectrum rates and internet speeds, aims to ‘be a better service provider’

Charter Communications CEO Chris Winfrey said he wants consumers to think about reliability and trust when they think about cable and broadband providers.

The cable giant told CNBC it is unveiling a series of changes Monday to bolster that goal, including rolling out new bundles and pricing, increasing internet speeds, offering outage service points and a promise of reliability. customers.

Charter – which offers broadband, cable TV and mobile services known to consumers as Spectrum – said it is also trying to make the company more accessible and remove the longstanding negative connotations of cable companies. announcing Spectrum’s new “first-of-its-kind Customer Promise,” branded “Unlimited Life.”

The announcement comes as Charter and its industry peers grapple with a number of changes: slowing subscriber growth, continued deficiencies in the cable TV package, and a young but rapidly expanding mobile business.

“It’s hard to be loved when you’re providing an essential service to a family that’s physical infrastructure that costs $100 a month,” Winfrey said in an interview with CNBC. “As long as there’s a problem, sometimes someone has to come into your home…just like an electrician or a plumber.”

The first step to changing negative consumer perceptions is “price and packaging that creates more value than you can replicate anywhere else in the market,” he said.

Spectrum said it will charge at least $30 a month for its 500Mbps Internet plan, or $40 a month for 1GB service, when either connected to two mobile lines or cable television. The company is also increasing the basic internet speed for current customers at no additional cost.

The company also said it plans to raise costs. Under her new plan, taxes and fees are baked in, there are no annual contracts, and prices are guaranteed for up to three years, she said. Charter has even done away with the 99 cents it tacked on to most Spectrum fares in the past.

In addition, Spectrum has promised to provide customers with fixed internet credit for issues beyond their control or when the company’s customer service does not live up to its promises.

Life Unlimited – a new platform for Spectrum’s internet, mobile and TV services – will roll out across its 41-state footprint this week, the company said.

“We wanted to make a bold statement about our commitment and our ability,” Winfrey said. “We also wanted to recognize that we’re not perfect, and we’re putting ourselves under pressure, significant pressure, to make sure we can be a better service provider every month and every year here and beyond.”

The announced changes are some of Charter’s biggest moves since Winfrey took over as CEO in December 2022.

He follows Tom Rutledge, who held the position for a decade and turned a small cable operator into the second largest U.S. cable company through the acquisition of Time Warner Cable and Bright House Networks in 2016. Winfrey was CFO. at that time and pioneered the merger.

Winfrey recalled the various investments and developments that cable companies have made in recent years: namely broadband, but also pay TV packages and telephone and mobile phone businesses.

“With all the value that the industry has brought over the years, and the service and the reliable investment that we have made, we have not always received the full credit that we deserve. In some cases, we get the credit that we deserve. Because I could do it. something better,” Winfrey said.

He entered the top job at a moment when it was clear that growth was unlikely to return to the TV package.

Winfrey was low key and not widely known in the media industry, but she started swinging.

At Investor Day in December 2022, Charter announced an aggressive capital investment plan that includes investing $5.5 billion over three years in its extensive infrastructure network. Higher-than-expected costs during a period of increasing competition for 5G wireless providers sent alarm bells on Wall Street, and the stock fell.

Charter’s share price has fluctuated significantly in recent years. On September 12, 2021, the stock price was $787.12. It closed at $340.17 on Friday.

That’s in part because of the broader customer growth of providers that include Charter and Comcast have struggled, according to corporate earnings reports. There has been increased competition from wireless companies such as AT&T and Verizon It also contributed to the stagnation, as well as a slowdown in the buying and selling of homes, due to high interest rates.

The third quarter was the worst ever for consumer losses in the broadband industry, according to MoffettNathanson. Charter lost 149,000 customers and had a total of 30.4 million residential and small business customers as of June 30, according to its second quarter earnings report.

Although the losses were not as significant as analysts had feared, Charter’s growth is currently in its mobile business, which was launched in 2018. Spectrum Mobile has 8.8 million lines in total and has grown rapidly due to advertising deals. attractive and increasing mobile use of reliable Wi-Fi networks, the company said.

In late 2022, Charter announced its “Spectrum One” plan, for the first time offering broadband, Wi-Fi and mobile bundles with ads that include competitive rates and, in some cases, free mobile lines.

“In wireless, the ‘Spectrum One’ promotion is definitely turning out to be a home run,” analyst Craig Moffett said in a research note in July. “Despite the fact that it was initially seen as shocking and aggressive, it was, in fact, a moderate offer.”

Moffett called mobile an “underappreciated growth engine” for Charter, not only because of subscriber additions but also growth in average revenue per user, or ARPU, a metric often used by cable companies.

Winfrey doesn’t expect ARPU to be affected by new ads.

“When I think of Wall Street, I think of the consumer,” Winfrey said. “If you focus on the customer, provide great customer service, save money, deliver value, then your capital market strategy, your regulatory strategy, all of that falls into place.”

Consumers quickly abandoned pay TV from all providers, including Charter. But the company has been vocal about its efforts to protect the business, especially under Winfrey’s leadership.

The big time came in 2023 then DisneyOwned networks have gone dark for Charter customers, and Winfrey has called the pay TV ecosystem “broken” as she pushes for a restructuring deal with Disney.

While these disputes are common — Disney and DirecTV on Saturday ended a nearly two-week pitch battle — this one was different in the age of streaming.

At Charter, the only sticking point wasn’t the fees. The company wanted the Disney-backed streaming option to be part of its TV offering.

Pay TV providers often say the prices that programming companies like Disney seek from them are too high, especially since programmers also stream much of their content on streaming sites. Even as the cable bundle loses subscribers, cable providers realize it’s still a cash cow while streaming chases profits.

“Thanks to Disney, they finally were willing to lean in and understand their role in the industry,” Winfrey said, adding that ESPN is considered the linchpin of the TV package. “They had to lead the position, and we knew that.”

The deal allowed for Disney+ and ESPN+-supported ads to be included in Spectrum TV Select packages. Additionally, when ESPN launches its live streaming option for subscribers — which is expected to roll out in the fall of 2025 — these subscribers will get it, too.

“I give Charter a ton of credit because they came into the room and they had some unique ideas. They had a vision that they wanted to execute, and again, it was a tough negotiation,” ESPN Chairman Jimmy Pitaro told CNBC on Sept. 3 about the fight. black on DirecTV.

Depending on the level at which customers subscribe, their packages may include ad-supported versions of streamers Disney+, ESPN+, Max, Discovery+, Paramount+, AMC+, BET+ and/or Televisa Univision’s Vix.

The agreements also give Charter the opportunity to sell and market streaming services to its customers-only – and include a revenue-sharing agreement.

The latest deals Warner Bros. Discovery and AMC networks they were an early update. That’s unusual in an industry where car negotiations often come down to the wire.

Charter last year also began offering its own streaming device, called Bad, in partnership with Comcast. The device eliminates the cable box and gives consumers a way to access both cable TV and streaming programs in one place.

“We still have challenges to overcome,” said Winfrey, noting that Charter’s goal is to provide all of the ad-supported programs that the major programs are negotiating with the cable TV package by the first half of 2025.

NBCUniversal’s Peacock is still not on that list, however. A Charter representative said the company did not discuss the renewal and declined to comment.

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.