While the pandemic has put added pressure on cable companies to keep their employees and customers safe and protected, Charter’s West Region — the company’s largest — has been more than up for the challenge. 

After battling lava flows and hurricanes in Hawaii and heat waves and wildfires in California, Charter’s West region team has continually proven its moxie in the face of harsh circumstances. 

“Rolling power outages, volcanoes, hurricanes, wildfires, and then you have to put a pandemic on top of it,” Charter senior VP of the West Region Deborah Picciolo said, adding that her team has been more than up to the challenge and that the safety of customers and employees remains the No. 1 priority.

Related: Charter's 'Giffen Good'

The challenges were particularly difficult in the early days of the coronavirus outbreak, especially when California had different rules depending on the county. Charter decided to follow Centers for Disease Control and Prevention guidelines early on and standardize its response around mask use, social distancing and using sanitizers and gloves. Charter also put a work-from-home program in place for those who could, and gave employees three weeks of COVID-related leave to deal with family and personal health matters, if needed. “We didn’t skip a beat,” Picciolo said.

West Region workers brought high-speed communications to the hospital ship U.S.S. Mercy, which was docked in Los Angeles to take COVID-19 patients, and helped wire up the first COVID-19 testing center in the state, in a parking lot in Riverside. At the same time, Charter had to get broadband service to customers that needed it for working and schooling at home. Prior to the pandemic, Picciolo said, about 60% of new customers self-installed their service. Within three or four weeks after the pandemic hit, that number grew to 95%. 

While Southern California wasn’t hit as hard by the latest round of wildfires — Picciolo said the region had about seven fires in August, but only one was within 2,000 feet of the cable plant — it has had to deal with major blazes in the past. In 2018, the Woolsey Fire, also known as the Malibu Fire, burned 100,000 acres and required 300,000 residents to evacuate. Charter lost hundreds of nodes in that inferno. But Picciolo said service was restored to the majority of its customers within 24 hours.

“We had to build a brand new hub and reroute everything,” she said. 

In Hawaii, where Charter is the dominant provider, employees had to deal with the double whammy last year. 

“We had a hurricane and a wildfire in Maui all at the same time,” Picciolo said. In 2018, the eruption of the Kilauea volcano destroyed 22 homes in the Spectrum footprint and caused significant plant damage. Charter lost about six nodes as a result of the eruption. 

Hawaii also gets its fair share of big storms, even hurricanes. The season starts in June but usually doesn’t pick up until August and September. This year’s July storm was unusual, and Picciolo said that most times hurricanes are downgraded to tropical storms before they reach the island chain. 

“But tropical storms cause a ton of flooding,” Picciolo said. “Last year, we had to use a Black Hawk helicopter to restore service. We also used donkeys to try to run fiber on Molokai, where we had a fiber run that went down because of a tropical storm. You have to be creative, especially in some of the more rural parts of Hawaii.”

Charter Communications’ success over the past few years, to hear chairman and CEO Tom Rutledge say it, is due to the ability of its employees to execute a relatively simple strategy: Offering high-value products at reasonable prices with top-notch customer service. And it doesn’t hurt to have a “Giffen good.”

For non-economics majors out there, a Giffen good is a product that, despite its higher price, continues to be in high demand. For 19th century Scottish economist Sir Robert Giffen, who coined the phrase in 1890, that product was bread. For Rutledge and Charter, it’s broadband. And in the cable business, broadband is everything.

Related: Charter's Wild, Wild West

Charter, the Multichannel News Operator of the Year for 2020, has managed record broadband and positive video subscriber growth during the pandemic by sticking to its game plan, initiated more than four years ago when it completed the purchase of Time Warner Cable. Back then, Rutledge and his team set out to make Charter’s plant across its 41-state footprint fully digital (achieved in 2018), to roll out DOCSIS 3.1 (completed in 2018), to uniformly align products and packaging across all markets (as of Q4 2019, 85% of its customers were in Spectrum pricing and packaging) and to raise broadband speeds (in 2019, it raised the minimum speed to 200 Megabits per second for 60% of the footprint and that rate continues to grow; the remaining 40% are at 100 Mbps). Four years later, the company is reaping the benefits of those investments.

Charter, in the words of Sanford Bernstein media analyst Peter Supino, is “making its own luck.”

Record-Setting Year

In the second quarter — the height of the pandemic — Charter added a record 850,000 broadband customers, outpacing the old mark, set in Q1, by nearly 50%. It also managed to grow residential video subscribers by 102,000 and wireless customers by 325,000. So far this year, Charter has added 1.4 million broadband customers (more than double last year’s gains) and is the only publicly traded cable operator to show positive video customer growth (32,000) for the first half of 2020. 

In a research note, Barclays Global media analyst Kannan Venkateshwar was impressed with Charter’s ability to grow video subscribers as other multichannel video programming distributors (MVPDs), including Comcast, are losing video customers at an accelerated pace. In Q2, Comcast lost about 427,000 video customers (up from a loss of 209,000 in Q2 2019), while other publicly traded operators like Altice USA and Cable One also saw video subs decline at an accelerated pace.

“It is also quite remarkable that in a world where every MVPD is managing the video business for cash, Charter is growing video subs, which is likely because of the revenue growth impact of video on overall cable and on headline broadband revenue growth,” Venkateshwar wrote in a note to clients.

Rutledge has a reputation of downplaying his own role in the success of the company, and that hasn’t changed. He gives all the credit to Charter’s 95,000 employees in the field and in the trenches, who’ve managed to steer the company toward record growth in the midst of a worldwide pandemic. At the Goldman Sachs Communacopia conference earlier this month, he pointed out that having the right product also is a big part of Charter’s success.

“The product is really valuable,” Rutledge said at Communacopia. “The product is valuable from a price perspective, relative to all the things you can spend your money on, particularly if you have nothing better to do. It’s a very attractive product — the ‘Giffen good,’ so to speak as an economic notion. It’s worth a lot of money, even in a down market. Our demand is up, our churn is down, and our ability to execute is pretty good.”

Cord-cutting will likely continue, Rutledge agreed, adding that future success across Charter’s product lines will depend in large part on the strength of the broadband service. And the operator is doing all it can to ensure that broadband growth continues on an upward slope for the foreseeable future.

“We look at our future in video as more of a video store of a whole range of kinds of products, including tiers, sports channels, traditional video products, linear products, AVOD products and making that an easy transaction for the customer, and making that part of the overall connectivity experience," Rutledge said at Communacopia. “We think we can continue to do that and that is the fundamental aspect of video that we’re interested in.”

The health of the video business will continue to depend on the sustained growth of broadband: As Rutledge noted, satellite-TV customers who switch to Charter’s Spectrum video offerings often buy a broadband connection, too. And broadband growth is showing no signs of letting up. 

“As they come loose from their satellite relationships, they are reevaluating their broadband connections as well,” Rutledge said.

The COVID-19 Conundrum

The demand for broadband has become even more pronounced during the pandemic. When most states began implementing work-from-home orders and mandating remote learning for students, having a reliable, fast internet connection became a necessity.

Charter, like other operators, scrambled to make its workplaces safe and to switch call-center employees and field operations to remote working status. There were some hiccups: Some complained that call centers in some areas were slower than others in letting workers do their jobs remotely. Charter, as an essential employer, remained open and leadership continued to come into the office to support essential front-line workers. Employees who could work remotely have been doing so since March, including more than 50% of call center operators shifting to remote work. As regions across the country have begun to open up, Charter is moving to a hybrid schedule of remote and office work in accordance with CDC guidelines.

Charter raised hourly pay for frontline workers by $1.50 per hour and increased the minimum wage for hourly workers by $1.50 per hour from $15 per hour. It also pledged that in 2022 all hourly employees will have a starting wage of $20 per hour or more. Charter gave workers an additional 15 days of paid COVID-19 flex time — not including paid quarantine time — and continued to pay its direct sales team when they were not allowed to go door-to-door (wages plus six-month average commission). There were no furloughs or layoffs in that time.

At its retail operations, Charter was able to deal with the shift in customer needs: Demand for and questions about broadband service spiked as more and more communities fell under work-from-home orders. Senior VP of Spectrum Stores and retail Pattie Eliason said that Charter, which managed to keep most of its retail operations open during the pandemic, was up to the challenge.

The retail operations have been undergoing a massive overhaul. Charter currently has about 430 retail locations and plans to end this year with about 530 stores. The goal is to finish 2021 with about 685 retail locations.

The idea is to make the retail stores a focal point for new customers, driving interest in new products and services. While customers were initially full of questions regarding broadband service, Eliason said, that has expanded into other areas such as wireless. The retail operations have helped with overall subscriber growth, she said.

“We’re very sales-focused,” Eliason said. “Consumers who have never thought about Spectrum are walking in the door and asking questions.”

In addition to mobile, broadband and video service, customers are asking about adding landlines, a product that in the past had been on the downswing, Eliason added.

 “People want to have a solid landline in their homes,” she said. “It definitely has increased overall in what we’re doing. Honestly, with people in the pandemic and being home, they wanted the safety of an extra landline.”

Charter managed to keep most of its Spectrum stores open throughout the pandemic, Eliason said, which to many customers was a needed breath of fresh air. 

“Customers were so thankful we were open, “ Eliason said. “They needed the service and they needed it now.”

That meant gearing up to get customers the equipment they needed to self-install the product and making sure there were answers to their questions. While traffic at the stores slowed during the pandemic’s first days — transactions were down about 50% early on — they have recovered to about 90% of what they were. In the meantime, Charter has significantly modified the way it does business in the retail locations.

“We have redone how we do everything,” Eliason added. “All of our employees wear masks, we have a social-distancing floor, so people know where they need to stand, we have plexiglass up, sanitizing at all times, making sure we’re following all the CDC guidelines. The biggest part is making sure the customers feel comfortable in all of the stores, as well as our employees.”

Charter also is limiting the stores’ capacity to about 50%, putting greeters outside each location to let customers know they can book appointments online and come back to the store later, rather than wait. 

The importance of the broadband product was evident by the Federal Communications Commission’s initial reaction to the pandemic, creating the Keep Americans Connected pledge. Just about every U.S. cable operator, including Charter, agreed to the pledge, promising to not disconnect any broadband connection for lack of payment during the pandemic. Charter, like other operators, also extended its free broadband offering to low-income homes with school-age children to ensure kids were able to learn remotely.

While the KAC pledge may have skewed the broadband numbers a bit, the company and most analysts believe that the bulk of those customers will be retained.

In a research note, MoffettNathanson principal and senior analyst Craig Moffett said even without the KAC and Remote Education Offer-related customers, Charter added 588,000 broadband customers in the period, a record for the company. Charter’s broadband growth rate was an “extraordinary” 8.3%, including KAC and REO, and 7.2% without, still its highest level since Q4 2016, according to Moffett. 

“The COVID crisis has shone a spotlight on the criticality of digital infrastructure and all cable operators have benefitted from the superiority of their broadband facilities,” Moffett said in an interview. “Charter, over the long term, is the best positioned cable operator because they have all the tailwinds of broadband’s ascendancy, but they also have a longer runway for margin expansion and free cash-flow growth.”

Maintaining the Growth Curve

But that leaves a question in every cable investor’s mind: Can Charter keep that momentum going? Analysts who follow the company said Charter is making moves to add more homes passed to ensure just that.

Like other operators, Charter has been extending its reach within its service territory, adding homes that are in the footprint but not receiving service. It has a lot of room to do that: Charter passes about 53 million homes in 41 states, and last month crossed 30 million customers, a major milestone but one that leaves room for growth. 

As part of the conditions for approval of its Time Warner Cable acquisition, Charter agreed to build out about 2 million additional underserved homes across the country and has been adding between 850,000 and 950,000 homes passed per year since 2015.  

The buildout program is just one of the many tasks that come under the purview of executive VP of field operations Tom Adams. Even in a pandemic construction continues, said Adams, who has overseen the buildout, adding more than 1.5 million homes in the last two years. 

Adams said Charter learned a lot from those early buildouts. “We learned what the hurdles were, administrative requirements to get on the poles, the difference in the quality of the infrastructure in rural America.”

Adams said the pace of the buildout will rely on economics, which varies depending on the geography. While he wouldn’t say how many more homes the company plans to add to the footprint in later years, he said Charter is committed to the program.  

“We would certainly like to build [out] more of rural America in the future,” Adams said. “We do believe there is an economic model that works that we can build some of the underserved rural markets that we’re in, and we’re going to make an effort to go after that in the future.”   

According to Moffett, the popularity of broadband service has made the economics of extending the network even to the most sparsely populated rural areas attractive.

 In a research note, Moffett said extending fiber into an urban area used to cost operators from $1,000 to $2,000 per home passed. For rural markets, where the runs are longer and the number of homes passed is lower, that figure could balloon to as much as $4,000 per home passed.

But rural markets, with fewer competitors, have much higher opportunity to sign up passed homes for service. Moffett wrote in his note that while 40% to 50% penetration rates could be assumed for urban builds, in rural markets 80% penetration rates are not unreasonable. That return on investment makes the higher costs more manageable. An urban market with a 50% penetration rate implies a cost of $4,000 per home, while a rural market with 80% penetration implies a cost that is just 25% higher, according to Moffett.  

“Suddenly, secondary markets look in many ways more attractive than primary markets,” Moffett said in an interview. “Ten years ago, everybody thought that the densest urban markets were the place to be, with the best advertising revenue and the lowest cost to serve. Today, the exposure to secondary markets with lots of rural adjacencies that allow for insistent edge-outs are more attractive than urban markets. You tend to see less broadband competition, you tend to see better new household formation, particularly now that people are fleeing the densest urban areas, and you have the longest runway for broadband growth.”

Wireless Takes Hold

While broadband growth has grabbed all the headlines, Charter has also made huge progress on the wireless front, adding 325,000 customers to its Spectrum Mobile service in the quarter, well above analysts’ expectations. Charter’s footprint expansion program, which largely involves rural markets, could prove to be a big help to the wireless side of the business, as well. 

Charter launched Spectrum Mobile in July 2018, part of a mobile virtual network operator deal with Verizon Communications. Spectrum Mobile debuted a few months after Comcast exercised the same MVNO, and in the last year and a half has grown strongly, ending the second quarter with 1.7 million subscribers. 

Charter is participating in the federal Rural Digital Opportunity Fund (RDOF) auction, a long-term program encouraging wireless companies to expand into rural markets and close the digital divide. The first phase of RDOF includes $16 billion in funding over 10 years. The second phase is a $4 billion program to extend wireless into underserved areas.

Charter has acknowledged participating in the auction, but because of quiet-period restrictions, has had to limit its conversations about the program.

But Moffett expects Charter to be a significant player in the RDOF auction. He expects “the longer growth runway provided by RDOF participation to be a welcome development for investors increasingly focused on broadband subscriber growth as the single most important metric to watch.”

With that many growth irons in the fire, Wall Street has taken notice. This year, Charter’s stock is up about 30% to  $630.07 each as of Sept. 16, and its share price has nearly tripled from $227.41 each just after the Time Warner Cable merger was completed. 

That performance has got to feel like a bit of a vindication for the Charter team. As one analyst put it, it wasn’t that long ago when, after a light quarter or two and the impending threat of streaming video casting a dark cloud over the industry, many in Wall Street were calling for Rutledge to step down and the TWC merger a failure. That Rutledge — who said on Charter’s Q2 analyst call that he would like to remain chairman and CEO beyond 2021, when his contract expires — wants to stick around is a clear indication that he is confident the company’s run of good luck will continue.

“We think Rutledge’s desire to remain at the helm is a bullish fact in that it supports confidence in management’s conviction about the company’s ability to gain market share, efficiency and cash flow for the long term,” Supino said in a recent report. “Remember, it was only six quarters ago when some on Wall Street were calling Charter’s TWC acquisition a flop and calling for a new CEO.”

Most of that turmoil was due to what some investors believed at the time was an indifference to deals, to the detriment of Charter’s stock. Market chatter was heavy concerning possible interest from Verizon, Japanese wireless company Softbank and even Altice USA, all of which never materialized. Rutledge and the rest of the Charter family weathered the storm by keeping their heads down and executing the plan.

“Tom is one of these rare CEOs that is just as comfortable with high-level strategy and economics as he is with nuts-and bolts-operations,” Moffett said. “There was a time when he was viewed as the consummate operator, but I think what has become clear to investors over the past 10 years is he’s a remarkably thoughtful economist and has really good insights into the economics and broad strategic issues in front of the cable industry.” 

To its credit, Charter has managed to keep the message uncomplicated in an increasingly complicated business. 

“I don’t think they’ve done anything that differently than anyone else,” Moffett continued. “It’s a refreshingly simple story: They told you what they were going to do, they’ve done it and it’s working.”

Cox Communications has long been the gold standard in the cable industry, reaching the top of the list of cable operators in J.D. Power customer-satisfaction surveys and as one of the first pioneering operators to introduce telephone services way back in 1997. Lately, though, Atlanta-based Cox has been more known as a target. Altice NV chairman Patrick Drahi made his desire for the family-owned cable operator well-known as he made plays for, first, Time Warner Cable and then Suddenlink Communications and Cablevision Systems. Cox made it clear it had no intention of selling, and it maintains that position today.

And why would Cox sell out? As one of the last remaining independently owned cable operators — controlled by the Cox family, it is part of Cox Enterprises and is the largest private telecom company in the U.S. — the MSO has thrived. Like its larger peers, Cox has reduced video customer losses over the past several years while consistently growing broadband subscribers: it has about 6 million residential and commercial customers. Commercial revenue is expected to reach $2 billion this year and president Patrick Esser believes $3 billion in annual sales in that category is not that far away.

Cox also continues to innovate. It has licensed Comcast’s X1 operating platform for a new version of its multiscreen Contour offering; launched a mobile-first, app-based offering aimed at millennials called Contour Flex Watch; and is trialing a Spanish-language video streaming service called Glosi. Efforts to convert Cox’s network to all-digital are expected to be completed this year and other projects, like an in-home gateway, Internet protocol- based voice service and DOCSIS 3.1-based Gigabit broadband are all on the way.

Esser says execution, not consolidation, drives Cox and its management team, led by chairman James Kennedy and himself; executive vice president and chief operating officer Jill Campbell; EVP and chief financial officer Mark Bowser; EVP and chief technology officer Kevin Hart; EVP and chief marketing and sales officer Mark Greatrex; and EVP of product development and management Steve Necessary. For stability and innovation amid the industry’s constant change, Cox Communications has earned the title of 2016 Multichannel News Distributor of the Year. Esser — the top executive at Cox since 2006 and an employee since signing on as director of programming in Hampton Roads, Va., in 1979 — spoke with senior finance editor Mike Farrell about Cox’s present and future positioning in the multichannel universe.

Related: Selfless Service After Louisiana Flood [subscription required]

MCN:Cox is one of the last sizable, independent family-owned cable operators left. Given how consolidation continues to transform the landscape, how do you maintain that independence in the new order?

Patrick Esser: When you look at the industry in general, we all talk about how much change we’re going through. I would probably use the word metamorphosis. I think it’s more of a step change than just change. You have to think about things differently today than you did five to 10 years ago, especially as it relates to the products we put out for our customers to use; the capabilities we have, what it is going to take to compete and grow.

The three things that I think about a lot are the pace of change that’s going on with technology; the pace of change going on with consumer behavior; and what’s going on with competition and consumers’ ability to choose. Those are all moving at such a rapid pace. That is really driving a lot of the change that is going on in the business.

That being said, our networks are faster today and smarter than they’ve ever been. The devices we’re putting in businesses and people’s homes and the experience they’re having is faster and smarter. The bottom line is this: Our customers are just more connected. You have to think about the business as a connected world.

Our mantra, which comes from the employees that deal with customers every day, is we connect people to the things in life they care most about. That drives a lot of our decision-making.

We have a very highly capable network. From the 1996 Telecom Act to this year, we’ve invested over $25 billion. We continue to spend at least 15% of our revenue every year on capital, most of that going into our network, to keep our network highly competitive and capable of delivering today’s products and services and ones we want to put into the market in the future. We’re very committed to our local communities. We believe this is a local business and so do our employees. That’s part of what makes Cox, Cox.

Our products are competitive. But you have to have those moments where you’re willing to pioneer some things, even before the product is fully baked, to keep yourself on your toes, leaning forward and moving at the kind of pace that the market is and your customers are.

But even talking about those things, in reference to Cox, I think it’s our people. I think it’s the values we all live by and our people’s commitment to take care of our customers that makes us such a special company. And none of this would be possible without the leadership and tone that is set by the Cox family. They are incredible stewards of this asset and their values have transcended generations for over 100 years, and they care about the businesses they own, the markets they do business in and the people that come to work here every day. So our values are very intact, and it gives us the ability to talk to [the family] and think long-term about the business.

MCN:You mentioned consolidation. Obviously, that has been a big issue over the past few years. Does having 4 million video customers have the same clout it did five years ago? How do you feel about scale?

PE: Scale really occurs at two levels: nationally and locally. Locally, we believe we have the scale in the markets we do business in. We can do the marketing and sales and service activities we need to do to compete and we’re willing to make investments in those markets. There are a couple of places where scale plays out, and that is in innovative platforms and services that you want to roll out and also with the supply chain work going on — in other words, the money you spend to buy products and services. We have a pretty close handle on what the difference is because of our size, in terms of what we pay for some of the products and services and content. That is always a tradeoff that we make.

To be able to 100% control a company — and don’t forget, no individual, no family is making a bigger bet on this industry than the Cox family — all of this company is owned by them and it is a large bet for them. So they think about it that way. The second thing about the markets you do business in, we can do the marketing, we can do the sales, we can do the execution we want to, but we have to be cognizant of the platforms. That’s why things like working with Comcast on the X1 platform as the foundational platform for our video product called Contour, was an important move for us to get the kind of innovation scale we wanted to get. The industry’s broadband platform is DOCSIS, we all share that same platform. That was important to us.

Our Homelife product [uses] a company called iControl; we all use that same platform. So it is important that you don’t do one-offs to the point that you lose innovation; that you are still swimming in the same direction that our peers are swimming. And that gives us some of the scale that we need.

MCN:But Cox really hasn’t been in the deal market since TCA Cable [in 1999].

PE: We’ve been doing deals. We’ve just been investing in other spaces, especially adjacent spaces.

MCN:In keeping with the industry trend of pigeonholing its participants, are you a buyer? A seller? Neither? Both?

PE: We have this total flexibility as a private company, and our balance sheet is in really good shape, to do whatever we want to do, whether it be in adjacent spaces or core business. But execution is where most of our time has been focused. And because we take such a long-term view on the business, we can be patient or we can [make moves] depending on the moment in time. I have had numerous conversations with Cox Enterprises and members of the Cox family that are very, very happy with this asset and where they stand today. We are right in the middle of our budgeting and long-range planning and we like what our plan says to us. There’s not been any lack of commitment by the Cox family or Cox Enterprises in the business. I don’t see any of that changing.

MCN:You touched on being a private company. It would seem that would be a big advantage because there isn’t a large group of outsiders pressuring the company to do something it might not want to do.

PE: I agree. You nailed it. That’s it. We have a different set of criteria and decision makers who plan to be here and to pass this on to their children or the next generation, so they think about it very differently.

MCN:Cable video has picked up, broadband is going strong and others are focusing on mobile and online. Where do you see the growth happening in this business going forward?

PE: There is more video being consumed today than ever in the history of the country. Now, it’s being done on different platforms, it’s been aggregated in different ways and we have to adapt to meet the customer where they want to consume it. But we are still bullish about the video business. The broadband business has been an incredible business for us, all the way back to 1997 when we launched it. We continue to add a lot of broadband customers every year. I think they buy the service because the product continues to perform extremely well, we continue to invest heavily in that space, we continue to raise our speeds [and] we offer customers a lot of choice. I think we have a lot of wind left in our sails with broadband.

Business services have done very well for us. We will hit $2 billion in annualized revenue for business services this year. Compare that to the size we are, that’s pretty impressive. Per business passed, per homes passed, per [fiber] mile laid, whatever term you want to use, we have performed extremely well in that space. I’m going to share a secret with you. We had a 10-year plan to build that business to $2 billion and this was the year we thought we could do it in, and we’re right on schedule. I think it could be a $3 billion business for us. There are some things we have to do and some investments we have to make in adjacent spaces to make it a $3 billion business, but with the team we have and the relationships we have in our communities and the customers we serve, they all want us to do more and more and more. Working with the other cable operators in the industry, we have just scratched the surface on enterprise revenue. Most of the stuff we’re doing is local and regional. But there are solutions and products that we can bring to the market that can make large nationwide, larger footprint customers very happy. I think that is the next phase of growth.

MCN:Have you made a lot of inroads into large enterprise business?

PE: Large regionals and small local business is our bread and butter today. Large regionals are city government, schools, military and banking. Those are large regionals we do very well with. I consider the Las Vegas Convention and Visitors Authority a large regional; they’ve been a very big customer for us. At the same time if you drive down the street, you can see business after business after business with 20 or fewer employees. We have done extremely well in that space. Our market share is getting to pretty impressive levels. It’s just a matter of the industry getting to a place where we have a standardized set of products that we can go to large enterprise customers [with], and serve them nationwide working together as an industry.

MCN:Cox has also made some moves with new products like a Spanish-language OTT service Glosi. What was the strategy behind that?

PE: We just saw a consumer group that was being underserved. Sometimes you have to say, “OK, if I have a large customer opportunity, and this is the content that they want and they want it both on their TV and their screen of choice, how do I get the content? How do I put it on their screen of choice? How do I make it a reasonable value play?” Remember, I said you can’t be afraid to pioneer. You have to go to the market and trial it and see what the customers tell you. We’re in a trial now with that product.

MCN:You have another relatively new offering, the app-delivered Flex Watch product. Is that your answer to younger viewers who want mobility and skinny bundles?

PE: It is mobile-first. We recognize the point that they may or may not consider the television their primary screen. That’s not my decision, that’s the consumer’s decision, it’s just accepting that. What is the aggregated set of content they want and what price point makes sense for them and allows me flexibility to do that? Whether they’re younger or it just meets their lifestyle — because not everybody’s 25 years old — it gives us another product that fits a lifestyle, and we’re trying to be responsive to the market within the constructs of what our content agreements allow us to do.

MCN:Everyone seems to be struggling to figure out a mobile strategy and video seems to be driving that. People are watching a lot of content on their phone.

PE: They’re watching a lot of content period. A lot of journalists have written that video is dead; they’re missing the point. It’s just showing up in more places than it ever has before. So content aggregators like ourselves have to adjust and adapt to what consumers are telling us. At the same time, we have the majority of our customers who love the video experience on a large screen TV in their front room. And we cannot leave them behind in terms of investments, and we’re not.

MCN:What about the next level — having an OTT product that goes outside the footprint? Has that tempted you at all?

PE: It hasn’t because it doesn’t fit with our core competency. That core competency of the local market has been really important to us. That competency of leveraging the network we’ve built; our service and billing organizations are all built around geographic regions. So no, we have no intention to work in that space.

MCN:Not even down the road, as the market becomes more saturated?

PE: Who knows in five years, but right now there is no energy being spent on that.

MCN:You were the first U.S. company to license Comcast’s X1 platform. What made you decide to go that route, rather than develop one yourself?

PE: Comcast has done a wonderful job developing that product. We got an opportunity to look into their road map and out further and there was a situation where they were willing to license it and its capabilities to us for about what we were spending a year on our video products. They’ve been a wonderful partner, by the way. They have something like 1,500 engineers working on this every day. I will never have 1,500 engineers working on it, but it creates a national platform that is extremely powerful and everything they said in their road map, they have done it.

We looked at the market; we looked at all of our options, even what we were doing ourselves, and we couldn’t think of a better scenario than the X1 platform. It made sense to us financially; it gave us, we thought, the most competitive product in the market and a product that continues to evolve. Fortunately they’ve got about 25 million reasons to get it right. They’re as motivated to get it right and keep it innovative as anybody, and we benefit by that.

MCN:How long before this is in everyone’s hands? Is it available in all of your markets now?

PE: Any customer in any Cox market can order the product. We rolled it out across the entire company. Over the next few years, it will become a larger and larger part of our user interface. It’s not going to be a forced migration.

MCN:Cox has always been willing to take risks and to admit when it was time to cut its losses and move on. You did that with the cellular business a few years ago, perhaps a good idea at the time but when the market shifted you pulled the plug. What have you learned from those mistakes?

PE: You have to have an environment that allows people to take risks; otherwise you will not be able to keep up with the pace of change. We’re right now in the process of wrapping up going all-digital, we’re driving the next generation of DOCSIS into the market — 3.1 will be here before you know it. We’re building fiber deeper and deeper. We’re building an all-IP voice platform. We have the next-generation gateway for the home [and] we have a whole new way to think about the WiFi experience in the home.

You’ve got to constantly be pushing yourself to move. You may never be able to move faster than the market, but you have to try to keep a cadence that reflects the market. If not, competitors will show up and steal valuable customers from you, and that shouldn’t happen. You have to be willing to make the investments, you’ve got to be willing to take some chances, you have to have extremely competent leaders and people working in the company — which we do — that you bet on and that you believe in. And you’ve got to be willing, if you’re wrong, to change.

In other words, we’re going to do some things, we’re going to trial some things, we’re going to launch some things. And if we find out six months later or a year later it wasn’t exactly what we thought it would be, then stop. Nobody’s ego is involved here: stop, learn and move on. I don’t care what Cox business you’re in, whether it’s the automotive division, the media division or the telecom division, I think that entrepreneurial spirit lives in all of them.

Charter Communications was named the Multichannel News Operator of the Year by the editors of the magazine.  

The Stamford, Conn.- based company is moving ahead rapidly on technology plans and transitions that will future-proof the nation's fourth-largest cable operator.

A little more than two years after a management shakeup that brought in Tom Rutledge as CEO, Charter Communications has transformed what was once thought of as a mish mash of secondary market systems into a tightly clustered operator (soon to be even tighter) and the industry’s biggest potential growth engine.

Since 2012 Charter has boosted high-speed data penetration, grown phone penetration and drastically reduced video customer losses. Charter lost 154,000 video subs in 2012, 109,000 in 2013 and 11,000 in the first half of 2014, compared to 216,000 in 2011. And this year all-digital initiatives have allowed the company to expand its HDTV lineup and boost minimum downstream data speeds from 30 Mbps to 60 Mbps in many of its systems (and up to 100 Mbps in St. Louis).

The company has also begun to test a new cloud-based user interface for set-tops, called "Spectrum Guide," that is using a system that will allow it to bring this new experience not just to new IP-connected boxes, but to older MPEG-only boxes as well.

Although Charter grabbed headlines this year for the deal that got away, it turned the loss of Time Warner Cable into a windfall. If all goes as planned, Charter will become the second largest U.S. cable operator, owning and/or managing an additional 5 million customers (more than doubling its current footprint) through sales, swaps and its one-third stake in SpinCo, a new public entity that will house about 2.5 million former Comcast and TWC customers.

Update: On Wednesday, it was announced that SpinCo will be known as GreatLand Connections.

And most analysts expect Charter to lead the consolidation wave after the Comcast deal is finalized, either directly or through SpinCo. Charter is consistently the top distribution pick for analysts that follow the industry and its stock continues to be a top performer – it is up about 15% this year after rising 80% in 2013.

In a report on Sept. 29, the magazine will feature Charter, and show through interviews and data how the company plans to execute an ambitious growth strategy.