Spectrum, which is owned by Charter Communications, is rolling out a free offer to internet customers as it struggles to retain them amid tougher broadband competition.
The company revealed in its latest earnings report that it lost 172,000 internet customers in the second quarter of this year. Amid this trend, its internet revenue also declined by 3.2% year over year.
The weak performance comes after Spectrum raised prices by $10 on several internet plans in July, a move it had warned customers about in June. It also comes as it faces heightened competition from AT&T, Verizon, and T-Mobile, which are increasingly attracting customers to their fiber and fixed wireless internet services with lower prices and bundled deals.
“We continue to see expanded fixed-wireless competition versus a year ago, including lower sales from low-income consumers, ongoing mobile substitution, and fiber overlap growth at a rate similar to prior quarters, with aggressive promotions by certain competitors,” said Charter Communications Chief Financial Officer Jessica Fisher on an earnings call in July.
Spectrum offers free Amazon Prime to select internet customers
As Spectrum struggles to navigate mounting competitive pressures, it has partnered with Amazon Prime to offer this service for free to eligible internet customers, according to a recent press release.
Amazon Prime usually costs $14.99 per month, and it includes benefits such as free fast shipping, member-only discounts and access to Prime Video.
Related: Spectrum makes significant decision as customer losses mount
The free offer is available to new and existing internet customers who are on any internet tier. Also, customers enrolled in the Spectrum Internet Assist program, which provides home internet service to low-income households, can also snag the deal for free.
Spectrum states that “eligibility is based on serviceable address.” The offer is also open to internet customers who have existing Amazon Prime memberships.
Customers in that category can transition their memberships through the deal’s website. If they have an existing Amazon Prime membership through a third party, they must first cancel it, and once their final billing cycle is complete, they can activate the free offer on the website.
Spectrum doubles down on slowing customer losses
The new offer comes during a time when Spectrum has recently been making major changes to improve customer retention in its broadband business.
In February, it launched its Invincible Wi-Fi product, which combines a battery unit and a backup 5G cellular connection designed to allow customers to maintain internet access when a power outage or network disruption occurs, a feature not offered by its rivals.
Spectrum has also focused more on enhancing the customer experience by vowing earlier this year to install service and resolve technical issues within two hours for residents and one hour for businesses.
The company also doubled down on strengthening its value proposition by highlighting the savings customers can receive when they combine phone, cable TV and internet services.
For instance, it recently started guaranteeing customers $1,000 in annual savings when they enroll in an internet plan with two Spectrum wireless lines.
During the company’s earnings call in July, Charter Communications CEO Chris Winfrey said that bundling “drives significant value and churn benefits” as internet customers who purchase a Spectrum mobile line churn (percentage of customers who cancel service) nearly 40% less, while those who add on a video product churn over 40% less.
Spectrum faces pressure to deliver more value to customers
It is vital for Spectrum to offer greater value to its internet customers, especially as more Americans switch broadband providers to avoid high prices. A recent survey from Reviews.org found that 73% of U.S. consumers saw their internet bills increase this year, up from 43% last year.
Also, 67% have switched or considered switching internet providers because of hidden or unexpected fees, up from 56% the year before.
Adlane Fellah, chief analyst at Maravedis Research, said in a RCR Wireless News report in June that network quality is no longer the top reason U.S. consumers are changing broadband providers.
More Telecom News:
- T-Mobile excludes 2 generous customer perks from new phone plans
- Comcast eyes acquisition of 33-year-old rival amid struggles
- Spectrum makes significant decision as customer losses mount
“The drivers of switching have shifted from the network to everything around it: billing clarity, support, and value perception,” said Fellah.
In a July press release, Kristen Hanich, an industry analyst and senior director of research at Parks Associates, said that more broadband providers are sharpening their focus on lowering prices and providing greater benefits to retain customers amid this growing trend.
“The competitive landscape has shifted from winning subscribers at any cost to keeping existing customers through better pricing, simplified service offerings, and integrated connectivity,” said Hanich. “Providers are investing in strategies that reduce churn while strengthening the value of broadband through mobile bundles and improved customer experiences.”
Amid this shift in consumer behavior, Spectrum is also betting big on its $34.5 billion acquisition of Cox Communications to help it win back customers.
The acquisition was finalized on Aug. 20, and the move will allow Spectrum to invest billions of dollars in expanding and upgrading its network across the country. It will also enable it to offer broadband service at lower prices, reaching more rural areas nationwide.
Related: Verizon acquires 35-year-old wireless carrier as it shuts down