Charter Communications today announced that it has signed up its 500,000^th telephone customer, with seven out of 10 of those customers taking the company’s triple play bundle. Charter’s senior vice president and general manager, Ted Schremp, talked to Editor-at-Large Carol Wilson.

On the significance of the milestone: What it demonstrates is how quickly we have been able to ramp up this service. At the beginning of 2006, we had
122,000 phone customers and only 25% of total footprint set up for phone. We have adding 4 million homes passed with digital telephone service to end the year at 6.8 million. Our top line is 11.5 million homes, so essentially we have enabled two-thirds of our total footprint to support phones. We have been doing a ton of launch activity and construction activity, including interconnection to the incumbents and all that goes with providing telephone service. And during that time, over the last 13 months, we quadrupled our telephone customer base. While 500,000 is a milestone on the way to bigger and bigger numbers, we think it is significant and is reflective of the momentum the cable industry has built behind our triple play services.

On the nature of the growth: We have seen steady growth over the year. We were in launch mode all year – we are still in launch mode. The fourth quarter, we had a larger addressable market, so we probably grew more then. If you look at penetration rate in terms of homes passed, the growth has been steady.

On how Charter is selling voice: When we first launch a market, there is a lot of existing market activity with the existing video and data customers, and we take advantage of the cross-selling opportunities to make sure they know they have a choice of wireline phone service that they didn’t have before. We use our video network, bill stuffers, telemarketing, all the typical stuff. Our standard offer is $29.99 for three months and after that, it’s $39.99. Plus we offer a multi-product discount for triple play customers.
We offer unlimited local and long-distance calling to the U.S., including Alaska and Hawaii, Canada and Puerto Rico and generally speaking, unlimited calling is the primary feature. That come with 10 features like Caller ID and voice mail at no additional charge. Plus the simplicity and savings convenience of one bill. The features and in particular the unlimited long-distance elements are important parts of the value proposition.

On attracting new customers: Beyond cross-sell, we are very focused on the triple play bundle for all of our non-subscriber type marketing – all of that is focused on three services. There is a $99.97 introductory price for 12 months. After that, it varies by market but it’s about $120-$125 a month, on average, and varies quite a bit depending on video package. We want to drive the switching behavior from the incumbent. As people move and make new choices of service providers, they get away from switching behavior and into selling behavior. We want to make sure the customer is presented with the bundled option.

On adding wireless to the bundle: Wireless – we’ll see, we don’t disclose our plans from a product perspective because our competitors would love to know it. We are watching that closely.

On business services: We have small business services deployed in the majority of our markets. Typically our business offering is launched two to three months after our consumer offer. We are focused on companies with 10 lines and below. The value proposition on business is very similar to consumer – the primary targeted audience is folks who have high speed data with us today or new customers and selling them a combination of phone and high-speed Internet. We do have video products as well, but more in the hospitality services area – Triple Play exists in the business world as well. The whole notion is value savings, simplicity of one bill and the notion of choice relative to the incumbent phone company.

Looking forward: We think this establishes us as a telephone company. We are using IP technology as the underlying mechanism but fundamentally we are delivering primary line telephone service – we are giving them ubiquitous signal all the way into the home, with backup power. We use the IP technology to our economic advantage but it sits on top of a managed network. So we have the economic advantage of IP, and the flexibility of IP and because it rides on a managed network, we can provide a primary line telephone service of equal quality to what they get today.