Charter Communications and Cox Communications face a significant integration project after closing their $34.5 billion merger today. However, one area that won’t need much TLC right away is Cox’s hybrid fiber/coax (HFC) network.
Well before the merger came to light, Cox had already made significant progress with distributed access architecture (DAA) and “mid-split” upgrades that boosted the overall performance of the network, particularly in the upstream direction. Cox also has been executing some “high-split” upgrades that allocate even more spectrum to the upstream. Cox advanced the ball further last year with its selection of Vecima Networks’ virtual cable modem termination system (vCMTS).
That activity fits well with a multi-phase HFC upgrade that has been underway at Charter. For a large portion of that footprint, the plan includes DAA and high-split upgrades, and the use of Harmonic’s virtualization platform, which together set the operator up to deploy multi-gigabit downstream speeds and 1-Gig upstream speeds across the board. Charter also plans to deploy DOCSIS 4.0 in about 35% of its legacy footprint.
Speaking today on a call with reporters, Chris Winfrey, the Charter president and CEO who is now leading the newly combined company, said Cox’s prior work on the HFC network means that there is no reason to make any big changes in the early going. Charter and Cox confirmed earlier today that within a year the combined company will become Cox Communications. The Spectrum brand will start to take hold in legacy Cox markets around mid-September.
While it won’t cost much to upgrade Cox’s mid-split plant to a high-split, “we’re not in a rush to go do that today,” Winfrey said. “We’re in great shape.”
Winfrey stressed that the newly combined company is focused on getting its capital expenditures down to a “normalized level” as it pushes ahead with HFC upgrades and the completion of rural broadband expansions in Charter’s legacy footprint.
“We’re also in the midst of a very large and significant integration, so trying to go do a Triple Lindy here at the same time with a network upgrade that is not necessarily needed because of what they’ve already invested in mid-split doesn’t sound like the best decision,” Winfrey said. “There’s no need to go rush and ramp the capital expenditure inside of the Cox footprint.”
In the companies’ public interest statement with the FCC, Charter and Cox noted that the combined company would be in position to accelerate DOCSIS 4.0 network upgrades in the Cox footprint. Among the conditions of the California Public Utilities Commission’s approval of the deal, the new company must invest at least $275 million to upgrade the Cox/Charter networks in the state to support symmetrical 1-Gig speeds across legacy service areas within three years.
The layoff question
Naturally, Winfrey was asked how the closure of the deal might impact the workforce and whether it could result in layoffs.
He said it’s possible there will be some impact because of overlapping corporate overhead, “but it’s a di minimis part of the overall company.”
But Winfrey noted that there will be an increase in front-line jobs at the new company. Spectrum has already posted more than 1,000 new service and sales jobs in the legacy Cox markets, he said.
And there is no plan to cut pay or hours. “If anything, we’ll be increasing hours, because we have a 24/7 service infrastructure and operating model,” Winfrey said.
Other tidbits from today’s call:
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The new company might participate in the upper C-band auction, which is expected to wrap by next July. Winfrey said the new company will take a look at the auction, but said that interest in it will depend on how the spectrum is auctioned. However, he noted that Charter’s wireless joint venture with Comcast “allows us to think a little bit more holistically.”
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While the plan is to extend Spectrum’s products, packaging and pricing into the Cox markets by mid-September, Winfrey stressed that existing Cox customers can retain what they have “unless they choose to make a change themselves.”
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Cox video customers in Los Angeles and Las Vegas will gain access to Spectrum SportsNet LA, the TV home of the Los Angeles Dodgers.
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Segra and RapidScale – two business service-focused companies that Cox acquired in recent years – will continue to operate separately and retain their branding.
