Charter added 276,000 mobile lines during its third quarter 2019, up from 208,000 additions in the second quarter. The company launched its Spectrum Mobile service in July 2018, and it now counts 794,000 total lines.
Charter operates as a mobile virtual network operator (MVNO), riding on Verizon’s nationwide wireless network.
Its executives have spoken about their interest in CBRS spectrum. Chris Winfrey, Charter’s CFO, said on Friday’s Q3 2019 earnings call that, “We're obviously experimenting with convergence, and we've done a bunch of radio and mobile experiments this year testing switching dual SIM technology.”
The cable operator already supplements its wireless service with its Wi-Fi hotspots. And it’s also been testing CBRS radios on its plant with dual SIM devices that allow a customer to use the wireless MVNO, or alternatively, offload traffic to a potential Charter wireless network.
If Charter were to build its own wireless network, it could deploy strand-mounted small cells, which are designed to fit onto existing aerial cables. They offer an opportunity for cable operators to deploy wireless small cells on their pervasive aerial cable plant. This is in contrast to the big U.S. wireless carriers that are densifying their networks with pole-mounted small cells. And the process to get municipal approval for pole-mounted small cells can take months, while strand-mounted cells can be deployed much more quickly because the cable operators already own the strand.
In a research note, analysts with Moffett Nathanson wrote, “We suspect that Altice is already assuming they can offload as much as half of their traffic onto strand-mounted small cells, allowing them to sell unlimited plans for just $20 per month. Even without core network control under the Verizon MVNO contract, Charter (and Comcast) look poised to pursue the same strategy by leveraging eSIMS and, in their case, their own strand-mounted small cells.”
“We're uniquely positioned to take advantage of wireline and wireless network convergence overtime with our fully distributed wireline network,” said Charter CEO Tom Rutledge on the Q3 call with investors.
If Charter and/or Comcast decide to deploy strand-mounted small cells for their own wireless networks, they could tap CBRS spectrum with the option of using free CBRS shared spectrum or Priority Access Licenses (PALS) spectrum, which will come up for auction next year.
Rutledge said Charter is “quite optimistic” about the use of CBRS spectrum and dual SIM technology and “the ability to make select investments in areas where traffic dictates in such a way as to move services that we pay rent for onto our own platform, and that opportunity already exists with Wi-Fi.”
Charter counts 500,000 Wi-Fi hotspots. This compares to 19 million Wi-Fi hotspots on Comcast’s network.
“As you know there's a significant amount of free CBRS spectrum available, which we've been using,” said Rutledge. “There's some private spectrum of CBRS that's going to be auctioned next year. The question we're evaluating is should we be involved in that. But we haven't determined that yet.”
The Moffett Nathanson analysts said that Charter’s ambitions in CBRS point the way to potentially much higher profitability for its mobile service. “If [Charter] can offload anything close to half the cost of monthly service onto their own network, it would be a game changer,” they wrote. “In essence, they would be bifurcating the network into two buckets. They would take the ROIC (high density) parts for themselves, and they’d be leaving the low ROIC (low density) parts to Verizon….but they’d be paying Verizon a wholesale price that is undoubtedly based on the average ROIC of the network.”