Why Charter Communications Is Gaining Broadband Subscribers

Charter’s broadband customer acquisitions in 4Q16

The cable industry’s market share of broadband subscribers in the US continued to rise in 4Q16. Comcast (CMCSA) and Charter Communications (CHTR) added the most broadband subscribers. Among the telecom companies, Verizon (VZ), AT&T (T), and CenturyLink (CTL) all lost broadband subscribers in 4Q16.

Let’s look at the robust performance of Charter Communications’s Internet component, a key growth driver for the company. In 4Q16, the company’s net broadband additions totaled 357,000 subscribers. In 4Q16, Charter Communications’s Internet customers increased ~7.3% YoY (year-over-year) to reach ~21.4 million, making it the second-largest US cable player after Comcast.

Why Charter Communications Is Gaining Broadband Subscribers

The US Internet market

At the end of 4Q16, Comcast’s Internet subscriber base remained the largest in the US, with 24.7 million broadband subscribers.

After Charter Communications, the third-largest Internet customer base belonged to AT&T, with 14.2 million broadband subscribers. With 7 million broadband subscribers, Verizon Communications has the fourth-largest Internet subscriber base in the US.

FCC conditions on the Charter merger

In 2016, Charter Communications completed its merger with Time Warner Cable and Bright House Networks. Although the FCC approved the merger, it stipulated certain conditions for the transaction. These conditions include no data cap and a no-usage-based pricing policy for residential broadband customers for the new Charter Communications for seven years.

Charter Communications offers minimum Internet speeds of 60 Mbps (megabits per second), and the company plans to offer the same capability to customers of Time Warner Cable and Bright House Networks. These conditions also included adding 2 million high-speed broadband to small markets.