Charter Communications today announced the launch of a 6- to 8-year, $5bn broadband build-out initiative to deliver 1 gigabit per second high-speed internet access to more than 1.1 million unserved customer locations, as estimated by the Federal Communications Commission (FCC) and awarded to Charter in the Rural Digital Opportunity Fund (RDOF) Phase I auction. Notably, Charter Communications’ investment is offset by support of $1.2bn in 1.1 million locations, which the company won from the Rural Digital Opportunity Fund (RDOF) auction.

Based on Charter’s investment of $5bn and 1.1m locations passed, this equates to a cost of $4,727 per passing, on a gross basis. Support from the Rural Digital Opportunity Fund (RDOF) helps to reduce Charter’s deployment cost by $1,156 per passing. Therefore, on a net basis, after including support, Charter’s overall deployment cost decreases to $3,571 per passing.

Overall, Charter Communications intends to expand its network to lower-density, rural communities over a 6- to 8-year period. Specifically, these are communities that have access to broadband download speeds of less than 25 megabits per second and upload speeds of less than 3 megabits per second. Importantly, this new initiative is in addition to Charter Communications’ existing network expansion plans.

Charter Communications – Current and RDOF Broadband Footprint

Charter Communications Rural Digital Opportunity Fund RDOF

As of December 31, 2020, Charter had 28.9 million broadband subscribers, under the Spectrum brand. Specifically, the broadband subscribers include 27.0 million (94%) residential customers and 1.9 million (6%) business customers. Therefore, the 1.1 million unserved customer locations from RDOF represents a ~4% potential opportunity, relative to Charter Communications’ existing customer base.

Rural Digital Opportunity Fund (RDOF) – Charter Communications Build-Out

Charter Communications will build a network in the rural RDOF areas to offer broadband speeds of up to 1 gigabit per second. Indeed, the company will also offer lower-price, entry-level, speed tiers starting at 200 megabits per second. In turn, Charter’s broadband service will enable consumers to engage in high-bandwidth, low-latency applications including remote learning, work, and telemedicine.

Furthermore, Charter Communications intends to offer customers the option to bundle their broadband service with the company’s other offerings. Specifically, these include wireless service (Spectrum Mobile), video (Spectrum TV) and voice (Spectrum Voice) offerings. In turn, Charter will leverage the RDOF public-private partnership for additional customer growth by expanding its footprint in unserved areas.

Overall, Charter is expanding service to 1.1 million previously unserved homes and businesses as part of the FCC’s RDOF program. In total, these locations span across 24 states. Specifically, these states are Alabama, California, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Michigan, Missouri, New Hampshire, New Mexico, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, and Wisconsin.

Fiber Network – Build-Out and Growth for Charter Communications

Charter Communications’ RDOF Phase I broadband build-out will involve the company constructing and deploying a new fiber optic network. Indeed, this new fiber network will drive a 15% increase to the company’s 250k fiber route miles deployed to-date. Therefore, Charter Communications will be constructing 37.5k fiber route miles to complete its RDOF Phase I broadband build-out.

Rural Build-Out Deployment Mechanics Differ

Charter Communications notes that utility pole permitting, and “make-ready” processes are key factors affecting the timely execution of the company’s fiber deployment. Indeed, with fewer homes and businesses in rural areas, broadband providers must access multiple poles for every new home served. Whereas in higher-density environments, broadband providers access multiple homes per pole.

As a result, pole applications, pole replacement rules and issue resolution processes are all important factors. Specifically, these factors can significantly delay the length of time it takes to build-out fiber in rural areas. Indeed, more cooperation between Charter and the pole owners & utility companies, helps to ease the situation. In turn, this cooperation allows Charter to connect rural communities with high-speed internet services more rapidly.

Jonathan Kim covers Fiber for Dgtl Infra, including Zayo Group, Cogent Communications (NASDAQ: CCOI), Uniti Group (NASDAQ: UNIT), Lumen Technologies (NYSE: LUMN), Frontier Communications (NASDAQ: FYBR), Consolidated Communications (NASDAQ: CNSL), and many more. Within Fiber, Jonathan focuses on the sub-sectors of wholesale / dark fiber, enterprise fiber, fiber-to-the-home (FTTH), fiber-to-the-premises (FTTP), and subsea cables. Jonathan has over 8 years of experience in research and writing for Fiber.


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