CHTR - Charter Communications

[rogermunibond]

I think would Rutledge is talking about is the 4G LTE/5G MIMO antenna installations which use spectrum much more efficiently.

 

The FCC under Pai is moving fast on 5G spectrum auctions.  28 Ghz and 24 Ghz in November 2018.

 

It's made Charlie Ergen's spectrum considerably less appealing.

[scorpioncapital]

It seems to me the mobile phone is the only additional element here. At home or work you would be able to use either when 5G is out...On the move you could use 5G...You wouldn't need 2 services. So maybe instead of buying all this stock back, cable should figure out how they will keep the customer on the road and at home, either via mobile partnership or buying a 5G network. It will cost alot of money so they will need to build a war chest. On the other hand, will they be allowed to buy a mobile network in terms of anti-trust? If not, then regulators will have signed a slow decline of cable if 5G takes off and consumers cut not only the cord but the broadband-at-home too. Backhaul will obviously be a smaller profit center in the worst case. I don't think the argument that backhaul is needed is a position cable cos want to take as they would just be even more commoditized. An alternative may be found to bypass even this function eventually. I've seen some estimates CHTR could be earning $40/share by 2020-2021. That would be 6-7x earnings. Even in a declining scenario you can imagine some positive annual return, but it always helps not to be in a business with headwinds or declining. It's not yet time to worry about this. But keep an eye on the total performance to see what the market believes - rightly or not, it has been spooked by something.

 

[CorpRaider]

Lowel McAdam says Verizon is planning on building their 5G network with the terminus 2000 meters from the home and foliage and weather are not impactful.

 

 

Great interview - thanks for posting.  Sounds like there will be a lot of exciting things coming for consumers, coupled with risks/opportunities for businesses.  I wouldn't want to be a 2nd/3rd broadband choice with 5G coming possibly as a home alternative to cable internet.

 

thanks for posting. Though it's a slow moving train, I'm slightly nervous about my GLIBA position in 3-4 years. Maybe we need to call Masa...  though the future is murky obviously, there is a not insignificant chance that this could be the satellite threat from the 90s all over again.

 

Sure thing.  Yeah, my crystal ball is cloudy. 

[Liberty]

Eyeballing it, it looks like Advanced Newhouse  tendered 1.86% of its take back into the buyback.

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318013385/xslF345X03/doc4.xml

[DooDiligence]

Eyeballing it, it looks like Advanced Newhouse  tendered 1.86% of its take back into the buyback.

 

https://www.sec.gov/Archives/edgar/data/914545/000089924318013385/xslF345X03/doc4.xml

 

Did they have to do this for the ATT dealio?

[jgyetzer]

Am I remembering correctly that because of an agreement to maintain equal ownership level with A/N that Charter likely bought in 1.86% of total shares as well?

[Liberty]

Am I remembering correctly that because of an agreement to maintain equal ownership level with A/N that Charter likely bought in 1.86% of total shares as well?

 

See this here: http://www.yetanothervalueblog.com/2017/10/still-bullish-on-charter-chtr.html

[jgyetzer]

Right. To me this suggests they have re-accelerated the rate of repurchases.

[wabuffo]

https://seekingalpha.com/article/4171990-altice-usas-atus-ceo-dexter-goei-q1-2018-results-earnings-call-transcript?part=single

 

Altice USA CEO throwing some shade at Charter's & Rutledge's billing/disconnect problem and contrasting the two companies' approach to billing systems integration...  Very interesting.

 

Dexter Goei

Well, we currently have two billing systems on the B2B side, one our Suddenlink and one at Optimum, and very similar one in each over at - on the B2C side. So we are going to be integrating those billing systems into one single billing system on the B2C side and, simultaneously, also doing one single billing system on the B2B side.

 

Marci Ryvicker:

...And I only ask because we saw a lot of messiness in Charter's numbers as they went from a bunch of billing systems to smaller billing systems.

 

Dexter Goei:

... as I understand that's what our friends over at Charter have done was to not necessarily merge into a single platform, but to effectively put a wrapper, a billing system on top of their legacy billing systems. So I think they're not necessarily reducing the amount of billing systems, I think they're increasing the number of billing systems they have.

 

And I think our view is and our experience historically was to merge the two whenever we go into integration and restructuring processes. We are - we've done this many, many times over. We're going to be extremely cautious about it, but we definitely don't want to do something maybe in a gray area. And I think I'm sure that our friends over at Charter have a reason for doing the way they did - they're doing it. But in our experience, we need to go the whole way on this. But we've done this many, many times over, and we feel good about our ability to do this. It's not without risk, obviously. And by the way, it's not just a telecoms-related issue, it's a related issue with all IT platforms across the board in all businesses. But we feel like we've got the tools, the people and the experience here to be able to deliver something here as seamless as possible.

 

wabuffo

[vince]

https://seekingalpha.com/article/4171990-altice-usas-atus-ceo-dexter-goei-q1-2018-results-earnings-call-transcript?part=single

 

Altice USA CEO throwing some shade at Charter's & Rutledge's billing/disconnect problem and contrasting the two companies' approach to billing systems integration...  Very interesting.

 

Dexter Goei

Well, we currently have two billing systems on the B2B side, one our Suddenlink and one at Optimum, and very similar one in each over at - on the B2C side. So we are going to be integrating those billing systems into one single billing system on the B2C side and, simultaneously, also doing one single billing system on the B2B side.

 

Marci Ryvicker:

...And I only ask because we saw a lot of messiness in Charter's numbers as they went from a bunch of billing systems to smaller billing systems.

 

Dexter Goei:

... as I understand that's what our friends over at Charter have done was to not necessarily merge into a single platform, but to effectively put a wrapper, a billing system on top of their legacy billing systems. So I think they're not necessarily reducing the amount of billing systems, I think they're increasing the number of billing systems they have.

 

And I think our view is and our experience historically was to merge the two whenever we go into integration and restructuring processes. We are - we've done this many, many times over. We're going to be extremely cautious about it, but we definitely don't want to do something maybe in a gray area. And I think I'm sure that our friends over at Charter have a reason for doing the way they did - they're doing it. But in our experience, we need to go the whole way on this. But we've done this many, many times over, and we feel good about our ability to do this. It's not without risk, obviously. And by the way, it's not just a telecoms-related issue, it's a related issue with all IT platforms across the board in all businesses. But we feel like we've got the tools, the people and the experience here to be able to deliver something here as seamless as possible.

 

wabuffo

 

Either its me or he doesn't understand what Charter is actually doing.  They have stated multiple times that they are going down from 13 billing systems to the current 4 and ultimately down to 1. 

[rogermunibond]

Maybe a question of how they are doing this.  Goei saying they are using middleware to intermediate all of these other systems.

 

It's probably cost prohibitive to actually port over all those users from 9 billing systems into the 4 remaining systems.

[LongTermView]

It seems to me the mobile phone is the only additional element here. At home or work you would be able to use either when 5G is out...On the move you could use 5G...You wouldn't need 2 services. So maybe instead of buying all this stock back, cable should figure out how they will keep the customer on the road and at home, either via mobile partnership or buying a 5G network. It will cost alot of money so they will need to build a war chest.

 

Yeah, there are a lot of questions regarding 5G. This "The Power of Millimeter Wave | Verizon" video is  pretty cool and it's less than 3 minutes:

[scorpioncapital]

That video makes me want to sell Charter :) But I think there will be lots and lots of investment required. The question is one of dynamics. How much money will cable cos make from now until their income stream is invaded. Also, what will be the final cost of the 5G service to compensate the developers for the investment? And what if Cable can get 1GBPS (which I think they already have?) right now at a fraction of the cost - then I suppose switching cost and stickiness may be an advantage. I read 5G will be able to do 10x current cable speeds such as 10GBPS. Will going from 1 to 10 require far more technology then in the video or it's just a scaling up process?

[jgyetzer]

Also, how hard/expensive would it be for cable cos to do the exact same thing? 

[Liberty]

It seems to me the mobile phone is the only additional element here. At home or work you would be able to use either when 5G is out...On the move you could use 5G...You wouldn't need 2 services. So maybe instead of buying all this stock back, cable should figure out how they will keep the customer on the road and at home, either via mobile partnership or buying a 5G network. It will cost alot of money so they will need to build a war chest.

 

Yeah, there are a lot of questions regarding 5G. This "The Power of Millimeter Wave | Verizon" video is  pretty cool and it's less than 3 minutes:

 

Nice marketing video. I like when the guy does the non-sequitur: "it's really high frequency so everybody thinks it doesn't go very far but it's a really big pipe and so that's what allows you to gain the superfast speeds".

 

A demo through a window and a plywood wall isn't that impressive, and obviously they only show the tests that worked. In the real world, the problem is when you try to have lots and lots of people on the same cells in very variable conditions (thicker walls, brick walls, stone walls, large growing trees, people in basements, etc). And how are they going to do the backhaul from all these cells on top of lamposts and telephone poles? They're running run fiber to all of them to provide those multi-gigabit pipes?

 

Seems to me like this is basically like doing cable/fiber overbuild, and the economics of that usually aren't very good.

[scorpioncapital]

And how many of those poles will they need? I mean will the landscape be scattered with those toothpick like poles literally everywhere?

[cameronfen]

And how many of those poles will they need? I mean will the landscape be scattered with those toothpick like poles literally everywhere?

 

I think I read that 5G small cells (particularly 23 and 26 Ghz bands) have range of 100 meters.  That total area is roughly a block or two in Manhattan I think. 

[walkie518]

And how many of those poles will they need? I mean will the landscape be scattered with those toothpick like poles literally everywhere?

 

I think I read that 5G small cells (particularly 23 and 26 Ghz bands) have range of 100 meters.  That total area is roughly a block or two in Manhattan I think.

 

At least in urban areas, street lights and signs can function as mini-towers...  Facebook's engineers for its connectivity lab and Terragraph program call these "street furniture."

 

[rogermunibond]

https://www.denverpost.com/2018/03/12/denver-5g-cell-phone-service/

 

This article has a couple good photos of what the small cell poles and installed cells look like.  In my area they are 30 foot wood poles with a brown metal wrap around the equipment

 

 

[Munger_Disciple]

In my mind, there are two questions about the viability of millimeter wave 5G:

[*]Do 28 GHz waves propagate well through foliage, thick walls, obstructions, etc.? So far I have not seen convincing evidence that it works robustly in a real life environment. The marketing video seems to show generally "RF friendly" environments.

[*] Assuming 28 GHz waves somehow propagate well enough and far enough (~100 meters), Verizon essentially has to overbuild another cable plant to enable the very small cells. Others have pointed out this in the thread.

 

We do know that Verizon tried to buy Charter last year. Perhaps they are not as sure internally about millimeter wave technology.  Other cellular carriers seem to be somewhat cooler on the millimeter wave 5G prospects. T-Mobile announced that they would be upgrading low and mid band frequencies to 5G and AT&T said they would upgrade cell sites that are part of FirstNet contract with 5G (presumably low and mid band as well).

[JRM]

Perhaps this is not the correct place to ask this questions, but has anyone done any serious research on potential health effects of cell tower radiation? 

 

Just curious.

[undervalued]

Can someone explain how Verizon is able to build 5G in the video and why ATT/T-Mobile/Sprint or Cable companies can't do the same (build towers and beam signals)? If 5G is backed by fibers, it makes more sense for Telcos to purchase/merge with Cable companies instead of building their own, especially when they want to expand into rural/suburb areas. Do they need to own spectrum for this to work?

[scorpioncapital]

What's better? Mobile + WIFI or Cable + WIFI + MVNO?

Seems all of it is so so similar. I maintain these are all utilities. Buy them when cheap , at the right time in the large capex investment cycle. Does the consumer care if he heats his house by coal, natural gas, hydro, geothermal? He probably just cares about the performance and price tag.

 

[undervalued]

What's better? Mobile + WIFI or Cable + WIFI + MVNO?

Seems all of it is so so similar. I maintain these are all utilities. Buy them when cheap , at the right time in the large capex investment cycle. Does the consumer care if he heats his house by coal, natural gas, hydro, geothermal? He probably just cares about the performance and price tag.

 

It's kind of hard to compare it to energy because energy doesn't have a characteristic that differentiate between the products (bandwidth speed/reliability). Right now Cable operators are cheap because once 5G hits, all people need is MVNO (if the wireless carriers are smart enough to remove the bandwidth cap). In this scenario where 5G takes over (assuming they don't need fiber or copper and other legacy buried wires in the ground), all these capex the cable companies are spending doesn't worth anything anymore. Most people can survive with just MVNO plan since they can tether their PC/Router/Repeater, etc.

 

I guess if we were to compare an event in history that kind of similar to this jump to 5G will be when people switch from dial up to Cable/DSL connection. Those people who cannot afford it are the last person who jumps on and those people who jumps on early will probably not give up their faster connection to go back.

[scorpioncapital]

So what's the Conclusion? :)