Charter’s Triple Play with Cedar Point Product Likely to Raise Customer Retention Significantly

Implications: 1.The use of the Cedar Point soft switch at Charter Communications is a wise move. 2.Charter’s biggest challenges are that a) much of its network is in poor shape and b) it has lots of small systems scattered across the US. 3.Effective execution on its quality assurance program will be vital to success.

Analysis: Charter’s reputation is mixed at best to say the least. With a good deal of older plant that was not maintained well, it has a significant number of ingress issues. Of course, with these network deficiencies, it is hard to deliver consistently on triple play – and has resulted in obvious inertia at Charter in the past.

However, Charter appears to be working hard to turn this situation around in putting the dollars where they are needed to overcome the complications in order to get ahead of the curve. The MSO also seems to have developed impressive quality assurance and control policies and procedures. Focusing on the ability of its technicians to do it right the first time is key, such as in measuring how many service calls are generated within the first 30 days of the installation.

The Cedar Point solution allows Charter to avoid the complexity and expense of working with four to six separate vendors, such as Cisco Systems for CMS, Gendband for the gateway, Iperia for software, etc. Otherwise, there would be real concern about system regression, integration, as well as testing and update management across all those suppliers. A larger MSO can afford to have dedicated resources in the evaluation lab to able to do regression testing -- and have enough clout to manage vendors in that direction.

Charter’s chances for success with the triple play is highly dependent on the pricing its back office provider is giving the cable company. With adequate flexibility, Charter can mix and match different tiers of voice service to various packages including the video and data components (potentially ranging from under $100 to over $200 per month) – so the customers can get pretty much what they want while also saving money. Once an MSO really gets up and running, close to 2/3 of its installs can consistently remain triple play. The complete package tends to be a big factor in retaining subscribers.

A positive impact on Charter’s churn rate is expected if there is aggressive execution (a lot of it dependent on how well the plant is maintained) and how structured they are in terms of being able to deliver on volume of installations accurately and efficiently. One major hurdle will continue to be figuring out how to stitch some of its spread-out areas to achieve at least some economies of scale.