Charter Communications, Inc. (CHTR) Earnings Call Transcript & Summary

Okay. Good morning, everybody. I'm Ben Swinburne, Morgan Stanley's media and telecom analyst. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. And very excited to welcome back to the conference, Chris Winfrey, the President and CEO of Charter Communications. Chris, thanks for coming back.

Great to be back.

Good to see you again.

Yes, likewise.

Why don't we start with some of the sort of areas of focus for the market on Charter, which is really around your ability to sort of accelerate growth and free cash flow. And I'd like you to just talk a little bit about the challenges that the industry has faced for the last couple of years, but why really you're so optimistic for the future of Charter and what you guys are focused on?

Sure. It starts with having the very best network in the marketplace, having the fastest products, having pricing and packaging that allows you to save customers lots of money and then marrying that up with fully deployed in-house sales and service infrastructure, which we have in charter, 100% U.S.-based, effectively made in America. And then utilizing the benefit that we have of being fully converged across our entire footprint. We have ubiquitous coverage of wireline -- gigabit wireline and gigabit wireless everywhere we operate. And then coupling that with making really strong use of the mobile packaging that we have to drive growth and save customers hundreds or even thousands of dollars and increasingly, and I'm sure we'll get into that, is using video, which we've repositioned in the marketplace to drive that growth. And so along the way, we've also invested in accelerating the speed capabilities of our network through network evolution, symmetrical and multi-gig speeds and you put all that together and having ACP now fully behind us, hopefully, a little bit of lightening of competitive environment sets us up for growth. And then we're about through the large CapEx cycle that we've had that we had previously announced. And we're really poised at this point, which we publicly said, to lower the amount of capital expenditure and have kind of a mechanical increase in free cash flow. So I think all that sets us up pretty well and leaves us really optimistic about the future for not just Charter, but for the industry.

I'm sure over the next few days, we'll be talking a lot at the conference about convergence and converged offers. You just mentioned what you guys are working on at least high level. Can you talk a little bit specifically about your products and packaging that have -- how you've evolved those, particularly on the convergence front and why you think it positions Charter to win with customers?

I mean the convergence that you're talking about is really wireline and wireless, and I'll talk about that. But we're also kind of converging -- so seamless connectivity, but we're also converging seamless entertainment through video, and I know we'll get into that. So it's really a convergence across all of our products, which we're uniquely positioned to do. And I know that going back to the seamless connectivity, which you asked, it seems to be the topic du jour. Everybody wants to talk about convergence. But the reality is, inside of our footprint, the only operator has gigabit wireline and gigabit wireless capabilities is us. And it's pretty clear. We provided a slide or 2 on that in our last earnings call, which talks about not only our ability to have that seamless connectivity ubiquitously deployed, but when you put it together with our pricing and packaging to save customers hundreds of thousands of dollars. So the facts speak for themselves, and we have that capability. Now what's upon us, both as a cable company as well as the industry, I think is how do you break through with that marketing message that doesn't just have a very compelling slide for investors but actually has a very compelling message for customers and educates them really how they can save money. And I think we still have work to do on that. But in the end, having the best products and having the best pricing and saving customers lots of money and doing it with a great service, that will prevail. So I'm confident where it goes.

We're going to talk about sort of the product specifics and competition and all that stuff in a minute. I just wanted to just stay high level. You guys also updated the market on your long-term CapEx plans on the last earnings call.

We did.

And the changes from the prior guidance weren't massive, but still I think worth touching on. Can you talk about the outlook, what these investments are doing for the business and your confidence and conviction in sort of the decline in capital spending that you outlined for us?

So the benefits of the capital expenditure are having significantly more passings, subsidized rural passings driving pretty predictable growth plus an additional leg of growth in the future as a lot of these rural areas will become suburban areas in the future. Second one is the upgrade to symmetrical and multi-gig speeds to maintain and actually have superior connectivity throughout our footprint. The pricing and packaging and convergence. There's been some investments around that as well as the fully deployed service investments, which are now behind us to drive tenure and to drive tools and capabilities to really have a different -- have our service be a differentiating factor in the marketplace. In terms of our commitment to the outlook that we provided on CapEx, you and I know that Charter is not typically known for providing guidance or outlook simply because we want to make sure that we can always pivot to what's best for shareholders. And of course, we'll always do the right thing, long-term right thing for shareholders. But we wanted to lay out a multiyear view of what the capital expenditure looks like, and we're committed to it because we understand that we've been through a period of significant capital expenditure and investment. It's paid off. It's working despite some of the external pressures in the short term, we're getting the results that we wanted. And but we thought it was important to articulate here's where it stops, here's where it goes down and that you can count on that really take off of free cash flow. It's not something we take lightly to go put that out. And like I said, well, we'll always do the right thing for shareholders long term. I don't see anything in the upcoming years over that time horizon that changes our outlook for capital expenditure and all of us as shareholders can count on that.

That's great. Thank you for making those comments. All right. Why don't we talk about broadband for a minute. You mentioned ACP. So last year, you guys, I think, lost around 450,000 customers that were tied to the ACP program. I think I asked you on your earnings call if you expected a better year in broadband in '25 and the direct quote was, it better be. So...

It was a visceral reaction. Probably not well planned, but it was true and it's just math. The reality is, it better be.

Yes. Well, let's talk about a little bit of the math. So sitting here today, here we are in March '25, talk about kind of the headwinds and the tailwinds to broadband customer growth, especially relative to last year.

There's still a lot going on. But if you think about compared to last year, cell phone Internet seems to have had its peak in terms of net add rate. Fiber overbuild, it continues, but it's not anything to do. We've been dealing with that for 10, 15 years. ACP, clearly behind us. There's a big benefit to that this year. And then the rural builds that continue to produce opportunities for us to drive penetration and growth. And so I think the setup in 2025, there's still external variables. I can cover that. But the setup is a lot better in '25 than it was in '24. The external factors that could be a driver here. Clearly, mover rate and household formation, plus or minus, those will be drivers. To what extent do we have an uptick or a normalization in nonpay for the previous ACP remaining base? And then there's hope, I'm not so sure I'd say we'd bet on it, but can video -- in addition to mobile, can video really become a tool for acquisition of Internet and retention of Internet, the way that it once was.

Yes, yes. Okay. How is Charter being impacted by fixed wireless on one hand and fiber on the other hand? And how are you now responding to those ongoing competitors?

Sure, cell phone Internet, as we call it.

I know, I want to make sure everybody knew what we were talking about...

Yes, no, I agree. Cell phone Internet is -- it continues to be painful picking off at the low end. But I do think from a -- both a supply and demand perspective, it's capacity limited and so we're working through that. And then the wireline overbuild, as I mentioned, it's not new. We've been competing against wireline and we actually -- wireline overbuild and we compete very well. I think the way that we're responding to both of them is making sure that we have the fastest speeds, that we provide convergence in a way that our competitors cannot have reliability in a lot of cases where it's much higher and save them hundreds or thousands of dollars and really push through with that marketing message that I mentioned before. So -- and then putting the investment behind the service and making sure that we have that as a competitive advantage. None of our competitors have 100% onshore in-house sales and service infrastructure. And I think that's a competitive advantage for Charter.

We keep hearing a lot on the fiber side about more and more investment into new fiber builds. Are you concerned at all that we might see some markets in the U.S. with gig capable cable like Charter and then 2 fiber players, and we end up in a market where no one can earn a real return?

Yes. For the past few years, the announcements have come about a faster pace of build. And the reality is there hasn't been much change in terms of the pace of build. So I'd be careful about what you read in press releases versus what's reality. The third operator question, it's not new. Some of that exists today. And it hasn't historically worked. In fact, the payback on it is terrible. The ROI is low I think it's actually pretty well understood, whether it's private or public capital markets that a third operator in this space has a very difficult time making a return, if not impossible, for the return on their investment. The history is littered with companies that went bankrupt trying to go do that. And even some well-branded companies have really struggled to make that happen and make a return on. So my hope and my belief is that cooler heads prevailed and that people have shareholders, they actually insist that they have to have a capital return on what's being deployed.

When we're talking about how you compete with fiber and fixed wireless, you talked about investing in the network and delivering the best speed. So you've got some -- I believe, some high split markets done now.

Yes.

Can you give us a little bit of a sense of whether you're seeing benefits to the business, whether it's in churn or penetration rates or anything else?

So we are seeing benefits to the business. It's too early to sit here and declare victory because we're not highly marketing in these markets. So several markets where we're now at acquisition as well as for existing customers, taking them up to symmetrical speeds. But we're still doing it relatively quietly at this stage. We'll be louder later on. What I can tell you -- so I think there's preliminary evidence that's attractive, but it's too early to get into detail about that. What is clear is that when we complete this network evolution, you're going to have a much higher quality network in place. You're going to have digital fiber return path that we didn't have before, which includes -- improves the reliability. All of the gear inside of the actives is going to be replaced as part of it. You end up with a fully end-to-end maintenance program along the way. And then we get telemetry and backup capabilities that have never existed inside the network. And in a way, because we have power and fiber and right away, it's pretty unique to our network because we have that telemetry that's there now with these investments we're making. So I think there will be a significant benefit. But the bigger benefit is really providing the platform for future product development to be able to take place. So people know that not only spectrum, but really all of the cable companies are upgrading the entire country to 10 gig by 1 gig capabilities and that you can rely on it, can count on it, can develop to that standard. And we want people to put products on these networks that are bandwidth hogs that have significant amount of low latency requirements, have edge compute requirements because that advantages us that makes our product that much more attractive.

Yes, I think, Chris, a -- I think it was a couple of years ago, you launched Spectrum One.

Yes.

Which is your sort of real push into wireless from a promotion and pricing point of view. Q4 Mobile service revenue was up about almost 40%. So you're definitely seeing nice financial performance from what you've been doing in wireless. But you did migrate from kind of Spectrum One to now this Spectrum Life Unlimited. Can you talk a little bit about that evolution from a marketing and planning point of view? Why -- what's different about them and kind of the overall strategy in wireless?

Sure. Spectrum One has been very successful. And it's still in the marketplace. To the extent somebody only wants 1 mobile line, Spectrum One is still available, and we use it. And just as a reminder, Spectrum One is taking the 500 megabit service and we increase the speeds, 500-megabit service, plus a free mobile line for $50. But what we found over time is that Spectrum Mobile had gained enough brand awareness in the marketplace. It is the fastest mobile product in the country, that's hard to believe, but it's the fastest mobile product in the country because of our WiFi. And so that allows us to have that marketing claim. And so it gained enough brand recognition that we said, "You know what, it don't -- it doesn't have to be offered for free if you're willing to take 2 paid mobile lines at $30 a piece, which is very low, that's not a promotional rate, that's a retail rate at $30, then we can have a lower price. We can use mobile to have a lower-priced Internet product, both at promotion and at retail with lower promotional roll-offs, which is better for customers over the longer term." So we could use mobile instead of having to build up brand awareness, we could use mobile as an asset towards selling and retaining Internet and it's working.

And does the fact that it allows you to have a lower headline price on broadband help from a competitor...

It does. And look, I could sit here. At the end of the day, we produced a slide as I mentioned in our last earnings report, which -- or presentation that shows the compelling nature of 2 mobile line households together with Spectrum Internet and how we can save you hundreds, in some cases, thousands of dollars relative to the competitors. But in the meantime, customers are seeing a low headline price out of cell phone Internet or others. And so this allows us to have a low headline price and to -- genuinely with a low roll off and a low retail price as long as you take 2 mobile lines. And if you do that, you're going to save hundreds and thousands of dollars. So it's another way of trying to break through from a marketing perspective about the bundle of services we have and the benefits of convergence.

I know you guys certainly going back to the Tom Rutledge years, very market share-focused company.

Yes, it hasn't changed.

However, you have seen wireless ARPU really start to grow nicely as Spectrum One free lines have rolled off. I'm just wondering, I know there's a lot of gap allocation noise in these numbers. But is mobile ARPU, maybe a real opportunity from a revenue growth point of view in the next couple of years?

It is an opportunity, both from a volume as well as from a rate perspective. Most of that comes about simply because if you have less free lines that are being at point of sale, less free lines as a point of the overall base, then you have a mechanical increase in your rate because more of those lines are being migrated to $30. The other big point is a very large percentage of our sales through Anytime Upgrade, which we launched as well as through the, as you call them life unlimited bundles are now coming through for the $40 Unlimited Plus package. And so that's becoming a pretty material driver and so the $30, now increasing to the $40 price point allows us instead of thinking about it as taking rate to really earn rate and the quality of the product is what is enabling us to do that.

Yes, I'm in New York, so I'm in a Spectrum market. I see Spectrum Mobile advertising all the time. But I have wanted to ask you for a while sort of how the brand is positioned from a consumer point view because you're sort of building a major wireless brand kind of from scratch. And a lot of your competitors like to talk about cable's wireless growth coming from prepaid, which feels like an easy thing to...

I don't think that's true anymore. Of course, all of us through acquisition, have that. But our port rate will tell you that's not the case.

Yes. So how would you size up kind of the brand position, your retail distribution and sort of your wireless position in the market?

We've spent a lot of time, effort and money building up the Spectrum Mobile brand. And we do that in conjunction with our Internet and our video products. And so we're a relative heavyweight from a marketing standpoint in all the markets where we operate. You've seen that in New York City. What makes us slightly different from the telcos or the carriers is that because we have such a strong buy flow for Internet and video that comes through online, that comes through inbound sales and it comes through outdoor channels. It allows us a selling opportunity for mobile that isn't just relegated to retail stores. Now we've made a huge investment in our retail stores. That's behind us. We did that through the launch of Spectrum Mobile. We've modernized what used to be cable payment centers into proper mobile stores. So that investment is behind us, and it's an important channel, but we're a lot less reliant on retail as a distribution channel as compared to a telco or the telco carriers.

Is marketing an area of investment for you guys...

It's been and it continues to be an area of investment, and we've been funding that through lower transaction costs or cost to serve to the investments we've made there. But I think in terms of the level of marketing investment that we have, outside of variable subscriber acquisition cost, I'm comfortable we're making the right investments. And I don't see a need to significantly increase that today.

It's interesting, we've been talking about wireless and broadband, which is what, I don't know, 90% of my investor conversations are regarding Charter. But you guys have been really hard at work on the video front for the last, well, many years, but particularly publicly in the last 1.5 years, and you've done a lot to really reposition that entire product. I don't think we've really seen that fully at the consumer level yet, but what do you think this all means if you're successful from a video point of view, and we've started to see losses come down. What do you think that means for Charter and the consumer over time?

I think for Charter, it means can you have a more compelling broadband package that includes mobile as well as video in a way that allows you to have better broadband sales and better broadband retention. We think about it from cash flow at the household level, and that certainly contributes to that. From a consumer perspective, you're right, our results have started to improve already I'd love to tell you it's because of the direct-to-consumer app inclusion. That's not quite the case yet. Where the improvement is coming from is you have to step back and think where were we 1.5 years ago. We had actually crossed the point where we thought that video was at risk of no longer being an asset to the broadband relationship and was potentially going to become a liability because of the programmer rate increases and the lack of flexibility to create packages that were meaningful for customers and that the programmers were selling retail packages, direct-to-consumer at a lower cost with less advertising and more video-on-demand library, which made it difficult to go compete against that. And so we said, look, we're either going to be in the business or we're not. And we're going to either have something that we're really proud of to put on the -- proud of a video product and proud to put on the bill of a broadband customer or we will be out of the business. Thankfully, we've been through the entire cycle of all the programmers. I do think that we have a very constructive relationship now where we recognize that we're in it to drive video to benefit broadband, and we're selling their product, and we want them to get behind us and sell as well. What is going to take a little time is the activation of these direct-to-consumer apps and to have it in a consumer-friendly way where it's easy to service, easy to activate, easy to upgrade to the ad-free version and easy to sell to our broadband customers, all of which we're doing. So if you go take a look at My Spectrum app or spectrum.net as a customer, all that is essentially available today. We're not marketing it and pushing it just yet because we're working with the programmers to make sure that the activation process is customer-friendly and doesn't create frustration for our customers. It doesn't create frustration for their brand. This is an area, when you think of authentication of cable channels, we're pretty good at. And so I think that combined with these programmers, I think we can get to something that works. And you'll see us really drive at that point. And we'll get to see is now over $80 of value that wasn't there before that's included as part of Spectrum Select. And so it's meaningful and then you'll see us get behind the market that you're already starting to see some of the programmers get behind us and promote the fact that their apps are available as part of our video service, or that they can buy it through us from broadband eventually.

I wanted to ask you about also the commercial business at Charter. It's a $7 billion run rate business, it's about 15% of revenues last year, but pretty -- generally pretty high margin, but how do you reaccelerate that business? Because it's been slowing and it's more subdued growth over the last couple of years.

So I think its true essence, so we think about it in 2 areas historically for Charter: one is Spectrum SMB, the other one is Spectrum Enterprise. The small and medium business really it was a small business segment and has grown very well over the years, still highly underpenetrated, but is exposed to some of the same cell phone Internet temporary pressure that exists, and we think that will abate. But in the meantime, it's still neutral/growing, but it has some short-term pressures. Enterprise on the other hand, which is think about it as large verticals, health systems, federal government, these larger segments traditionally was fiber-based products, and we separated the 2 many, many years ago to make sure that we had a universal focus on getting -- moving upstream. We've done that. It's growing very well. But what you've also seen over time is when network evolution and network expansion has taken place, what used to be coax and SMB and fiber and enterprise is becoming somewhat irrelevant. The quality of the DOCSIS plan is so high that many of our enterprise customers were connecting using coax, not just a fiber drop, particularly for satellite operations and vice versa. We have fiber customers, SMB fiber customers in new build areas as well. What we've realized is that there's a whole mid-market segment that we have been serving, but between the 2, I think combining SMB and Enterprise, which we announced a couple of months ago, is going to allow us to accelerate growth and start servicing that space in a better way. And we'll still continue to move upstream and provide a wider array of products to small, medium and large customers.

Some of your competitors more on the telco side have talked about an opportunity around providing fiber connectivity and really maybe some other ancillary opportunities in relations with hyperscalers and sort of leveraging all this investment in AI. Is there something for Charter as you think about enterprise or your asset base that you think could be interesting?

We have a capillary network of fiber that's fully deployed across our footprint. A lot of people think about us as HFC or even coax on the drop, but over 99% of our footprint is really fiber based. And so we are a fiber provider. We're everywhere. We have tremendous amounts of capacity. So yes, I think the opportunity to be a connectivity provider to cloud providers exists. One of the other things and you know I've talked about it as well that we're looking at is -- we have probably 900 hubs, physical locations that house network equipment across our footprint. That's very close to the customer. And as we go through the network evolution, one of the byproducts is a lot of the equipment that is in the racks today is actually being virtualized, virtualized CMTS and it's creating space. So we end up with a real estate footprint of 900 sites that have fiber, power, cooling and now suddenly additional excess space that's there. And so we're exploring right now together with some of the other cable operators as to what do we think is any monetization opportunity, if any, through AI edge compute over the future, localized CDN, those type of applications, think about financial transaction services that really need that proximity, low latency. So I think there's an additional opportunity there to go evaluate whether we can monetize that footprint as well as opposed to just having OpEx savings by collapsing along the way.

Got it. Great. Well, we can revisit these topics next year and see things.

See where we're at.

So last year, you guys were -- there were a lot of concerns earlier in the year around your ability to grow EBITDA. You had a -- actually had a pretty healthy EBITDA growth year in 2024. And part of that was Jessica and the team finding efficiencies on the cost side. When you look at this year, I think you've talked about cost of service to be flat to down.

Correct.

What's allowing you guys to sort of keep the expense base from growing as you are in obviously a very competitive marketplace?

Sure. The -- I think the -- one of the factors is a lot of the activities that we did, particularly late in last year are having a full year run rate impact this year in terms of cost savings. We didn't do anything and it was a cardinal rule inside the company. We did nothing from cost reduction that would impact sales or service, but we did some things that really did make sense to lower our cost footprint. The bigger thing and the bigger opportunity for the future is that our service continues to get much better because of the investments that we've already made. The #1 cost inside the business is service transactions. So by having lower customer calls per customer relationship and by having lower trouble call truck rolls, there's a dramatic opportunity to not only lower the cost but improve the customer experience, which has improvements on your customer satisfaction and lowers your churn arguably that's maybe your biggest cost in the business is churn. And so we come at it really, first and foremost, of how can you improve the customer experience. But what's good for that is also really good for the expense line. And it's still the early days. We have a long runway of being able to reduce transaction costs inside the business through the investments we've made in our employees as well as the investments we've made in tools and systems and AI.

I was going to ask you, is AI a net benefit to the P&L today? Are you guys investing in AI from a cost point of view?

I think it's a net benefit to the P&L. Yes, we're investing, and we've been investing. It started out as machine learning, the dividing line between what's machine learning and AI and Gen AI, we're not doing any Gen AI today. I'm not sure who really is, even though there's a lot of discussion around it, but it will be. And along the way, because we're making the foundational investments that we're making and because we're focusing those investments based on the customer experience and the agent experience, I think we're coming at it the right way. We're coming at it from a quality perspective. But I can envision a really long runway for efficiency. Probably the hardest part isn't guessing where we're going to be, I think that's actually more clear. It's the path and the step function of getting there and the timing to do so in such a way that's not disruptive to our customers.

Let's spend a couple of minutes here in the time we have left on your rural expansion.

Yes.

This is a huge project. It's a big part of why your CapEx is elevated, so to speak. You've guided, I think, to an additional 450,000 subsidized new passings in '25, mostly RDOF related. Is this -- is '25 kind of a max build year? And do you have any concerns over kind of supply chain or labor cost or anything like that at this point?

'25 is the max build year from a dollar perspective next year because you have the tail end of activations with the lower amount of incremental cost, a lot of that expense will have already been incurred this year. We'll still have about 450,000 subsidized rural extensions inside of next year, but at a much lower capital cost in the year. I think what's interesting is if you take a look at the map that we've produced, you had mentioned how large of a project this really has been, it's massive. If you take a look at what was the original Charter footprint and all of the RDOF and the subsidized rural investment, and we've published these maps before, it's huge in terms of square footage. It's huge in terms of mileage in terms of what we've done. We used to do, I don't know, 20,000 miles a year, and we're cruising in at 100,000 miles capability today. And so when you talk about supply chain and labor because we are the nation's largest rural builder, because we're the nation's largest rural operator and because in moments of time where interest rates got finicky, others backed away and we did not and we stuck to it. Our suppliers understand that we're in it, and we're committed. When we say we're going to do something we do. And they've not backed off and neither have we and so I don't have any concerns around labor or supply and the ability to finish up what's left?

I know we're still early in seeing kind of the customer base build in your rural footprint or subsidized rural footprint, but we have noticed the ARPU has been growing. I think it was up about 5% last year. What's happening there? Are people taking video in rural America?

Yes, of course, they are. Rural America and not just video, but of course, mobile, right? So when you think about in a rural footprint that doesn't have broadband today, you probably have a $50 or $60 telephone line. And so it's not just broadband that we're substituting at a similar rate and a massive improvement in the quality of life by putting broadband into this rural footprint. But now you're attaching a very low-cost wireline phone, which they already had at a much lower cost and more importantly, attaching mobile and video. And it's the first time that they've had that option available from us. And so over time, our expectation is that more PSUs, more products will be attached to that relationship. And we've all thought about the rural build is really the broadband rollout and the connectivity, the penetration, the ARPU as such to that. But the reality is there's a lot more products to be sold in these households, and it's sticky. And you'll see continued ARPU growth in that space.

What is your perspective on Starlink as a competitor? I get, obviously, a lot of focus from the marketplace and the rural is where they're, I think, probably make -- having the most success.

I think low earth orbit satellite is a great product for the right market and the right circumstances. And I think arguably, when you get below a certain amount of density, it's the much better product. It does not make sense, I think, for the government to provide $20,000, $25,000 per passing of subsidy to go build something that could actually be serviced by low earth orbit satellite. Yes, it's a slightly more -- well, it's a more expensive product. But when you think about the overall economics, I think it has its place, and I think it works well in those markets.

Does it change the opportunity that you see in terms of the returns for your rural build as a competitor?

If we were building at that low amount of density, absolutely, but we're not. So I think it's the more appropriate project for that space or product for that space.

I want to ask you about BEAD, which is also filled with uncertainty, especially now. I felt like you guys -- you went a little further than I was expecting on the earnings call in terms of letting us know kind of your appetite here. But maybe just fill us in on kind of where your head's at on BEAD spending? And how that -- going back to your commitment to those CapEx numbers. How those may fit into that?

Well, we said it because we wanted to make sure people knew that they could depend on us that when we talk about a mechanical uplift and a significant uplift to free cash flow that we mentioned, and so we essentially put a cap on it in terms of BEAD. But that's only come about because every time we take a look at BEAD, it becomes less attractive and less material. The reason for that is that as the BDC maps have come out from the FCC because of providers like ourselves, there's less opportunity, less unserved passings that are available in our markets, likely because we did a lot of it already. And secondly, the rules and regulations that were attached to this and some of the states were able to get waivers that were okay and some of the states did not, it just makes it a lot less attractive compared to when we did RDOF or ARPA. And so we've really gotten behind those programs, and I think BEAD has become less attractive as we go on. And we felt it was important to articulate that to the capital markets and to shareholders so they understood what the size of the envelope could be.

Okay. All right. My last question, Chris, I wanted to ask you on the wireless side. So you have some of your own Spectrum CBRS, which you've been trialing and I think deploying. Can you talk about how meaningful that could be? And maybe in your answer, just talk about the MVNO model as one that's working for Charter and whether there'd be a situation where it might lead you to look to build or acquire your own MNO?

So on CBRS, we're out of the trial phase. We're in full deployment phase. We deployed a couple of markets last year. We're deploying several markets this year. We needed to make sure that multiple vendors could work together, that it got out of that trial phase, it works fantastically well. And we'll be fully deploying that across the entire U.S. footprint that is included inside of the CapEx outlook that we provided. It's not a lot of money. And so the pace has been picked up and we'll fully deploy that in short order. So we're excited about it. And CBRS enables us to have not only a higher quality service and more seamless connectivity, but also a lower operating cost because it provides offload that's there. In terms of the question of our dependence on an MVNO versus needing to own assets, I would say that we are a cellular operator today, 87% of the traffic for Spectrum Mobile goes over our network. Our WiFi is a cellular radio. CBRS is cellular. So we are a facilities-based wireless provider for 87%. Now do we need to buy these big macro cell towers to cover the 13% that isn't driving a lot of the traffic. So far, we haven't seen a need to go do that. And we've got a much better relationship with a good strategic partner in Verizon that allows us to go do that and piggyback off of that and pay them a fair amount of money along the way. It's probably better at this stage of doing that than to go out and purchase macro cell towers.

Okay, that's very clear, Chris, anything you'd like to wrap up with as we close it out?

Look, we can wrap it up where we started. I think we're in a great position. We've got the best network today. We've got the best network in the future. The investments to make that happen are going to be behind us very quickly. We've got a large footprint of expansion that will provide growth for years to come. We've made already -- completed the investments in our service and tenure, and we're going to market with the pricing and packaging that is designed to drive better broadband acquisition, better broadband retention, with lower pricings, both at promotion and retail. And we've committed to an outlook on capital that means that you can, as a shareholder, mechanically calculate the amount of free cash flow. Jessica said it, and maybe that's the best place to close it, is that drop between where we are today in CapEx and what we're committed to is worth over $25 per share in free cash flow, it's significant. It's a big deal.

Great. Well, thank you for that upbeat presentation, and thank you for being here.

Thanks a lot.

Thanks, everybody.