Broadband's Future: Analyzing Comcast and Charter's Customer Losses

Current Customer Trends at Comcast and Charter

Comcast is seeing increased bandwidth requirements and higher adoption of advanced service tiers among its customers, while Charter's residential revenue per customer has slightly increased due to promotional rates and rate adjustments. Both companies are investing in faster internet speeds and new technologies to meet growing customer demand.

"behavior trends we see in our base of 32 million customers. Bandwidth requirements and engagement are increasing at a rapid clip, while the vast majority of our customers are now on speeds of 500 megabits or higher and adopting advanced tiers of service, like xFi Complete, at a higher rate." --- (CMCSA, earning call, 2024/Q1)

"Second quarter 2024 monthly residential revenue per residential customer totaled $120.77, and increased by 0.4% compared to the prior year period, given promotional rate step-ups, rate adjustments and the growth of Spectrum Mobile, partly offset by a lower mix of video customer relationships, a higher mix of lower priced video packages within Charter's video customer base and retention offers extended to customers that previously received an ACP subsidy." --- (CHTR, press release, 2024/07/26)

"Comcast Business customers now have access to increased Internet speeds, nationwide, at no additional cost 🚀 @comcastbusiness is introducing its fastest Internet plans yet, plus multi-gigabit symmetrical business Internet speeds in select markets. More: https://t.co/ueunuBe55m https://t.co/mxwhRpaEsi" --- (CMCSA, Twitter, 2024/05/10)

"In long term, our network and customer demand, products, pricing, and packaging capabilities, our service infrastructure, and the associated investments we're making today position Charter for sustainable growth and value creation. With that, I'll turn the call over to Jessica." --- (CHTR, earning call, 2024/Q1)

"Recently Comcast connected the first customers in the world to a DOCSIS 4.0 connection, delivering symmetrical gig speeds over existing connections in customers' homes with plans to continue to rollout these speeds across the country over the coming years." --- (CMCSA, press release, 2024/06/25)

Competitive Pressures from Other Broadband Providers

AT&T, T-Mobile, and Verizon are intensifying competitive pressures on Comcast and Charter by leveraging their mobile distribution channels, expanding fiber networks, and enhancing customer retention. These strategies are driving broadband growth and increasing market share, challenging Comcast and Charter's dominance.

"Additionally, we're able to reach new broadband customers through our substantial mobile distribution channels. The key point here is that our proven ability to drive higher share in both mobility and broadband through converged service penetration is the true benefit of owning and operating both 5G and fiber networks at scale." --- (AT&T, earning call, 2024/Q2)

""As the demand for reliable, low-latency connectivity rapidly increases, this deal is a scalable strategy for T-Mobile to take a significant step forward in expanding on our broadband success and continue shaking up competition in this space to bring even more value and choice to consumers," said Mike Sievert, CEO of T-Mobile." --- (T-Mobile, press release, 2024/04/25)

"I don't believe in sort of discounting products to get there. But of course, our efficiency if one customer has both mobility and broadband from us, and we will see that we share that with our customers as an opportunity." --- (Verizon, earning call, 2024/Q2)

"Broadband revenues increased in the second quarter and for the first six months of 2024, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU due to prior-year promotional pricing, partially offset by declines in copper-based broadband services." --- (AT&T, sec filing, 2024/Q2)

"And that's translating exactly into the results that we just talked about, where you saw the biggest share of broadband growth in Q2 coming from T-Mobile US, both because we're attracting more customers, and because we're seeing churn decrease across every 10-year cohort within the base." --- (TMUS, earning call, 2024/Q2)

Technological Advancements Influencing Customer Choices

Technological advancements in devices and form factors are rapidly evolving, significantly influencing customer choices in broadband services. The ability to choose and control tech platforms is critical, as customers seek empowerment and flexibility in their decision-making processes.

"The devices and form factors customers prefer evolve rapidly, influencing how users access services in the cloud and, in some cases, the user's choice of which suite of cloud-based services to use." --- (MSFT, sec filing, 2024/Q3)

"Our perspective is always to empower our customers and partners. And so we recognize a sense of choice and selection and control is super critical to anybody making a decision about their tech platform or any individual service within it." --- (MSFT, conference, 2024/05/29)

Pricing Strategies and Customer Retention

Comcast's new pricing plans and promotional offers have driven significant customer line additions, while Charter emphasizes fair pricing that provides high value. Both companies are adapting their strategies, with Comcast targeting multi-line customers and Charter avoiding a barbell pricing structure. External factors, like government program funding, also impact customer retention.

"Customer lines increased 20% year-over-year, reaching 7.2 million in total, including 322,000 line additions this quarter. The acceleration in line additions compared to the prior several quarters was driven by some early success with new pricing plans launched in April, targeted at multi-line customers, as well as continued traction with our Buy One, Get One line offer." --- (CMCSA, earning call, 2024/Q2)

"Doesn't mean it's cheap, but it's a fair price one that can stick and has high value inside the home and not end up with what you and I have talked about as a barbell strategy around your pricing structure." --- (CHTR, conference, 2024/05/14)

"In addition, if funding for the Affordable Connectivity Program, which provides a monthly discount towards broadband service for eligible low-income households, expires without renewal by Congress during the second quarter of 2024, our residential broadband customer relationships may be negatively impacted." --- (CMCSA, sec filing, 2024/Q1)

"have talked about as a barbell strategy around your pricing structure. And so we have a fundamentally different operating strategy." --- (CHTR, conference, 2024/05/14)

"For us, we’ve constantly been evolving our approach towards wireless and how we connect it with broadband and how we use it, so we have--for example, new pricing plans, our new mobile plans that are really targeting multi-line customers, we’re excited about that." --- (CMCSA, earning call, 2024/Q1)

Regulatory and Market Changes Impacting Broadband

Lower household formation rates and competition from fixed wireless are key market changes impacting broadband. Charter's network upgrades and strategic partnerships, along with Comcast's rural expansion efforts, reflect responses to these shifts. Additionally, Charter's strategic approach to bundling video services highlights evolving market dynamics.

"And the real issue has been selling opportunities for broadband were actually much lower in the marketplace year-over-year, and that's driven by continued lower year-over-year move in household formation rates." --- (CHTR, earning call, 2024/Q1)

"This is a good answer. This is better broadband for customers that want a better experience on for streaming, the straightforward applications, I think this is a better answer to fixed wireless in my humble opinion." --- (CMCSA, conference, 2024/05/21)

"In addition to that, we're upgrading that wireline network to have symmetrical and multi-gig speeds everywhere, not just in redline pockets, but everywhere that we operate, and then you combine that with our WiFi and CBRS capabilities and a very strategic relationship that we have with a great partner in Verizon, it gives us the ability to provide seamless connectivity, converged broadband everywhere you go inside of our" --- (CHTR, earning call, 2024/Q2)

"We're working to bring our next-generation broadband network to as many Americans as possible, including rural areas that have been unserved or underserved." --- (CMCSA, twitter, 2024/04/30)

"We're not sitting here saying that we're going to arrest completely the loss of video but I think what we are saying is to the extent we're going to put video on our broadband bill, it better have value and if it doesn't have value to the customer then we'd rather they just go take that through the direct-to-consumer applications and we need to be proud of what we're putting on the bill and that's not where the MVPD space has been in a long time." --- (CHTR, earning call, 2024/Q2)

Impact of Streaming Services on Broadband Demand

Streaming services have significantly boosted broadband demand, driven by consumer preference for on-demand content (NFLX), increased YouTube subscriptions (GOOG), and Disney's dual strategy of linear and streaming channels (DIS). Technological advancements in content discovery and network efficiency further enhance streaming's appeal (NFLX).

"On-demand and streaming have been unbelievable for consumer choice and control." --- (NFLX, earning call, 2024/Q1)

"Google subscriptions, platforms, and devices revenues increased $1.3 billion from the three months ended March 31, 2023 to the three months ended March 31, 2024, primarily driven by an increase in subscription revenues, largely from growth in the number of paid subscribers for YouTube services." --- (GOOG, sec filing, 2024/Q1)

"Our linear channels are deeply embedded in our direct-to-consumer strategy, as they continue to deliver high-quality content that reaches demographics not captured on streaming alone, allowing us to broaden our audiences and leverage our unmatched content engine across an expansive base." --- (DIS, earning call, 2024/Q2)

"The international angle is a really interesting angle, too. So as we we now have 5 years of the streaming wars to observe, perhaps we, maybe this is me, have underappreciated the massive technology advantage you have in content discovery, recommendations, ease of use, efficiency of the network." --- (NFLX, conference, 2024/05/15)

"As Bob mentioned, we continue to expect our combined streaming businesses to be profitable in the fourth quarter and expect further improvements in profitability in fiscal 2025. At Entertainment" --- (DIS, earning call, 2024/Q2)

Infrastructure Investments and Network Improvements

Comcast has invested heavily in infrastructure, with over $335 million in Connecticut and $8 million in Citrus County, FL. They are expanding networks in Pittsburgh and introducing new products like NOW Broadband, backed by their Xfinity network and 5G, to enhance connectivity and compete more effectively.

"The milestone is part of Comcast's ongoing expansion in Connecticut, where the company has invested more than $335 million in technology and infrastructure over the last three years – including upgrades to its local network." --- (CMCSA, press release, 2024/05/06)

"Comcast invested $8 million to make this technology infrastructure project possible." --- (CMCSA, press release, 2024/06/25)

"📣 Introducing NOW: a new portfolio for affordable, reliable connectivity 📣 Backed by our Xfinity network and the most reliable 5G, NOW delivers a connection customers can rely on for Internet, mobile or streaming in their homes or on the go: https://t.co/empOyQ7O8O https://t.co/kOavygcvro" --- (CMCSA, Twitter post, 2024/04/17)

"In addition to the grants, and as part of Comcast's commitment to improving access to fast, reliable Internet throughout Pittsburgh, network expansion projects are currently ongoing in both Allegheny and Butler Counties." --- (CMCSA, press release, 2024/07/30)

"And so we see a pretty steady ability to do that. And so however, we didn't think we were competing as effectively in that other segment, and we've introduced some new products called Now Broadband, prepaid, really simple product to onboard, a better value than some of the fixed wireless or we think all the fixed wireless offerings and a road map to hopefully one day upgrade you to the full Xfinity broadband experience." --- (CMCSA, conference, 2024/05/14)