Charter Communications Sees a Customer Drop Post-ACP, Seeks New Ways to Retain Clients

Charter Communications is facing challenges following the termination of the Affordable Connectivity Program (ACP), a federal initiative that provided subsidies for internet service to low-income households, reporting a decline of 149,000 residential internet customers in the second quarter of 2024, primarily attributed to the end of the ACP.

About 100,000 of the lost customers were directly benefiting from the program’s $30 monthly discount, which in some cases rendered internet service free. The ACP’s funding was cut off in June after Congress didn’t approve additional appropriations, despite the Biden administration’s request for $6 billion to sustain the program through December 2024. Republicans opposed the measure, characterizing it as wasteful spending that primarily benefited households already possessing broadband access.

Charter, which serves more than 4 million ACP recipients, has implemented retention strategies to mitigate the impact of the subsidy’s end. But during the company’s second-quarter earnings call, CEO Chris Winfrey expressed concerns about the long-term affordability of internet service for these customers. The company has introduced offers such as Spectrum Internet Assist and Internet 100 to provide more affordable options.

The loss of ACP subscribers is expected to increase market churn and create opportunities for new customer acquisitions, Winfrey noted, adding the company’s bundled offers, including free mobile service for a year, can provide savings comparable to the ACP subsidy.

“If you think about a typical one-line environment or even in a typical two-line environment, the average cost of a line is over $60,” he explained. “And so even at retail rate of $30, we’ve built in a savings of $30 per month through taking mobile together with our attractively priced, high-powered broadband product. And that’s as much, if not more, than the ACP benefit.”

While the termination of the ACP presents challenges for Charter, the company views it as an opportunity to expand its customer base. By offering competitive pricing and bundled services, Charter aims to attract low-income customers who may have previously relied on the government subsidy.

“The real question is the customers’ ability to pay — not just now, but over time,” Winfrey said during the earnings call.

The ACP had provided up to $30 per month for internet service and up to $75 per month for qualifying tribal lands. It included a one-time discount of up to $100 for purchasing a laptop, desktop or tablet, contingent on a household’s contribution of between $10 and $50. The program aimed to help ensure that eligible households could afford broadband for essential services such as work, education and healthcare.

“We put a lot of effort into the ACP program and it wasn’t renewed,” Winfrey explained during the earnings call. “Beginning early this year, we’ve been actively working with customers to preserve their connectivity. Our service and retention teams are handling the volume of calls well and we’ve retained the vast majority of ACP customers so far. I expect we’ll have a better view of the total ACP impact once we’re inside the fourth quarter.”