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Why CHTR Is Optimistic about Its MVNO Agreement with Verizon

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Charter’s MVNO agreement with Verizon

Charter Communications (CHTR) seems upbeat about the prospects for its MVNO (mobile virtual network operator) business. CHTR activated the MVNO agreement with Verizon (VZ) and plans to launch a mobile offering in 2018 under that agreement. 

Charter Communications believes that its Verizon MVNO is well-suited for CHTR’s short- and medium-term wireless goals. Over the long term, Charter Communications’s wireless approach should be flexible, leveraging its network capabilities and product development with the goal of driving more growth and value creation for its shareholders.

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During Charter Communications’s 4Q16 earnings conference call on February 16, 2017, the company’s CEO, Tom Rutledge, stated, “Our goal is to include wireless services in our packages and drive more customer relationship growth, and longer customer lives at Charter. We’re also launching high-capacity experimental 5G-like Field Trials using Spectrum test licenses that were recently granted to us by the FCC.”

According to a September 2016 report by FierceCable, in 2011, Verizon had purchased an AWS-1 (Advanced Wireless Services) spectrum from Comcast (CMCSA), Bright House Networks, Cox, and Time Warner Cable. As part of this agreement, Verizon had offered access to use the company’s wireless network “in a potential MVNO offering.”

Increase in mobile video data traffic

Wireless networks are increasingly coming under pressure regarding their speed and latency as more viewers stream videos over the Internet. The significant portion of mobile data traffic comprises video, which drives wireless carriers’ data consumption. 

According to Cisco Systems’s (CSCO) VNI (Visual Networking Index), video constituted ~61% of mobile data traffic in the United States at the end of 2015. The VNI report anticipated that by the end of 2020, this figure would expand to ~77% of mobile data traffic in the US.

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