Charter CEO Tom Rutledge met with President Donald Trump today, and he made a splashy promise to “invest $25 billion in broadband infrastructure and technology in the next four years.”
But Charter, the second biggest US cable company after Comcast, was already planning broadband expansions during the Obama administration. When Charter purchased Time Warner Cable and Bright House Networks 10 months ago, it agreed to a merger condition requiring it to bring 60Mbps download speeds to an additional two million customer locations.
The spending Charter promised Trump today won’t guarantee broadband access for any additional customers beyond what the company already committed to during the Obama years.
“This is not tied to a number of new broadband customers. This is an overall broadband infrastructure and technology investment commitment over the next four years,” a Charter spokesperson toldtoday when we asked how many additional customers will get service.
Charter’s statement did not point to any specific Trump policies that would spur increased investment, and the company did not say when it came up with this investment plan. Rutledge said this is the “right regulatory environment and right tax climate to make major infrastructure investments.” The $25 billion spending is “predicated on the kind of regulatory consistency and efficiency that we expect,” he said.
Companies like AT&T and Sprint owner SoftBank have been quick to link investment plans to Trump policies, whether there’s any real connection or not, as they seek more business-friendly regulation. Charter’s statement attributed its investment plan to “confidence in the deregulatory policies of the Administration and the FCC.”
Rutledge said he expects to hire 20,000 new US employees over the next four years—but that’s a promise Charter already made in 2015 when it was seeking approval to buy Time Warner Cable, The Los Angeles Times wrote today.
“In addition, we are committed to moving all of the former Time Warner Cable customer service calls from offshore to the United States, consistent with our approach at Charter, and will create new jobs to handle those calls,” Charter said.
In this too, Charter was already pledging to “return offshore jobs to America” when it announced the merger in May 2015.
Crunching the numbers
Figuring out how the $25 billion in spending compares to previous levels is tricky. In calendar year 2016, Charter and its new subsidiaries spent a total of $7.5 billion on capital expenditures. This is a “pro forma” figure that includes TWC and Bright House spending from the months before the merger was completed.
Excluding money related to the post-merger transition, the total capital expenditures of Charter and subsidiaries were $7.1 billion in 2016. Using the $7.1 billion figure, we could expect $28.4 billion in capital spending over four years if there are no increases.
However, Charter toldthat the $25 billion promise is “specific to broadband infrastructure and technology investment” and different from the total capital expenditure figure.
We asked Charter what the spending in these categories was in 2016. The company did not give us 2016 figures, but it said that over the past three years, Charter “invested $16 billion in infrastructure and technology.” That’s a pro forma figure that includes TWC and Bright House spending from before the merger, Charter said.
That would indicate $5.3 billion in annual spending over the past three years. The $25 billion promise ($6.25 billion a year) would then be a real increase in annual infrastructure and technology spending, according to these figures. But since we don’t know the exact 2016 figure, we can’t say if it’s an increase or decrease over last year.
Charter’s financial statements break capital spending down between customer premise equipment, scalable infrastructure, line extensions, upgrade/rebuild, and support capital. We asked Charter which of these are included in the $25 billion promise and will provide an update if we get one. You can see the numbers in this next image—we’re guessing that “customer premise equipment” such as cable modems and set-top boxes might be excluded from the $25 billion promise.
FCC may undo commitment that boosts competition
While Charter’s announcement didn’t include any bad news, it’s disappointing that the company would tout new investment without committing to serving any additional customers. Perhaps the company will improve speed and reliability for existing customers beyond what was already planned before Trump was elected, but the company didn’t make any specific promise to do that, either.
Last year’s merger commitment to bring 60Mbps speeds to two million new residential and small business locations included a pledge that at least one million of those would be in areas served by at least one other high-speed provider. This condition was designed to increase competition. But new FCC Chairman Ajit Pai is planning to eliminate the “overbuilding” requirement while keeping the overall requirement of two million locations in place.
Pai issued a statement praising Charter today. “I’m pleased to see that our investment-friendly policies, along with the Administration’s overall regulatory approach, are already producing results,” Pai said.
Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which ownsTechnica.