Charter plans to strengthen its broadband business by trading away redlined communities

3 August 2014 by Steve Blum

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Charter Communications will get a 2% bump in its Internet service market share, if the massive restructuring of the U.S. cable industry proposed by it, Comcast and Time-Warner is approved by federal and state regulators. By unloading systems that perform relatively badly on Comcast and a newly formed cable company – currently with the placeholder name of SpinCo – and, in return, adding systems from Time-Warner and Comcast, Charter will see its Internet subscriber base rise from 35% of homes passed to 37%. That’s according to Charter’s most recent quarterly report, released last week.

The systems it’s getting aren’t actually that much better – 36% broadband service penetration. The real gain comes from getting rid of the dogs, with an aggregate figure of 33% Internet uptake.

A significant reason for the poor results in some of those systems is a lack of capital investment – Charter hasn’t spent the money necessary to bring all of its customers into the twenty-first century. Particularly poorer ones.

On California’s central coast, for example, Charter has redlined communities in the Salinas Valley. Castroville, Gonzales, Soledad, Greenfield and King City struggle with outdated, analog-only systems, while just to the north, in Watsonville and Hollister, for example, Charter has upgraded to digital, broadband-capable plant.

Given its apparent lack of interest in investing in low-income communities, it’s probably a good thing that Charter wants to get out of California, although turning 80% of the state’s cable market over to Comcast seems a high price to pay. And brings no guarantee that the red line will be erased.