The two largest residential Internet providers in the US lost subscribers in the second quarter of 2022.
On Friday, Charter Communications reported a loss of 42,000 residential Internet customers, leaving it with 28,259,000 households buying Internet service from Spectrum. Charter also gained 21,000 small and medium business (SMB) customers, bringing it to 1,994,000 in that category.
Charter is the second largest Internet provider after Comcast. Last week, Comcast reported a loss of 10,000 residential broadband customers, leaving it with 29,826,000 households subscribed to the Internet. Comcast also gained 10,000 business broadband customers, giving it 2,337,000 business subscribers.
Subscriber losses are unusual. For Comcast, it was the first quarter in which it failed to gain broadband subscribers.
Charter had gained more than 7 million home Internet customers since its 2016 purchase of Time Warner Cable made it the second largest cable company with 20.7 million residential Internet subscribers At that time. Charter added more than 1.1 million home internet customers in 2021 and other 164,000 in the first quarter of 2022.
Charter blames end of COVID subsidy program
Charter’s slowdown might have started sooner were it not for COVID-related issues Emergency Broadband Benefits Program (EBB), which provided $50 per month subsidies for low-income people and those who lost income during the pandemic. Charter said it lost 59,000 residential and SMB subscribers in the second quarter as a result of that program being replaced with the Affordable Connectivity Program (ACP), which offers $30 a month and has more restrictive eligibility requirements.
“During the second quarter, we added 38,000 Internet customers excluding an unfavorable impact related to the disruption of the emergency broadband benefit program and the additional definition requirements of the affordable connectivity program,” said Charter CEO Thomas Rutledge, in a statement. call with analystsaccording to a transcript from Seeking Alpha.
Charter’s second quarter revenue was $13.6 billion, up 6.2 percent year over year. Net income was $1.5 billion, 44.2 percent more than the second quarter of the prior year.
Charter COO Christopher Winfrey said the company is confident “Internet network additions will increase again…our recipe for broadband growth has always been about being competitive and competitively priced.” in the market”.
Charter pins hopes on new federal funding
Like Comcast, Charter appears to be having trouble adding subscribers, because it has already signed up almost everyone who wants its service and lives in a home within Charter’s network area. Comcast and Charter do not compete with each other despite being the two largest cable companies.
Charter is expanding its network to some new areas using money from the federal government. Rural Digital Opportunities Fund (RDOF) and other grant programs. Rutledge noted that in addition to the RDOF and various state grant programs that have given money to Charter, the US government. $42 Billion Broadband Equity, Access, and Deployment Program “next year…will allow additional construction, which we hope to bid on and be successful.”
Although the Charter is only high-speed landline provider in many parts of its territory, company executives said competition from fiber and fixed wireless played some role in the loss of customers. Fixed wireless remains “relatively small. It’s not the main component of our quarterly performance, but it’s a factor,” Rutledge said.
Charter also lost 240,000 residential TV customers and 265,000 residential voice customers in the second quarter. Average monthly income of residential subscribers increased from $113.28 to $116 in the second quarter. That includes broadband, TV and landline service.
One bright spot for Charter is that it added 344,000 residential mobile and SMB subscribers, giving it 4.3 million mobile lines. “Our mobile business is growing at an extremely fast rate,” said Rutledge. Charter offers wireless service using the Verizon Wireless network.
Disclosure: Advance/Newhouse Partnership, which owns 12.4 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.