What to Expect from Charter’s Internet Service after the Merger



Fast Internet speeds for Charter Communications’ customers moving forward

Previously in this series, we learned about the completion of the merger of Charter Communications (CHTR), Bright House Networks, and Time Warner Cable (TWC). This transaction gives the new Charter Communications the second largest wireline Internet base in the United States, according to figures from the end of 2015. Charter Communications offers minimum Internet speeds of 60 Mbps (megabits per second), and the company plans to offer the same to customers of Time Warner Cable and Bright House Networks, per the FCC (Federal Communications Commission).

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Some FCC conditions on the Charter Communications merger

Earlier, the FCC had approved the merger while putting certain conditions on the transaction. These conditions included no data cap and no usage-based pricing policy for residential broadband customers for the new Charter Communications during a period of seven years, per the FCC. The conditions also included adding 2 million broadband locations in the consumer and small business markets with a minimum Internet speed of 60 Mbps.

According to Charter, the FCC’s conditions for the merger included “a commitment to build out high-speed broadband service to unserved and underserved customers, the fastest low-income broadband program of any major service provider, and settlement-free peering.”

Charter’s scale in the US Internet space

As you can see in the above chart, as of the end of 2015, Comcast’s (CMCSA) Internet subscriber base remained the largest in the United States. After the new Charter Communications, the third largest Internet customer base belonged to AT&T (T). Verizon Communications (VZ) had the fourth largest Internet subscriber base in the country at the end of 2015.

For diversified exposure to some of the largest cable companies in the United States, you may consider investing in the PowerShares QQQ ETF (QQQ). QQQ held a total of ~3.4% of its holdings in Comcast (CMCSA) (CMCSK) and Charter Communications (CHTR) on May 18, 2016.


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