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Greetings June from Davidson/Lake Norman, Dallas (TX), and the mountain town of Murphy, NC. After a busy week, the Briefer took some time to rest and relax with friends in the mountains. Pictured is the view of Lake Chatuge from Chatuge Shores Golf Course, located on the border of North Carolina and Georgia. Our group of boys stayed at McGuire’s Millrace Farm which is normally booked for June weddings (see link) but the accommodation would be great for any group.
This week, after a brief commentary on the market, we dive into the strategic future of Charter Communications (known to many by the Spectrum brand). While there are many similarities between Charter and last week’s topic (Comcast), we believe Charter has a material opportunity to increase value through its “Mobile Internet + High Speed Internet” approach and diversification strategy.
Charter Cable Colorado Springs
A quick reminder: next week we will be celebrating Independence Day and as a result there will be no Briefing. Jim will start a new position on the leadership team of American Broadband (ABB), a small but fast-growing broadband company focused on rural areas. Because of their focus on a small community, they often operate as a cable and telephone company. ABB operates under its old names, including Cameron Communications (Louisiana and Texas), Blair Telephone Company (Nebraska), Eastern Nebraska Telephone Company, and TelAlaska. We are currently actively seeking small rural cable and telephone companies to join our fiber movement. In addition to providing many geographic areas for the opening sentence of the soon-to-be-released biweekly summary, you now get an overview of one of the most dynamic parts of the telecommunications world: local fiber access. More ideas to follow in future summaries – there is much to learn.
Charter, Time Warner Cable Have Footprints In Colorado
This was a good week for both the Fab Five (+$95bn w/w) and the Telco Top Five (+$34bn). In the past five weeks, the Fab Five have added $579 billion in market cap, bringing their total for the year to well above $1 trillion. Amazon was the lone loser of the Fab Five with Prime Day falling short of expectations (company announcement here; CNBC/Bank of America analysis here). But don’t worry, the Seattle giant has increased shareholder equity by nearly $800 billion since January 1, 2020 (Amazon’s closing on Friday was the lowest since… June 16, 2021).
Outside of Prime Day, the biggest news of the week was the announcement of Microsoft Windows 11 on June 17. As Ars Technica summarized, this is more than “a new theme in Windows 10”. Microsoft went to great lengths to highlight the interoperability of its new operating system, revealing that the next version of Windows would work seamlessly with Android apps. Although Microsoft has been approaching Android since it announced it was discontinuing Windows Mobile in 2017 (that development took more than two years), this announcement is still a big step. In addition to the Ars article mentioned above, CNET has a very good review of Windows 11’s features. Microsoft’s integration into other parts of the company (especially Xbox) is clear and welcome.
More changes are also taking place in the world of smartphones, with Jeff Moore of Wave7 reporting that Verizon is shrinking its in-store portfolio significantly, with LG out (as expected) and Samsung models scaling down (not expected). As we discussed last week, the remaining Samsung SKUs are currently out of stock. Based on our online checks (and Wave7’s store checks two weeks ago), Verizon sees widespread slowdowns on the Galaxy S21 5G, Note 20 Ultra, A42 5G, and S20 5G Fan Edition. Only the Galaxy S21+ 5G in black or silver seems to be available.
As we discussed last week, we knew Verizon’s supply chain issues couldn’t be left behind for other carriers, and T-Mobile this week confirmed it’s “out of stock” (with no back-order dates) on the following Samsung models:
Comcast, Charter Teaming Up To Launch Joint Streaming Platform
Please note that these are not the model/storage agreements that are backordered; there are many more “backorder” combinations listed (including, as Jeff Moore points out, the popular and free Samsung Galaxy A32 5G, now shipping between July 27 and August 17) These are the models/storage/colors T-Mobile doesn’t have willing to predict
It’s not yet clear how this shortfall will affect T-Mobile’s efforts to convert Sprint’s legacy customers to its new 5G network (thus allowing Magenta to phase out its existing CDMA network). But two congressmen from Dish’s home state of Colorado, who are also members of the House antitrust subcommittee, want the Justice Department to investigate whether T-Mobile is violating its commitment to regulators by telling Dish they are taking over his network. next 9 months. More details on the inquiry request and T-Mobile response from Margaret Harding McGill of Axioshere.
There were committee votes on six bills last Wednesday and Thursday, and they’ve put the Fab Five on edge, so much so that Apple’s Tim Cook called fellow California House Speaker Nancy Pelosi earlier this week to discuss (the New York Times assumes that the discussion is here). Speaker Pelosi told Cook to “let the process unfold”. He did, and all six bills fell out of commission. The most controversial bill, the Ending Platform Monopolies Act, was only passed 21-20 after Representative Cori Bush, D-Missouri, changed her vote from “no show” to “yes.” Three other committee members who have voted on antitrust measures in the past have not voted. Anyone can guess when the final vote in the House will take place, but this legislation will spark a lobbying effort by the Fab Five that we haven’t seen in a while.
Two weeks ago, we prepared for the second quarter results by discussing Verizon’s strategy: more MVNOs, more C-band coverage, and more content packs. Last week, we looked at Comcast’s ability to make profits in theme parks, advertising, content production, broadband, and business (and compared it to AT&T’s struggles and potential divestments).
Spectrum Hosting Job Fair To Fill 70 Jobs At Colorado Springs Call Center
This week we look at Charter Communications, a company with less business breadth than Comcast but more business momentum than Verizon and AT&T combined. They are entering a unique golden age for the company: a) the Brighthouse/Time Warner Cable/legacy Charter merger synergies are nearing completion; b) Extraordinary broadband growth due to the pandemic; and c) New sources of mobile growth and a resurgent post-COVID economy. Even with this mix of cash flow goodness, the company is wise to look for additional sources of growth which we outline below.
New York City, Los Angeles, Dallas/Ft Worth, San Antonio, Tampa/St. Petersburg, Orlando, San Diego, Charlotte, Cleveland, Columbus, Cincinnati, Austin, Saint Louis, and Raleigh/Durham are the major metropolitan areas. But Charter also has many fast-growing second-rate cities, including the suburbs of Boston, upstate New York, and northern Alabama. They are highly clustered (which improves operational efficiencies) and have worked diligently to increase their small and medium business presence in the community (currently led by Bill Archer, but heavily influenced by his predecessor, Phil Meeks).
The “infill” nature of the build is pretty clear on the map. For the most part, Charter goes “out” to adjacent territory (East Texas is the notable exception). The impact of this will be greatest on AT&T and nationwide providers such as TDS (Wisconsin). Charter’s RDOF commitment is for low-latency, Gigabit-speed solutions, something CFO Chris Winfrey has said will take time (although he indicated in a recent interview that the company is moving as fast as possible).
The nationwide market initiative could also generate revenue growth for video, as fiber-optic households could be a source of growth (and satellite losses). In her recent interview at the Evercore (webcathere) conference, Winfrey noted that the lack of density (and thus lack of active users) made fiber even more attractive.
Spectrum Outage In Colorado Springs, Colorado: Current Problems And Outages • Is The Service Down?
† According to recent research by Parks Associates, “broadband + mobile” double-play accounted for 19% of their surveyed home internet, averaging $128/month (see release here). Mobile telephony is slowing the growth of single primary service units. With Charter’s triple play penetration of ~22% (excluding mobile), a new solution is needed, and mobile fits the bill perfectly.
† This is currently being experienced at faster speeds thanks to improved metro Wi-Fi implementations, but in the future will be accompanied by an improved implementation of the 20 MHz Citizens Band Radio Spectrum (CBRS). in the New York City area). Verizon is a very good wireless network partner for Spectrum and Comcast, but it’s only a matter of time before CBRS implementations become part of the standard fiber plan. As Chris said in the Evercore interview linked above (about 3:38pm in the video) “More mobile success means more CBRS.”
† Spectrum’s rapid adoption of DOCSIS 3.1 as the default architecture after the merger made the process of upgrading to the new benchmark speeds relatively easy. Chris talked about adopting a new “Hi-split” architecture that would allow for faster download speeds in the Evercore interview. U.S
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