Charter, Comcast two months free offers are cash bonanzas, not charity

by Steve Blum • , , , ,

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The covid–19 emergency is turning into a windfall for broadband companies, particularly Comcast and Charter Communications. As lockdowns came into effect in mid-March, people turned to broadband to stay connected, and for many that meant subscribing to service for the first time. It also meant running the gauntlet of high pressure sales pitches that steered many away from low cost standalone Internet deals and into expensive video packages that start billing immediately.

In its first quarter financial report, Comcast said it gained 509,000 new broadband subscribers between January and March, including 32,000 who signed up for the $10 per month standalone Internet service that the company offers to low income households, and that currently carries a first two months free promotion. The remaining 477,000 landed in market rate packages with payment due. It was the biggest quarterly broadband subscriber gain that Comcast booked in the past 12 years.

Charter had a more expansive first two months free promotion, applying it to all of its Internet packages for households with students. It did even better than Comcast, picking up 580,000 net new broadband subscribers. Of those, 120,000 came in during the promotion period and opted for the free introductory offer. Charter’s aggressive up selling paid off, according to the Seeking Alpha transcript of CEO Tom Rutledge’s first quarter earnings call with financial analysts…

Interestingly, and uniquely, about 50% of the customers who participated in the offer in March chose to order additional products with immediate billing. The vast majority of these customers are taking our flagship Internet product at 200 megabits per second or 100 megabits per second, and a small minority subscribe to our low-income offer or our ultra and 1 gigabit premium offerings.

Although both companies try to score political points by spinning their covid–19 offers as acts of good corporate citizenship, when they speak to Wall Street, they tell the truth: trolling free and/or discounted broadband service past low income households and then shamelessly up selling them is good business.