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Video: How to Swap Out Your Leased Time Warner Cable Modem and Avoid $3.95/Mo Fee

A reporter from the Syracuse Post-Standard is featured in this video explaining how to swap out your leased Time Warner cable modem for one you can buy yourself. It will save you $3.95 a month. One piece of advice: If the coaxial cable you plan to use has a push-on style connector, toss it for one that screws on. The push-on connectors are not recommended, even if your cable modem comes with one. You can also use the cable Time Warner originally supplied if it has a superior screw-on connector. Time Warner does not need the cables returned with the cable modem or the original box. Just return the cable modem and power cord to any Time Warner Cable store location and make sure they print, and you keep, the returned equipment receipt. (4 minutes)

Northeastern Time Warner Cable Internet Customers Will Pay $3.95/Month Modem Fee Nov. 1

All Time Warner Cable broadband customers in upstate New York, New England, Pennsylvania, and the Carolinas will begin paying $3.95 a month to rent the cable modem required to make your $54.99/month Time Warner Cable Internet service work.

The cable company confirmed the charge will apply to all customers in Buffalo, Rochester, Syracuse, Albany, Binghamton, and beyond effective Nov. 1, joining New York City already paying the modem rental fee as of this week. The fee is gradually being introduced in all Time Warner Cable service areas nationwide.

Signature Home customers and those participating in the company’s trial of discounted Internet for the disadvantaged are exempted.

The new fee represents a 7% rate increase for Internet service, unless customers pay for their own modem.

Time Warner Cable mailed notification postcards to all affected areas this week, so they should begin arriving in mailboxes as soon as today. Southern states including Texas may see the new modem fee in their area as early as December.

“It is strictly a fee for customers who choose to lease their Internet modem from us,” Joli Plucknette-Farmen, the communications manager for Time Warner Cable’s western New York division told the Buffalo News. “As we continue to deploy more and more cable modems, many of these modems need servicing or replacing, get damaged and some are not returned. The monthly lease charge will allow us to service or replace the equipment, provide a better user experience and further enhance our Internet services.”

Stop the Cap! notes Time Warner Cable already assesses a fee ranging from $24-150 for unreturned or damaged cable modem equipment, however.

Phone subscribers who do not have Internet service will escape the fee as long as they avoid signing up for broadband.

Many of the models on the company’s approved modem list are now out of stock at the handful of retailers selling them. Other sellers, particularly on eBay and Amazon Marketplace, have doubled prices to as much as $200 on some popular DOCSIS 3 modems to capitalize on the cable operator’s new fees.


Turbo, Extreme and Ultimate Service Plans

Vendor Model
Motorola SBG6580
Motorola SB6141

Lite, Basic and Standard Service Plans

Vendor Model
Motorola SB5101
Motorola SB5101U
Motorola SBG901

Time Warner’s $3.95 Cable Modem Fee Fiasco Continues: Killer Hold Times, Long Lines

Shelly, a Time Warner Cable customer in New York City, ended up with a modem not on the company’s “approved for purchase” list, based on the recommendation of… Time Warner Cable.

Jon Weinberg has devoted more than six hours of his life trying to navigate around Time Warner Cable’s forthcoming $3.95 monthly modem rental fee, with no end in sight.

The 15-year Time Warner Cable customer is just about fed up and has started shopping around for another provider. The Staten Island resident tells Stop the Cap! asking for an additional $3.95 a month for a five year old cable modem is probably the last straw.

“Time Warner’s easy-to-miss postcard probably cost the company around 80 cents to print and mail, but their investment is going to cost them more than $1,500 a year they will shortly no longer be getting from me,” Weinberg said.

Weinberg, along with dozens of other Time Warner Cable customers in the Big Apple have been sharing their stories with Stop the Cap! since they learned the cable company was back for more of their hard-earned dough.

“This is simply ridiculous, because they have gotten enough money from me several times over to have paid for their modem,” Weinberg says. “I could understand if they wanted to charge new customers extra for a new modem ($2.50 a month), but demanding current customers pay $3.95 for equipment that is several years old is out of line.”

Many Time Warner Cable customers are choosing to purchase their own cable modems to avoid the fee, but the cable operator is making that as hard as possible. Customers are complaining about the very limited selection of “approved modems,” incredibly long hold times and delays activating new equipment, and impossibly long lines at the company’s store to return old equipment.

“I called seven times last week, always being left on hold for more than 30 minutes, trying to get my new Motorola 6141 modem activated,” Weinberg says. “When someone finally answers, it sounds like they are working out of a home and don’t understand what I am asking.”

Weinberg and several other readers, including your editor, also endured extended hold times and problems activating customer-owned modems. A supervisor earlier told Stop the Cap! a change to their billing system made it difficult to provision customer-owned modems last week. That problem appeared to be resolved by Saturday, but long hold times of 15-60 are not unusual after telling Time Warner’s automated  attendant you need to activate new equipment.

“Time Warner uses the same relentless hold music with a not-so-subtle prompt to use their online chat function, which connects you to India, Guatemala, or maybe the Philippines, with all of the frustrating results you can expect,” Weinberg says. “I tried that route while waiting on hold for 40 minutes and they told me I should call in because they could not handle my request.”


Gary Krakow, senior technology correspondent for TheStreet, suspects this cable modem fee could turn out to be a giant nightmare for customers. Some customers, including Krakow, are initially being told it will take several days to provision customer-owned equipment:

After 5 interactive minutes [with Time Warner’s automated call attendant] I was transferred to Lina (that’s what it sounded like when she spoke into her headset). She’s one of Time Warner’s national advisers. I told her exactly what I wanted to do. She listened attentively and took down a lot of information. She then gave me a “case number” and told me to hold on to speak with someone on the Time Warner Provisioning Team.

After a minute or so I was speaking with Monica, who called herself a Customer Service agent. She began asking me to repeat all my information again, but I insisted that she could find all of that by searching the case number from Lina. After a minute or two (we all had to wait for Lina to exit the file) Monica had all the info she needed and began typing in a new  computer file.

In a minute or so she was done. She gave me a confirmation number (different from the case number) and told me that I’ll get a return call when they were ready. It turns out it will take as much as three days for a technician to make the change.

“But wait!” I exclaimed. “Your postcard had me go to your Web site, where I followed the instructions – installed the new modem – and called you to turn it on.”

Monica’s response: “Put back the old modem”.

Krakow is annoyed Time Warner gave New York-area customers just two weeks’ notice of the forthcoming fee and has so far dropped the ball helping out customers trying to avoid it.

“I can’t describe how pissed off I am with the cable company right now,” says Shelly, a Stop the Cap! reader from Manhattan. “I almost threw out their postcard because it looked like it was printed by someone on their personal ink jet printer. Time Warner has been totally unprofessional and unhelpful.”

Shelly ended up getting conflicting information from Time Warner about what modem to buy. A call center representative recommended modems from the company’s rental list, not the approved for purchase list.

“I bought and received the exact same modem Time Warner gave me a year ago for my service and then they told me they cannot activate it because it is not on their list,” Shelly says. “It’s the exact same modem so it must work, but they absolutely refused to help me and now I am out a 15% restocking fee and return postage to send this thing back.”

A supervisor offered her a $5 courtesy credit for the misunderstanding. Shelly was not impressed.

“It will cost me $15 in restock and shipping fees to deal with the problem they created with their money-grubbing.”

Verizon FiOS is not yet in her neighborhood, but Shelly says she will remember the modem fee when Verizon knocks on her door.

“This is an excellent example of how Time Warner treats customers,” she says. “They are in a real hurry to charge us more but can’t be bothered when customers want to avoid their crap.”

Weinberg finally managed to get his modem activated on Sunday, after another 45 minutes on hold. But his aggravation is not over.

“I decided to drop off my old equipment at the cable store and was told there would be at least a 90 minute wait with 20 people in line ahead of me, several with their own cable modems to return,” Weinberg reports. “They had two people working the desk while two others seemed to be doing paperwork. I left.”

Krakow ran into the same problem at the Time Warner Cable store on Manhattan’s Upper West Side.

“The line was out the door,” Krakow said. “I was told there was a one hour wait to ‘get a number and wait some more.'”

One strange side effect of the modem rental fee is that Time Warner Cable will allow you to keep your current cable (eMTA) modem if it is also used to support the company’s phone service. If you purchase your own cable modem, the company will deactivate the cable modem ports on the modem/eMTA they supplied and will not charge you a modem rental fee, even though you are still using their equipment.

Update #2: Time Warner Cable Will Begin Charging Virtually All Customers $3.95 Cable Modem Rental Fee

Most Time Warner Cable broadband customers across the country will soon pay a $3.95 a month cable-modem lease fee in an effort by the cable operator to boost revenue by as much as $300 million annually.

New York City-area customers will be the first to see the modem rental charge, and customers began receiving postcards this week informing them of the new fee, which begins Oct. 15.

“It’s an outrage considering how much Time Warner Cable is already charging for broadband service,” says Stop the Cap! reader B.J., who received notification in yesterday’s mail. “My Ubee cable modem is four years old and they want to charge almost $50 a year for something that costs $40 retail brand new? Not a chance. I am calling Verizon. Goodbye Time Warner.”

A Time Warner Cable spokesperson said the company is busily printing notification cards that will arrive in customer mailboxes across the country in the next two months.

“Customers have the choice to purchase a modem from a third-party retailer to avoid paying the $3.95 per month,” according to the cable company.

Last year, Time Warner began gradually rolling out a $2.50 modem rental fee for new customers, but exempted current ones. Now the cable operator has increased the rental fee and intends to impose it on everyone except Starter Internet, Connected Learning, SignatureHome and certain IntelligentHome customers.

The cable operator may get resistance from customers, but Wall Street analysts state other cable operators, including Comcast, already charge up to $7 a month for modem leases.

Many customers will elect to buy their own cable modem, but the cable company has severely limited its approved device list in many areas to just a single manufacturer: Motorola Mobility, despite still leasing out often less-costly models from seven other manufacturers.

“It’s convenient how they will lease out inexpensive Ubee cable modems made in China but they won’t let you buy one,” says B.J. “There is nothing wrong with Motorola modems, but it reduces customer choice.”

Time Warner Cable (and Stop the Cap!) recommends all customers who plan to buy modems choose a DOCSIS 3 model for future compatibility. The company has switched out cable modems for customers at least twice over the decade plus history of cable broadband service. If history holds, the estimated useful life for a DOCSIS 2 cable modem will probably be five years or less before future standards make them obsolete. DOCSIS 2 modems are not capable of supporting the fastest broadband speeds, while DOCSIS 3 modems often cost just a little more.

Time Warner Cable’s Approved Modem List in the Northeastern U.S. And Our Reviews (all prices approximate, from Amazon.com — consult Time Warner Cable’s website for specific modems approved in your area):


Recommended Motorola SurfBoard SB6141 DOCSIS 3.0 Cable Modem ($100): The SB6141 is now on the approved list for most TWC service areas and has gotten excellent reviews. It is an upgrade from the 6121, now off the list of approved devices. The 6121 could only support four-channel bonding for upstream and downstream, while the 6141 supports up to eight downstream channels and four upstream channels increasing data rates to over 300Mbps for received data and over 100Mbps when sending data. The only downside is that it is harder to find in stock for purchase.

Motorola SURFboard Gateway SBG6580 DOCSIS 3.0 Wireless Cable Modem ($117): The 6580 includes built-in gigabit Ethernet and a Wireless-N router, so it theoretically could replace your home router. My personal experience with cable modem-router combinations has been less than glowing, however. Consider this only if you do not already have a Wireless-N router. This model gets overall good, but not excellent reviews.

DOCSIS 2 – Consider a DOCSIS 3 modem to guarantee future compatibility.

Motorola Surfboard SB5101 Cable Modem ($50): This workhorse DOCSIS 2 cable modem has been around since 2003 and is popular with cable companies and customers, with a proven track record of performance. But it is not DOCSIS 3-capable, which means its useful life may be shortened as cable broadband standards continue to evolve.

Motorola Surfboard SB5101U Cable Modem ($53): Functionally equivalent to the 5101, the 5101U was introduced in tandem with Motorola’s cheaper 5101N model that omitted the USB port and driver CD. Choose the 5101 or 5101U based on which model is currently selling at the lowest price.

Not recommended Motorola SURFboard Gateway SBG901 DOCSIS 2.0 Wireless Cable Modem ($84): Overpriced and mixed reviews plague this aging Motorola DOCSIS 2 modem with built-in wireless G support. You would do better buying a Wireless N router yourself, or consider the SBG6580 if you absolutely need built-in Wi-Fi.

Updated 4:54pm ET: Readers report the SB6141 now has the best chance of being on TWC’s list of approved equipment, so we’re deleting the 6121 and replacing it with the 6141. If you happened to place an order for the 6121, make sure you verify whether it is on your area’s approved list. If not, cancel the order.

Update #2 10:00am ET 10/17/12: After publishing, Time Warner Cable overhauled their entire website. We have updated the link for the current approved list. None of the models have changed as far as I can see. I have also deleted the model 6121 entirely from the story — it is not on any approved list I’ve seen. As of today, the gouging continues on eBay with the 6141, still selling for up to $200. Amazon.com sellers have also jacked up the price to take advantage of current demand, though not as much.

Do NOT pay eBay sellers $200 for the 6141, which normally sells for $99. It only encourages the bottom-feeding speculators. If you want the 6141, I recommend you wait until prices drop to between $99-125. Do not pay more.

Some readers are finding used/refurbished cable modems that work perfectly fine on Craigslist and eBay. There is generally nothing wrong with these, unless they happen to be stolen or unreturned modems that really belong to Time Warner Cable, which will in turn not activate them. Be careful.

Why Time Warner Cable Can Jack Up Rates Willy-Nilly: Lack of Competition

cable ratesAlthough cable and phone companies love to declare themselves part of a fiercely competitive telecommunications marketplace, it is increasingly clear that is more fairy tale than reality, with each staking out their respective market niches to live financially comfortable ever-after.

In the last week, Time Warner Cable managed to alienate its broadband customers announcing another rate increase and a near-doubling of the modem rental fee the company only introduced as its newest money-maker last fall. What used to cost $3.95 a month will be $5.99 by August.

The news of the “price adjustment” went over like a lead balloon for customers in Albany, N.Y., many who just endured an 18-hour service outage the day before, wiping out phone and Internet service.

“They already get almost $60 a month from me for Internet service that cuts out for almost an entire day and now they want more?” asked Albany-area customer Randy Dexter. “If Verizon FiOS was available here, I’d toss Time Warner out of my house for good.”

Alas, the broadband magic sparkle ponies have not brought Dexter or millions of other New Yorkers the top-rated fiber optic network Verizon stopped expanding several years ago. The Wall Street dragons complained about the cost of stringing fiber. Competition, it seems, is bad for business.

In fact, Verizon Wireless and Time Warner Cable are now best friends. Verizon Wireless customers can get a fine deal — not on Verizon’s own FiOS service — but on Time Warner’s cable TV. Time Warner Cable originally thought about getting into the wireless phone business, but it was too expensive. It invites customers to sign up for Verizon Wireless service instead.

timewarner twcThis is hardly a “War of the Roses” relationship either. Wall Street teaches that price wars are expensive and competitive shouting matches do not represent a win-win scenario for companies and their shareholders. The two companies get along fine where Verizon has virtually given up on DSL. Time Warner Cable actually faces more competition from AT&T’s U-verse, which is not saying much. The obvious conclusion: unless you happen to live in a FiOS service area, the best deals and fastest broadband speeds are not for you.

Further upstate in the Rochester-Finger Lakes Region, Time Warner Cable faces an even smaller threat from Frontier Communications. It’s a market share battle akin to United States Cable fighting a war against Uzbekistan Telephone. Frontier’s network in upstate New York is rich in copper and very low in fiber. Frontier has lost landline customers for years and until very recently its broadband DSL offerings have been so unattractive, they are a marketplace afterthought.

Rochester television reporter Rachel Barnhart surveyed the situation on her blog:

Think about this fact: Time Warner, which raked in more than $21 billion last year, has 700,000 subscribers in the Buffalo and Rochester markets. I’m not sure how many of those are businesses. But the Western New York market has 875,000 households. That’s an astounding market penetration. Does this mean Time Warner is the best choice or the least worse option?

Verizon-logoThat means Time Warner Cable has an 80 percent market share. Actually, it is probably higher because that total number of households includes those who either don’t want, need, or can’t afford broadband service. Some may also rely on limited wireless broadband services from Clearwire or one of the large cell phone companies.

In light of cable’s broadband successes, it is no surprise Time Warner is able to set prices and raise them at will. Barnhart, who has broadband-only service, is currently paying Time Warner $37.99 a month for “Lite” service, since reclassified as 1/1Mbps. That does not include the modem rental fee or the forthcoming $3 rate hike. Taken together, “Lite” Internet is getting pricey in western New York at $47 a month.

Retiring CEO Glenn Britt believes there is still money yet to be milked out of subscribers. In addition to believing cable modem rental fees are a growth industry, Britt also wants customers to begin thinking about “the usage component” of broadband service. That is code language for consumption-based billing — a system that imposes an arbitrary usage limit on customers, usually at current pricing levels, with steep fees for exceeding that allowance.

frontierRochester remains a happy hunting ground for Internet Overcharging schemes because the only practical, alternative broadband supplier is Frontier Communications, which Time Warner Cable these days dismisses as an afterthought (remember that 80 percent market share). Without a strong competitor, Time Warner has no problem experimenting with new “usage”-priced tiers.

Time Warner persists with its usage priced plans, despite the fact customers overwhelmingly have told the company they don’t want them. Time Warner’s current discount offer — $5 off any broadband tier if you keep usage under 5GB a month, has been a complete marketing failure. Despite that, Time Warner is back with a slightly better offer — $8 off that 5GB usage tier and adding a new 30GB usage limited option in the Rochester market. We have since learned customers signing up for that 30GB limit will get $5 off their broadband service.

internet limitIn nearby Ohio, the average broadband user already exceeds Time Warner’s 30GB pittance allowance, using 52GB a month. Under both plans, customers who exceed their allowance are charged $1 per GB, with overlimit fees currently not to exceed $25 per month. That 30GB plan would end up costing customers an extra $22 a month above the regular, unlimited plan. So much for the $5 savings.

Unfortunately, as long as Time Warner has an 80 percent market share, the same mentality that makes ever-rising modem rental fees worthwhile might also one day give the cable company courage to remove the word “optional” from those usage limited plans. With usage nearly doubling every year, Time Warner might see consumption billing as its maximum moneymaker.

In 2009, Time Warner valued unlimited-use Internet at $150 as month, which is what they planned to charge before pitchfork and torch-wielding customers turned up outside their offices.

Considering the company already earns 95 percent gross margin on broadband service before the latest round of price increases, one has to ask exactly when the company will be satisfied it is earning enough from broadband service. I fear the answer will be “never,” which is why it is imperative that robust competition exist in the broadband market to keep prices in check.

Unfortunately, as long as Wall Street and providers decide competition is too hard and too unprofitable, the price increases will continue.

Time Warner Cable Raising Modem Rental Fee (Again): $5.99/Month Starting Next Month

Time Warner Cable is increasing the cost of renting your cable modem. In the third increase in ten months, using the company-provided cable modem will now cost subscribers $5.99 a month. But the costs don’t stop there. Last week, Time Warner announced it was raising the price of its broadband service an average of $3 a month. Taken together, the cost of standalone 15/1Mbps broadband with a leased modem will now cost $61 a month.

modem fee

SB6141 is a DOCSIS 3 modem

SB6141 is a DOCSIS 3 modem

Time Warner introduced its $3.95 monthly modem rental fee last fall. In June, the company announced it was raising the price of the modem rental to $4.99 a month for new customers,  and has now decided customers can afford to pay more — $6 a month for equipment that costs the cable company, on average, less than $50 per unit according to Wall Street analysts.

CEO Glenn Britt remarked earlier this year that customers accepted the modem rental fee with few complaints. Britt foreshadowed the modem rental fee increase saying the company had significant room to boost prices, noting Comcast charges $7 a month for its modem.

Customers can escape modem rental fees altogether by purchasing their own equipment. At Time Warner’s new prices, most customers will recoup the cost of the equipment within one year. Unfortunately, as news of the modem rental fee increase made its way to retailers and eBay resellers, prices have soared for equipment on Time Warner Cable’s approved modem list.

The popular Motorola SB6141, which sold for $78 two weeks ago, has now shot up to $99.99 in anticipation of a new wave of buyers. Prices on Newegg have also increased from $78 to $99.99 as of this morning. Best Buy has also boosted prices to $99.99. Amazon still lists this white version of the SB6141 this afternoon for $87, but is expected to quickly sell out.

Based on the last two waves of price increases, if thinking about buying your own modem the time to buy is right now because major retailers are likely to temporarily sell out and eBay resellers will begin a wave of price increases in response to demand.

Stop the Cap! top rates the Motorola SB6141 among the modems on the approved list. It is DOCSIS 3 capable, which means it will support faster Internet speeds. But also be aware that if you upgrade to a DOCSIS 3 modem, Time Warner’s Speedboost technology, which delivers a few seconds of additional speed at the start of a download, will no longer work. Speedboost is gradually being phased out by most cable operators so we still think buying a DOCSIS 3 modem makes the most sense over the long term.

Time Warner Cable Modem Rental Fee Increased to $4.99/Month for New Customers

one time charge

Time Warner’s “Because We Can” One-Time Charge applies to new customers signing up for certain promotions.

Time Warner Cable has increased the monthly rental fee for its leased cable modem from $3.95 a month to $4.99 a month and has introduced a “one-time charge” of $19.99 applicable to certain Internet service new customer promotions.

CEO Glenn Britt earlier commented that Time Warner Cable had room to grow its modem lease fee:

“It was received with a minimum of push-back and we’re still actually charging less than Comcast ($7/month), so I think there is room to charge more going forward. People can buy their own if they want and a small percentage of customers have chosen to do that which is fine with us.”

For now, the increase only applies to new customers, but Stop the Cap! expects it will also eventually apply to current customers as part of the next round of rate increases. The Internet Modem with Free Home Wi-Fi, available to customers ordering 30/5 or 50/5Mbps service costs $14.99 a month.

Time Warner Cable has pulled back on customer promotions since the beginning of the year and has begun shifting its pricing for its most profitable service — broadband, to capture price-sensitive customers who have been unable to previously afford Internet-only service from the company.

Time Warner has introduced a new “Lite” tier offering 1Mbps service for $20 a month and has made the 3Mbps “Basic” service the staple of many of its bundled promotions.

twc pricing

twcGreenStop the Cap! strongly encourages Time Warner Cable customers to buy their own cable modems and avoid the rental fees. Customers can also bypass the rental fee by signing up for Earthlink service through Time Warner Cable.

Our top modem choice remains the Motorola SB6141, which can be found at the “Buy It Now” price on eBay as low as $77.99 with free shipping and no upfront sales tax for most buyers. This model does not include Wi-Fi, but most people don’t need it — a router generally provides Wi-Fi connectivity on its own.

We highly recommend purchasing DOCSIS 3-ready modems to avoid obsolescence issues.

The most recent list of “acceptable” modems that can be activated with your Time Warner Cable broadband service are:

Turbo, Extreme and Ultimate Service Plans

Vendor Model
Motorola SBG6580
Netgear CMD31T
Motorola SB6121
Zoom 5341J
Zoom 5350
Zoom 5352
ZyXEL CDA-30360

Lite, Basic and Standard Service Plans

Vendor Model
Motorola SBG6580
Motorola SB5101
Motorola SB5101U
Motorola SBG901
Netgear CMD31T
Motorola SB6121
Zoom 5341J
Zoom 5350
Zoom 5352
ZyXEL CDA-30360

Time Warner Cable Laying Groundwork for Usage Pricing, Higher Modem Fees

timewarner twcTime Warner Cable has laid the foundation to eventually begin charging broadband customers usage-based pricing, raise the modem rental fee originally introduced last fall, and continue to offer customers unlimited broadband service if they are prepared to pay a new, higher price.

Time Warner Cable CEO Glenn Britt spoke at length at this week’s Bank of America/Merrill Lynch Global Telecom and Media Conference in London about how Time Warner Cable intends to price its broadband service going forward. The moderator peppered Britt with questions as investors looked on from the audience about if and when the cable company can raise prices for its broadband service or start a usage pricing plan that will generate higher revenues based on metering customer usage.



Britt repeated his earlier assertions that Time Warner Cable has no interest in capping customer usage. In fact, the company sees fatter profits from increased usage, as long as customers are willing to pay for it.

For the first time, Britt admitted customers seeking unlimited service should be ready to pay a higher cost for that option, telling the audience Time Warner would set a premium price on the unlimited tier and offer discounts to customers seeking downgrades to comparatively cheaper, usage-based pricing plans. The company hopes this new approach will limit political opposition and customer push-back.

Britt also said there is room to grow Time Warner Cable’s monthly modem rental fee ($3.95 a month), comparing it against Comcast’s current rental fee, which is $7 a month.

Britt complained that increasing usage and demand for broadband speed was requiring the company to invest more in its broadband service, something not clear on the company’s quarterly balance sheets. Real investment, except for expansion by the business/commercial services division, has been largely flat or in decline for several years. Time Warner Cable’s broadband prices have increased over the same period.

Britt also admitted that the costs to offer the service remain comparatively minor.

“In broadband there are the costs of connectivity and peering and all that sort of stuff, but they are pretty minor compared with (video) programming costs so it appears that broadband is usually profitable versus video.”

Britt also admitted the cable industry in general is increasingly dependent on broadband revenue and the profits it generates to shore up margin pressure on the industry’s formerly lucrative video service. As programming costs increase, pressure on profits increase. Yet the cable industry remains profitable, primarily because broadband earnings are making up the difference.

The meter is lurking

The meter is lurking

“I think if you look at the U.S. cable companies the EBITDA margins have been remarkably stable over a long time period,” Britt said. “The mix has [recently] changed. The video gross margin is getting squeezed, the broadband gross margin is larger and we are growing broadband so that is helping. The voice gross margin is higher than video and a little less than broadband and until recently that has been a growing part. And then we have business services which are growing rapidly and have a high gross margin.”

Additional Quotes:

Cable Modem Equipment Rental Charge: “It was received with a minimum of push-back and we’re still actually charging less than Comcast ($7/month), so I think there is room to charge more going forward. People can buy their own if they want and a small percentage of customers have chosen to do that which is fine with us.”

Usage-Based Pricing: “In order to keep up with the demand for throughput and speed which is going up every year, we are going to have to keep investing capital which we do on a regular basis, so we are going to have to figure out how to get paid for that. I think inevitably there is going to be some usage dimension, not just speed within the package, so what we have done is to put in place pretty much throughout our footprint, with a few exceptions, the idea that you can buy the standard service that [includes] unlimited usage and that costs whatever it costs, but if you want to save $5 (and that is the first thing we put in place) you can agree to a consumption limit, and we can start expanding on that.”

“I think the key to this — there has been push-back against caps in the past — I think the reason for the push-back is it was perceived in a sort of punitive, coercive fashion. The usual rhetoric is, ‘gee 20 percent of the people use 80 percent of the bandwidth or some number like that — we need to make them stop using so much.'”

“My feeling is we actually want everybody to use more, we want to invest the capital, we just want to get paid for it. So I think we should always have an unlimited offering and that should probably cost more than it costs today as the usage goes up and then people who don’t use as much should have the opportunity to save money. They don’t have to but they can, so I think that is a much more politically and consumer-acceptable way to do it than a sort of punitive thing people talk about.”

Time Warner Cable Raising Rates in Wisconsin Again; 3rd Increase in Five Months

Phillip Dampier February 26, 2013 Consumer News, Time Warner Cable/Spectrum Comments Off on Time Warner Cable Raising Rates in Wisconsin Again; 3rd Increase in Five Months

twcTime Warner Cable subscribers in Wisconsin are facing the third rate increase since October 2012.

The cable operator has announced a $3/month rate hike for most television packages — a four percent increase for those with the popular digital variety package.

Time Warner blamed increasing programming costs in a notice attached to this month’s cable bills. The company defended the increase, stating the rate rise was half of what it could have been if the cable company tried to recoup all the programming costs incurred over the last year.

Customers facing higher cable bills and still paying regular prices should consider our advice on winning a lower rate from the company. With just 10 minutes, our readers are saving $20-50 a month on Time Warner Cable services with attractive customer retention deals.

In October, Time Warner announced it was introducing a cable modem rental fee of $3.95 a month. In November, the company raised rates on its converter boxes by $1.05 a month. The latest rate increase for cable television takes effect next month.

 Thanks to Stop the Cap! reader Nkundinshuti in Milwaukee for sending word.

Time Warner Raising Rates in the Carolinas: $90.49 for Digital Cable, $167.89 Triple Play

Phillip Dampier February 14, 2013 Consumer News, Time Warner Cable/Spectrum 2 Comments

timewarner twcTime Warner Cable customers in the Carolinas will soon pay $90.49 a month for digital cable television, including one set-top cable box. Customers who buy broadband, television, and phone service will see their monthly bill rise to $167.89.

The rate increases will not initially apply to customers on term contracts or promotional pricing until those terms expire. Others will begin to pay higher rates in March.

Almost 70 percent of Time Warner Cable’s eastern North Carolina subscribers have digital cable TV. The rate increase for television-only service amounts to an extra $5 a month or $60 a year. Triple play customers will also pay an extra $5 a month.

Time Warner’s last rate hike, not including the introduction of a $3.95/month cable modem rental fee last fall, was in late 2011.

Although Time Warner claimed increased programming costs were responsible for the bulk of the rate increases, the cable company keeps adding more channels. In 2012, Time Warner added NFL Network and NFL RedZone, both costly sports networks. In the last few months, Time Warner added an additional 30 channels to the cable lineup in the Carolinas, including a number of new HD channels and barely watched networks including Retirement Living Television and Magic Johnson’s Aspire TV.

A rate change notice mailed to customers in the Carolinas will include exact pricing changes applicable in different communities, but customers in Fayetteville and surrounding parts of the eastern Carolinas will see these changes starting in March:

  • carolinasBroadcast cable: From $16.19 to $17.99
  • Cable programming tier: From $53.30 to $54.50
  • Basic cable: From $69.49 to $72.49
  • Digital tier: From $10.68 to $9.01
  • Basic cable, when bundled with standard Internet and/or home phone unlimited nationwide: From $68.99 to $71.99
  • Digital cable includes basic cable, digital tier, digital equipment and Navigator interactive guide: From $85.49 to $90.49
  • Digital cable when bundled with standard Internet and/or home phone unlimited nationwide: $82.49 to $85.49
  • Basic cable, standard Internet and home phone unlimited nationwide: From $162.89 to $167.89
  • Cable card: From $2 to $2.50
  • Digital equipment primary outlet: From $6.82 to $8.99
  • Navigator interactive guide: Not applicable to $2.17

Customers affected should consider reviewing our tips on how to fight for a better deal from Time Warner.

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