RealTime IT News

Charter Says Cuts Won't Hurt Broadband

A spokesman for cable company Charter Communications said its move to restructure costs and lay off a "significant" number of its 18,700 employees would not impact its investments in broadband and digital cable services.

David Andersen, senior vice president of communications for the nation's third-largest cable company, said the layoffs and cuts would have no impact on Charter's business plan, which includes developing new digital cable services such as video on demand.

Charter on Tuesday announced "sweeping" changes to its operating structure, including consolidating operations into five key markets that serve an average of 250,000 customers within each market. Layoffs across the company's divisions are expected to be significant, company officials said, but just how many jobs would be affected by the action won't be known until January. A large number of the job cuts are expected to take place during the first quarter of next year.

Charter, which counts Microsoft founder Paul Allen among its major owners and investors, has spent heavily on upgrading its cable systems for broadband Internet services and digital cable systems that deliver video on demand. It counts just under one million broadband subscribers out of a total of 6.7 million cable users.

Despite Charter's upgrades to digital systems to deliver interactive services that help it compete with satellite cable providers, Charter has lost about 300,000 subscribers this year alone, many to satellite providers.

With analysts increasingly concerned about the size of Charter's debt load, Charter announced Tuesday it would restructure operations to eliminate redundancies and enhance communications. The company said the move is a natural step following 14 acquisitions it made in the past three years, in addition to spending on plant upgrades to add digital systems to cable delivery.

The St. Louis-based company said the changes would enable it to streamline reporting structures and take advantage of its size and scope.

The changes could also help Charter run a leaner operation as it faces the prospect of increased competition for subscribers from Comcast, in addition to satellite cable providers.

Charter ranks as the nation's third-largest cable provider behind number one Comcast , which recently closed its merger of AT&T Broadband and now counts about 21.4 million subscribers. Comcast is followed by Time Warner Cable, which ranks as the nation's second-largest cable provider with about 12 million subscribers. Both Comcast and TWC have been aggressive about rolling out interactive services over their cable systems, which satellite providers are ill-equipped to offer.

Comcast on Tuesday said it plans to invest between $2 billion and $2.5 billion over the next two years as part of its plan to upgrade AT&T Broadband cable TV systems for digital cable and advanced cable features. During 2003, it expects to pay upwards of $4.5 billion on the job of upgrading AT&T Broadband systems for digital content delivery.

Analysts such as Michael Harris of research outfit Kinetic Strategies and publisher of Cable Datacom News, estimates that North American broadband subscribers via cable modem and DSL passed the 18 million mark in the U.S. and Canada at the end of the third quarter. Cable Datacom expects to see the broadband subscriber count in this country surpass 20 million by the end of this year.