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Charter Finds an Off-Ramp for Spectrum Wireless Traffic

Spectrum Mobile store
Charter added some 300,000 Spectrum Wireless lines in fourth-quarter 2020. (Image credit: Charter)

Charter Communications hopes that Citizens Broadband Radio Service (CBRS) can soon divert a big chunk of its mobile data traffic off Verizon’s network, which it uses under a mobile virtual network operator (MVNO) agreement. 

“I think over the long haul — meaning four, five years — [CBRS] could be up to a third of our traffic that’s ... currently [used] on an MVNO kind of basis,” Charter chairman and CEO Tom Rutledge told investment analysts Jan. 29 during the cable operator’s fourth-quarter and full-year earnings call.

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Charter recently spent $465 million to purchase 21 CBRS priority access licenses. Rutledge said that 80% of Charter’s current mobile traffic is delivered over WiFi. It aims to soon have even more data usage defrayed from more expensive wholesale usage of Verizon’s network. 

“We intend to use those licenses, along with significant unlicensed CBRS spectrum on a targeted 5G small cell site strategy, with our [hybrid fiber-coaxial] network providing power and backhaul,” Rutledge said. “Those small cells, combined with improving WiFi capabilities, enable better throughput while driving significantly better economics for Charter. This year, we'll focus on scaling our systems to actively manage traffic on handsets using our MVNO, WiFi and CBRS spectrum. We will also build some targeted 5G small cell sites, which will help us learn how to pace our purely return-on-investment based CBRS deployment.”

Charter added 300,000 mobile lines in the fourth quarter and now controls 2.32 million total lines. Mobile revenue in the fourth quarter reached $428 million, versus $236 million in Q4 2019. 

The cable company is spending more on its mobile business these days: the wireless unit’s costs were up 40.5% year over year to $522 million. But Charter insisted that costs — and subscriber lines — aren’t rising due to device subsidy promotions. 

“We’re not giving away free phones to kick up wireless net adds,” Charter chief financial officer Chris Winfrey said, speaking alongside Rutledge.

ALSO READ: Charter Launches $5 Billion, Multi-Year Plan to Expand Broadband to 1 Million New Homes

As for CBRS, Rutledge said it will have an “opportunistic” role in Charter’s technology portfolio. “It depends on traffic flows, it depends on the quantity of flows and where they are and whether it pays for us to put out the capital to reduce those costs, but it is necessary. And if you think through our WiFi deployment as well, there is a mixture between WiFi and CBRS in terms of offload and how that works.”

Beyond pure economics, Rutledge said CBRS could improve overall user experience. “We’ve looked at CBRS strictly as a incremental opportunity from a return-on-investment point of view to move traffic onto our network, but it also does have the potential of increasing the consumers’ experience in terms of their satisfaction because of the quality of that connection,” he said. “And so that’s sort of an unstated opportunity going forward. Hard to quantify, but part of our strategy.”