Following tests already underway in Fort Worth, Texas, and trials coming to “several” additional but still-unnamed markets later this year, Charter Communications hopes to commercially deploy its new cloud-based user interface for set-top boxes in all of its markets in 2015, company president and CEO Tom Rutledge said Thursday during the company’s second quarter earnings call.
That anticipated rollout, which hinges on whether the new UI can scale, will cover Charter’s historic markets and, eventually, those that will be coming way of Charter’s complex system acquisition and swap deal with Comcast, which involves some systems currently with Time Warner Cable.
“So far, the results have been promising,” Rutledge said of the cloud UI trials. “We think it's going to be commercially launched everywhere we operate in 2015.”
That new “Spectrum Guide” (a sample is pictured above), which reflects the Spectrum brand Charter is introducing as it completes all-digital upgrades, is designed to give Charter a unified look and feel because it’s made to run on new IP-capable boxes as well as QAM-only devices. Charter’s key tech partners on the project include set-top software firm Zodiac Interactive and ActiveVideo Networks, which has developed a network-based system that can support the UI on Charter’s full range of boxes.
Because Charter’s new UI is made to be device-agnostic, the operator might be able to introduce it in newly acquired systems even before they get the all-digital treatment. If the interface works as anticipated, “it might be able to be deployed even before you go all-digital, and it’s a relatively minor capital expenditure, compared to a box rollout,” Rutledge said.
Charter said it is has completed its all-digital initiative in 60% of its current footprint, and expects to complete it by the end of the year. Those upgrades are paving the way for the MSO’s new Spectrum suit of services, which include more than 200 HD channels and minimum downstream Intnernet speeds of 60 Mbps (the exception is St. Louis, where Charter’s minimum downstream speed is now 100 Mbps).
In addition to St. Louis, Charter has launched Spectrum to markets such as Madison, Reno, portions of its Michigan properties, and its North Carolina and Alabama footprints.
Charter is offering the Spectrum suite to new customers as well as existing ones that are on pricing and packaging launched in 2012. Charter estimated that 80% of its residential customers were on board those plans by the end of the second quarter.
Due in part to the accelerated deployment of interactive set-top boxes, Charter’s all-digital initiative has also resulted in heavier capital spending.
Total capex for the second quarter rose $130 million to $570 million. About $134 million of that was tied to the all-digital initiative, versus just $3 million in the year-ago quarter, and $119 million in the first quarter of 2014.
Charter EVP and CFO Chris Winfrey said the company expects to buy boxes at cheaper rates as its all-digital initiative continues, noting that the operator is already buying set-tops for less than it was when the project got underway.
Charter was also asked if extending more support to retail devices could reduce CPE spending. Rutledge said Charter’s already seeing some uptick for its app for tablets and smartphones, but believes that, for now, it will focus on deploying its own boxes that support Charter’s full video product suite.
“But I do see a world in which that is possible,” he said.
