Charter CEO: How the end of the Affordable Connectivity Program impacts broadband subs

• Charter CEO Chris Winfrey spoke at a MoffettNathanson investor conference

• One topic he brought up was how ACP ending is impacting the company’s broadband base

• It’s offering mobile as a post-ACP lifeline for customers

The cable industry hasn’t been doing too great with keeping broadband subscribers, and Charter is no different. CEO Chris Winfrey’s take on the situation? This is just temporary, but the company must also navigate a post-Affordable Connectivity Program (ACP) environment.

The broadband market had a “temporarily lower growth rate, particularly inside of Q1,” he said at MoffettNathanson’s Media, Internet & Communications Conference. Winfrey attributed the decline to not only “lower household formation” but also the current state of ACP.

The first quarter marked “the first time ACP was no longer available not only for new connects but also for movers.” Winfrey noted since the beginning of February (when the FCC froze new ACP enrollments), customers with an ACP wireline benefit couldn’t keep the subsidy when they moved because they had to open up a new account.

For context, Charter has disclosed it has just over 5 million households enrolled in ACP. Analyst Craig Moffett said during the fireside chat Charter has “leaned into ACP much more so than [its] competitors and peers.”

Indeed, Charter’s ACP enrollee tally is much higher than that of Comcast and Cox.

As for Charter’s plans in a post-ACP world, Winfrey said the company has had several months to communicate to customers about other affordable internet options. And it’s leaning toward mobile as a lifeline.

“We have the ability to, instead of a customer having a $30 ACP benefit, we can give them the equivalent of $50-60, $70 of value by giving them a free mobile line for a year. So we’ve offered that proactively to all of our ACP customers,” he said. “It takes people a while to realize that this is for real and for the benefit to go away to be a triggering point.”

As ACP is in its final month, the government is currently offering a partial monthly subsidy of $14 for non-tribal households (though Charter is increasing that credit to $15/month for Spectrum customers). While Charter hasn’t announced a specific ACP replacement, customers on ACP might be able to qualify for the Spectrum Internet Assist plan, which costs $25/month.

Winfrey pointed out Charter’s low-income product has existed since 2016. That, coupled with how Charter had to transition its customers off the Emergency Broadband Benefit program to ACP, has given the company “a lot of experience to kind of lean on in terms of what we think is going to work.”

“That’s not to say it’s not going to be disruptive,” he stated, as Charter’s broadband subscriber count will likely be impacted going into Q2 and Q3. “We’ll manage through collections and try to work with customers to preserve their broadband relationship.”

How does Charter intend to identify customers that have left ACP? On one hand, “there’s going to be a combination of art and science.”

“We’re going to do our very best to provide good estimates the best that we can and we’re going to label it as such,” Winfrey said. “We can get reasonably comfortable inside the business if you take a look at acquisition, voluntary churn and non-pay churn across income deciles and then flag those with ACP and without ACP, posting year-over-year and sequentially, you get a sense of what was…happening with different cohorts at different lower income levels.”

While Charter will take that data “with a grain of salt,” Winfrey thinks the company will have “a pretty good ability” to at least project the impact ACP has had to broadband net adds.