He’s preparing a broadband service that transmits 10 Gbps up and downstream, which he can build “at fairly low capital investments,” he told investors today at the UBS Global Media and Communications Conference.
The initiative would open “the possibility down the road of a whole new industry” that blends wired and wireless services — especially if you include home and office WiFi. When you add them, then “80% of the bits on the mobile company’s devices is coming through our networks.” About 200 million wireless devices connect to Charter’s WiFi systems, he says.
Charter also plans to create its own mobile service in a deal that it, and other cable companies, have with Verizon. It would enable them to offer phones that use WiFi where that’s available, and Verizon’s network where it isn’t.
“We’re going to start down the path” of such a service — although he declined to offer any details, including potential pricing.
He seems unfazed by AT&T’s launch of DirecTV Now, the video streaming service that currently offers more than 100 channels for $35 a month.
“That’s a promotional price, and that price doesn’t include CBS or broadcast stations in most parts of the country,” he says. Although “it always worries me when someone sells below cost,” his programming deals would enable him to match.
And he says that programmers run the risk of undermining their pricing power if they help others provide skinny bundles or digital services that compete with conventional pay TV.
Currently “you have a really good model for programmers,” Rutledge says. “They’ve lashed themselves to the fat package and priced accordingly.” If they break that up then “their pricing power goes down.”
Charter doesn’t need to link up with a content provider “right now,” he adds. “We have a great runway for years to come. I don’t know how a content play would get us anywhere immediately.”
Some investors suspect that Charter’s biggest shareholder, Liberty Media’s John Malone, has big plans to link the No. 2 cable company with other companies in which he has significant stock holdings including Discovery and Lionsgate.
Rutledge says he’s also feeling upbeat about how a Trump administration might affect Charter — for example if it quashes FCC efforts to promote an open Internet or competition for set-top boxes.
“I was surprised by how captured I was by that regulatory environment,” the CEO says. “And to think, ‘Gosh, that’s gone’ — it’s pretty cool.”
Rutledge says that integration efforts with the recently acquired Time Warner Cable are on track — with savings likely to exceed his earlier forecast of $800 million over three years.
He blanched at the thought of making another deal that would require him to go through the process of seeking regulatory approval.
But with the change of administrations to one that might be more open to mega-mergers “it makes you think again about what’s possible.”
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