Charter, Cable One plot price increases amid layoffs

• Charter and Cable One plan to raise internet prices come July
• Both operators have also recently announced layoffs
• With subscriber growth stalled, cable needs to grow ARPU, an analyst said

Charter and Cable One are planning to raise internet prices this summer – news that comes after both companies announced a batch of layoffs.

According to CNET, Charter plans to raise the internet base price on all plans by $3 monthly (or $4 for legacy plans). Those rates will take effect in July.

As for Cable One, a spokesperson told Fierce it’s increasing Sparklight high-speed internet rates by $5 per month effective July 1. However, customers can offset that by changing their payment method.

“To offset this increase, customers who enroll in paperless billing and Auto Pay via debit card or checking/savings account will receive a $5 corresponding credit, resulting in no monthly increase,” said the rep.

Charter recently disclosed layoffs of more than 1,000 customer service employees, affecting 1.2% of around 101,000 total full-time workers. Cable One, which had just under 3,000 employees at the end of 2023, announced plans to lay off 4% of its workforce.

The numbers

New Street Research estimates Charter’s broadband price increases will impact approximately 15.3 million customers, not affecting customers who are currently on promotions or using low-cost services like Internet 100 or Spectrum Internet Assist.

Charter at the end of Q1 had around 28.5 million residential broadband subscribers. It’s also facing a potential impact from the end of the Affordable Connectivity Program, as Charter’s ACP enrollee tally is much higher than that of its peers.

According to New Street, Charter’s investors have been concerned the company’s EBITDA might decline this year and in 2025 due to the loss of ACP benefits as well as “the loss of political advertising benefits.”

But the rate increases make the prospect of EBITDA declines less likely.

“The price increase also demonstrates that management will use price to support growth when they need to (investors have favored Comcast over Charter this year because they believe Comcast has been more willing to use price to support growth),” wrote New Street’s Jonathan Chaplin in a note to investors.

Cable clings to ARPU as life raft

It’s pretty clear cable operators have seen better days in terms of subscriber growth. Comcast, Charter and WOW! all posted subscriber declines in Q1 2024. Cable One actually gained 6,900 internet subs in its first quarter, however its residential data revenues dropped by $6.9 million year-over-year.

“With broadband unit growth now stalled, growing revenues depends on growing ARPU,” MoffettNathanson’s Craig Moffett told Fierce.

He said Charter and Cable One can still get some ARPU growth from customers who choose to upgrade to higher tiers, but price is still an important part of the mix.

“Charter’s prices are the lowest in the industry, so there is more room to raise,” said Moffett. “Cable One’s are higher, and the demographics in their footprint are less favorable.”

Charter serves customers in 41 states through its Spectrum brand. Cable One operates in 24 U.S. states, but three-quarters of its subscribers are concentrated in seven of those: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas.

Percentage-wise, the companies’ price increases “are generally smaller than the increases being taken by their fiber competitors,” Moffett added.