Charter Communications has talked about its rural expansion plans several times recently. The topic came up again at an investor day in December, at earnings in January and again this week as CFO Jessica Fischer touted the initiative at an investor conference. But what it didn't draw attention to was the fact that most, if not all, of its planned rural intersections will be delivered via fiber.
The carrier initially announced its rural build-out plans for 2021 after the Rural Digital Opportunity Fund (RDOF) auction ended. All told, it said it planned to spend $5 billion over the next few years - including $1.2 billion in RDOF subsidy funds - to reach 1 million rural areas in 24 states. Since then, it has raised hundreds of millions of dollars in additional grants for rural construction in several states.
Fischer said 120,000 of the 200,000 additional Rural Roadrunner charters in 2022 have been subsidized. It plans to accelerate its subsidized construction to 300,000 sites in 2023, she added. While it has been building about 15,000-20,000 new passing sites per month, she noted that it hopes to finish at a rate of 30,000 by the end of the year.
While she did not directly state what technology Charter is using in its rural builds, all of its RDOF builds will be fiber-to-the-home. In its fourth-quarter 2022 earnings, Fischer said the vast majority of its 2023 rural builds will be RDOF projects. In fact, Charter bid at a 1 Gbps/500 Mbps service level during its 2020 RDOF auction, and in a subsequent request made clear that it was dropping a small portion of its bid, it plans to use fiber-to-the-premise technology. In January 2022, all of its winning bids were authorized for distribution to a subsidiary called Charter Fiberlink.
Rural areas aren't the only places Charter wants to deploy fiber. The carrier also said that an upgrade to its wireline network would allow it to use remote OLTs within its wireline nodes to selectively deploy fiber to top customers in its footprint in the future. That said, Fischer stressed that Charter has no plans to overbuild its wireline network with fiber.
Cable giant Comcast is also eyeing fiber deployments. Elad Nafshi, executive vice president and chief network officer of Comcast Cable, said fiber makes more sense in rural areas because it requires fewer active network components and less maintenance. However, like Fischer, Nafshi said Comcast has no plans to overbuild its network with fiber.
Fischer noted that Charter has achieved significant penetration and ARPU in its rural buildout areas. Specifically, she said it achieved penetration rates of about 40 percent within six months of construction, with ARPU exceeding $100 as customers bundled voice, video and mobile services with broadband connections.
Other subsidies
Of course, RDOF isn't the only subsidy money Charter receives. It has also received grants in Georgia, Missouri, South Carolina and Florida through 2023, building on the more than $334 million in grants it received in 2022.
The description of its award in Florida indicates that Charter plans to use fiber in all 15 of its projects, several of which specify the use of EPON technology. Awards in other states did not specify what technology was used in each project.
