Once in a while, I see something in the industry press that gives me a pause. Telecompetitor reported that Charter CEO Chris Winfrey said on the company’s first quarter earning call that Charter is the “largest rural provider today.” As much as I work in and track the industry, I would never have connected the dots enough to think that.
I can see how Charter is on the way to being a big rural player. The company was the largest winner of the RDOF reverse auction in terms of passings and is slated to bring broadband to pass over 1 million rural homes and businesses. The company says it is ahead of schedule and has already built 40% of those passings. But does passing 400,000 homes make Charter the biggest rural provider in the country?
In the last few years, there has been an explosion of FWA fixed cellular wireless from T-Mobile and Verizon. At the end of 2022, T-Mobile had over 2.6 million FWA customers and added 524,000 in just the fourth quarter of 2022. Verizon had almost 1.5 million customers and added 389,000 in the fourth quarter. While not all of those customers are rural, it seems likely that both companies have a lot more rural customers than Charter.
It’s hard to get specific statistics from the big telcos, but it’s hard to imagine that CenturyLink and Frontier don’t still have more rural customers than Charter. In all fairness, the rural telco DSL customers are the prime target for Charter and everybody else who is building rural networks – but it’s unlikely that Charter has yet eclipsed them in customer counts.
Jonathan Chambers of Conexon wrote a recent blog that notes that electric cooperatives collectively have more rural customers than Charter.
Nobody knows who the eventual biggest rural winner will be. There are somewhere north of 10 million rural passings that will be tackled by the upcoming BEAD grants. Meanwhile, huge amounts of funding have been provided in rural America through CARES and ARPA funding administered through states or awarded by local governments. I think we’re going to have to wait for the BEAD grants to play out to see who will ultimately be the largest rural ISP.
And even at the end of those grants we might not know. I’ve been predicting that there will be a major roll-up of last-mile fiber networks, and there is no reason that won’t include rural properties. We might have to wait a decade to see who the biggest rural players will be.
I have to think that Winfrey knew his statement wasn’t factual, and I think that he was making the point that Charter is now a major player in rural America. He caught the industry’s attention through the statement which was aimed at Charter’s stockholders. We’re seeing big cable company customer counts level off after a decade of spectacular growth, and I think his message was that Charter is still a growing company.
One thing that Charter didn’t say is that whoever builds fiber in rural areas today is creating monopoly markets. It’s going to be hard for anybody to compete against rural fiber over the long run, and Charter and other companies pursuing grants are counting on being the monopoly provider across large swaths of rural areas. I see a lot of speculation asking why companies are pursuing rural broadband – and I think the appeal of having markets where a company will eventually have an 80%+ market penetration is something that pencils out well.