Charter said its Spectrum Mobile service, an MVNO offering that runs over Verizon’s network, has so far gained a total of 21,000 lines. The company initially launched the offering in July and expanded it to its full cable footprint at the beginning of September.
That figure is dwarfed by Comcast’s own mobile efforts: Comcast counts almost 1 million lines for its own Xfinity Mobile service, an MVNO that also runs over Verizon’s wireless network. However, Comcast, has been offering its own service since April 2017.
Charter also offered some financial figures around its MVNO progress so far: Costs for the launch, devices and services and operations totaling $94 million in the third quarter, and $17 million in revenues from mobile. The company noted though that it will continue to rack up significant expenses as its gets its MVNO business up and running because it must first buy phones for its mobile business outright and then must wait two years while customers pay back the full value of those phones through Charter’s equipment installment payment plans for phones.
“So far our broader market launch has gone very smoothly,” said Charter chief executive Tom Rutledge “We started selling our product after Labor Day, so our total customer base is relatively small. We're at about 21,000 customer lines, but we're seeing steady new sales growth ... as we build brand and product awareness."
He also said that Charter would soon introduce new services to the MVNO, including the ability for customers to bring their own device.
“Ultimately our goal [with the MVNO] is to save customers money by an integrated, superior product offering driving faster customer growth and better retention, higher penetration and better EBITDA per passing,” Rutledge said.
However, more interestingly, Charter’s top executives also offered some interesting insights into key areas of Charter’s Spectrum Mobile MVNO and its wireless plans overall:
eSIM: “There are new technologies coming along with dual sim and eSIMs in mobile devices, which will allow somebody with an MVNO like us to actually run their own network and an MVNO simultaneously on the same device, which is an interesting thought as you go forward in terms of what you could do and how you could manage traffic and how you could do that efficiently,” Rutledge said.
Rutledge explained that Charter does not have “owner’s economics” with its MVNO since the service uses Verizon’s network, but he said Charter could potentially build out a wireless network using CBRS spectrum and then direct traffic onto that Charter wireless network in part through eSIM technology.
“Today we have a limited MVNO and it doesn’t do ultimately what we would like it to do,” he noted, but added that “it’s more than we had a couple of months ago.”
Rutledge’s comments are particularly noteworthy considering Apple’s new iPhones sport a dual-SIM design that features one physical SIM slot and support for one eSIM. Apple is currently primarily selling the setup as a way for customers to maintain two numbers on the same device: One number that handles calls, messages and data, and another that handles calls and messages.
Break-even: "We expect the mobile business on a standalone basis, without the benefits of cable—which we think are significant—we expect with no growth and no benefits to cable to reach financial break-even [in mobile] around 2 million mobile lines,” Rutledge said, noting that figure would represent about 5% penetration of the operator’s “internet relationships.”
Clarified Rutledge: "I don't want that to be a guidance of where we're going to break even because the reality is that we expect to be growing and continue to grow well beyond that. And I also think there's meaningful benefits to cable, but as an academic or analytical framework that gives you a sense of where the business needs to be, but it also hopefully shows our confidence around the MVNO and mobile and frankly the level of risk we're taking on.”
CBRS: Rutledge said that Charter may well look to acquire CBRS spectrum, though he said the company doesn’t expect the FCC to auction CBRS 3.5 GHz spectrum until 2020.
The agency recently voted to move forward with plans to release 3.5 GHz spectrum for commercial use, but it will likely first be released under the generally unlicensed GAA scenario, and later through a licensed PAL scenario.
Acquiring CBRS spectrum “would be a good business opportunity,” Rutledge said, noting the carrier could deploy the spectrum using CBRS radios on Charter’s cable strands. "We would look at the traffic and the cost of the MVNO, and say to ourselves, what would the capital do from a cost perspective? If it was more efficient to spend the capital [to build a CBRS network] and reduce our expenditures on the MVNO, that would be a good return on investment. So we'll look at that as it comes up."