Spectrum, which Charter Communications (CHTR) operates, has been on a downward spiral over the past few years as the cord-cutting trend, which involves consumers ditching cable services for streaming platforms, grows in magnitude.
Despite recent efforts to retain customers with bundled deals and marketing that emphasizes value, Spectrum’s fleeing customer problem worsened earlier this year.
Not only did Spectrum continue to lose cable TV customers, but it also began to lose internet customers in alarming numbers.
In Charter’s second-quarter earnings report for 2025, it revealed that Spectrum lost about 117,000 internet customers during the quarter, which is almost 6% higher than the number of internet customers it lost during the same period last year.
During an earnings call in July, Charter CEO Chris Winfrey revealed that the number of Spectrum internet customers whose service has been cut off due to nonpayment has increased year over year, partially due to the end of the Affordable Connectivity Program (ACP).
This was a government program that provided eligible customers a discount of up to $30 a month for internet service. It was discontinued in February last year.
“The reason that nonpay has stepped up year-over-year is because twofold,” said Winfrey. “One is you have former ACP customers who are economically challenged and have a higher non-pay rate systemically, without the benefit of the subsidy from a year-over-year standpoint. But in addition to that, from a year-over-year standpoint, you have newly acquired customers who would have qualified for the ACP. We don’t have ACP today, and therefore, they have a higher nonpay rate than they would otherwise.”
Image source: Mordant/Bloomberg via Getty Images
Spectrum faces big lawsuit due to customer losses
As Spectrum loses internet customers, Charter Communications now has another major problem on its hands: a class action lawsuit.
Charter Communications shareholders filed a lawsuit against the company on Aug. 14, alleging it misled them about its ability to weather the end of the ACP program by making “materially false and misleading statements that conditioned investors to believe the company could manage and reverse the causes of internet customer declines,” according to the lawsuit.
For example, investors highlight that during an earnings call on Nov. 1, 2024, Charter executives touted Spectrum’s new pricing and packaging strategies to attract new internet customers and reduce churn. They also claimed that the loss of ACP customers was under control.
Related: Spectrum suffers major loss as customers pull the plug on service
“The end of the ACP program drove higher third-quarter nonpay and voluntary churn among former ACP customers for a total estimated third-quarter impact of approximately 200,000 internet losses …” said Charter Chief Financial Officer Jessica Fischer during the call. “We continued to do a very good job in managing the end of the program, and we’ve retained the vast majority of our customers who were previously receiving an ACP benefit.”
Investors claim these statements downplayed how the loss of ACP customers negatively impacted the company.
Spectrum investors face financial damages as internet customers leave
Spectrum investors allege that Charter specifically made misleading/false statements or failed to disclose that it was “unable to manage or promptly move beyond” the impact of the ACP program ending. It was “actually having a sustaining impact on internet customer declines and revenue,” and the company wasn’t “executing broader operations in a way that would compensate for, or overcome the impact, of the ACP ending.”
They also state that “the internet customer declines and broader failure of Charter’s execution strategy created much greater risks on business plans and earnings growth than reported.”
After Charter revealed in its latest report for 2025 that Spectrum lost 117,000 internet customers during the second quarter this year, almost double the 66,000 reported in the prior quarter, the company’s stock price fell $70.25 per share, or 18.4%, closing at $309.75 per share on July 25, 2025.
Investors claim that this caused them to suffer “significant losses and damages.” Through the lawsuit, investors seek compensatory damages for their financial damages due to Charter’s alleged “acts and omissions.”
Spectrum is also losing customers due to rising competition
Spectrum’s rapid loss of internet customers comes at a time when many Americans are looking for cheaper internet options as their monthly bills increase.
According to a State of Consumer Trust Survey 2025 by Reviews.org, 43% of Americans said their internet bills spiked the most last year compared to other home services. This has encouraged 75% of Americans to either cancel, downgrade or change internet providers.
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Many consumers are switching to fixed wireless internet, which is cheaper than traditional internet services provided by cable companies. Phone carriers such as Verizon, AT&T, and T-Mobile all offer fixed wireless internet, also known as 5G home internet.
“Although 5G home internet technically isn’t faster than cable or fiber internet, it offers a lot of value,” said Peter Holslin, managing editor at Reviews.org, in the survey. “5G internet packages are typically sold at fixed rates, with no extra fees for installation or equipment, and you often get other perks too like unlimited data and bundle discounts when you pair it with a cell phone plan from the same provider.
“Setup is easier because you don’t need to run any cable or wiring through your house, and usually customers can get solid speeds to cover common needs like streaming TV, online gaming, and making video calls,” Holslin added.
Related: DirecTV customers threaten to leave after latest warning
