Diana Thibodoux documents Comcast's shoddy work in her rented home.

The city of Savannah, Georgia is at the mercy of Comcast Cable, and city officials and local residents are fed up with high bills, the “don’t care” attitude from customer service, and cable and broadband that fails repeatedly, sometimes extending for weeks.

The fervor came to a head in December when city council had accumulated more than 150 complaints from local residents, deciding public hearings were warranted to deal with the city’s dominant cable company, Comcast.

“Comcast Destroyed My House”

Diana Thibodoux called Comcast to deal with a cable issue in her Ardsley Park home and never expected the service call would turn into an expensive nightmare.

Thibodoux says the Comcast technician who showed up decided on his own to rewire the house for cable and began drilling through brick and expensive plaster, stringing easily visible black coaxial cable along outside walls, inside baseboards and up over doors, all in plain sight.

“My house looks like a frat house,” Thibodoux complained to Comcast officials who were on hand to listen to customer complaints at the first of four public “town hall” meetings.

“I’ve never dealt with a company so incompetent,” another local resident said.

WTOC in Savannah shares the horror story of Diana Thibodoux, who says Comcast destroyed her house thanks to an overzealous, incompetent repairman.  (3 minutes)

At least everyone knows she has cable.

Residents used the public sessions to vent about long hold times which can extend to as much as two hours, poor quality service, and what city officials call the predictable outcome of a company that has “a stranglehold” over Savannah’s cable TV market.

“Comcast has treated Savannah like a third world country for years, delivering the best service to the wealthiest neighborhoods while leaving cable lines dangling on the ground in the areas they don’t care about,” said Stop the Cap! reader Jenny Child, who has kept a folder of papers documenting more than a dozen service calls regarding poor Internet service at her small business.

“If it rains in Savannah, and it does so a lot, our Internet goes out,” Child complains. “We have called and called but the technician shows up when it is bright and sunny and shrugs his shoulders and says there is no problem.”

Child and her two employees now handle their online business activities based on local weather forecasts.

“If the man says we’re getting rain today, we handle our Internet things real quick, because as sure as I’ll be in church on Sunday, we won’t have service after the first drops fall from the sky,” she says.

Child keeps calling Comcast when her Internet service drops out, but long hold times to reach the company’s outsourced-to-India customer service department have cut into her business.

“I can’t be sitting here on hold with Comcast for 45 minutes waiting for some representative’s nails to dry so she can pick up the phone and deal with customers,” Child complains. “It’s the biggest cable company ever, and don’t they own NBC? How many people do they have working there that they can’t answer the phone. Maybe everyone else is calling to complain too.”

Comcast’s Business Broadband Blockade Prompts Whining When Potential Competition Shows Up

Hargray is wiring downtown Savannah with fiber broadband to serve long-neglected area businesses

While fielding complaints from more than 50 local residents at a second meeting held to address complaints, Comcast executives questioned whether the city of Savannah was giving favorable treatment to Hargray, a new entrant pushing to bring 21st century broadband into the city of Savannah for businesses Comcast has refused to serve for years.

Comcast complained they didn’t mind competition, but wanted “a level playing field,” a statement that prompted an immediate and angry response from some members of the city council, who blasted the cable company for its attitude.

Aldermen Tony Thomas, John Hall, and Tom Bordeaux all noted Comcast has steadfastly refused to wire many downtown business buildings for cable broadband service, despite years of requests.  Comcast claimed the relatively low number of customers did not justify the cost to expand the service.

Alderman Tony Thomas has championed the ongoing dispute with Comcast Cable on behalf of local residents.

All three could not understand why Comcast had a sudden urgency to complain about unfair treatment when a competitor sought to provide the service they never did.

“If [Comcast] did not want to offer that service previously and someone else is coming in to provide the service, where is the sticking point?” Thomas said.

Bordeaux was more blunt in his remarks intended for Comcast.

“Tell them to sue us,” he said.

In contrast to service from AT&T and Comcast, which often markets 3-6Mbps broadband in Savannah, Hargray’s fiber broadband project will deliver speeds up to 1Gbps, first to business customers. But the company promises it is considering selling to residential customers as well.

Great Deals, But Only for “Selected Neighborhoods”

As Comcast’s bad press has become fodder for the nightly newscasts on several of the city’s television outlets, Comcast literally took to the streets to try and mitigate their public relations nightmare. In the process, they created a new one.

Councilman Tony Thomas is happy Comcast is approaching upset customers and offering them substantial discounts on their cable bill.  But he’s not happy Comcast is only extending those deals to certain customers, not all.

Thomas wants the deals offered to everyone, something that he says is not happening today.

(Courtesy: Ted Goff/newslettercartoons.com)

Andy Mackie, Comcast’s Vice President of Communications counters, “All they have to do is call 1-800-COMCAST and they will hear the same deals that the same people are getting from those reps going from door to door.”

“Comcast’s attitude in Savannah is see no evil, hear no evil,” says Jeff White, a Comcast customer who has watched the scuffle. “They don’t even admit there is a problem until it runs on the evening news and city council waves 150 complaints they are getting at the camera — the ones Comcast ignored.”

Mackie himself told WJCL-TV, which has covered the dispute with Comcast repeatedly, he was “unaware of the extent of the concerns that our Savannah customers had with us.”

Despite promises to make things right, Alderman Thomas says many complaints are still unresolved.

“We were told that all of those folks had been contacted and that their problems were being worked on. I have since found a few of these people [who] have had no contact whatsoever with Comcast,” Thomas told the TV station.

“Under no circumstances should City Council let the situation with Comcast get pushed under the rug,” one person wrote in the Vox Populi column in the Savannah Morning News. “We the people need help!”

No Help On the Way

Unfortunately for that reader, and other Savannah residents, an attempt by Savannah city officials to attract competing cable service has met with no success and no interest.  Cable operators almost never compete head to head, each respecting the service areas of fellow providers.  Hargray’s interest in Savannah is primarily serving business customers, and the option for municipal service may not be possible much longer if a bill supported by Comcast, SB 313, ever becomes law.

A compilation of news reports from WJCL, WSAV, and WTOC exploring Comcast’s performance problems in the city of Savannah, Georgia.  (15 minutes)

Time Warner Cable’s new TV App for Apple’s iPhone and certain iOS 4.3-capable iPods has arrived with streaming live cable television for authenticated Time Warner Cable subscribers with a cable-TV and broadband account.

Features on TWC TV™ include:

• Interactive program guide (IPG) – up to 7 days of listings. View detailed show descriptions including box art. Option to display “HD only” or “favorites only” by creating a favorite channel list.
• Search – search for programming by title or episode name and filter results by genre
• Set-top box tuning – tap on a network logo or “watch on TV” button within the program description to tune compatible set-top boxes directly to the channel
• DVR management – schedule one-time and series recordings on compatible DVRs directly from the interactive program guide. Tap on the “DVR” button to see a list of all upcoming recordings and make changes or cancel recordings
• Live video streaming of many cable networks

Time Warner wants customers to be so excited, it included a customer poll in its latest newsletter e-mailed to customers, with one notable possible impression left completely off the menu:

You just gotta love it: Time Warner's especially-enthusiastic customer poll can't imagine a possibility that customers might not love their latest app.

Customers who could not find a button to express concerns about the problems they’re experiencing with the app took to the company’s blog instead.  Among the issues raised by subscribers:

• The app does not work on older generation Apple devices that do not support at least iOS v4.3;
• Local channels and certain cable networks are not available for streaming;
• Customers are limited to in-home viewing only;
• The app does not work on jailbroken devices;
• Certain Time Warner-provided set top boxes are reportedly not compatible with TWC TV, a problem that usually manifests as no access to the interactive program guide or DVR settings.

The app is available at no charge from the iTunes or Android store.  Android device owners can expect a live streaming-capable version of TWC TV in the near future.

AT&T’s vision for 21st century broadband will not extend beyond the 30 million homes that can or will soon be able to access the company’s fiber-to-the-neighborhood service U-verse.

Speaking on an investor’s conference call to discuss 4th quarter earnings results, AT&T CEO Randall Stephenson announced the expansion of its fiber to the neighborhood service is now effectively over.

“Our U-verse build is now largely complete, so we have in place an IP video and broadband platform that reaches 30 million customer locations, which gives us significant headroom now to drive penetration,” Stephenson said.

In practical terms, Stephenson’s announcement means AT&T will continue work on building its U-verse platform in cities where the service is already available, but other areas are unlikely to see an introduction to the service anytime soon.  AT&T President John Stark originally envisioned U-verse for 30 million homes and that vision remains unchanged today.

AT&T’s news for its rural customers is worse.  The company admits it has run out of ideas how to provide rural broadband to its landline customers.

“We have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?,” Stephenson said. “And we’ve all been trying to find a broadband solution that was economically viable to get out to rural America and we’re not finding one to be quite candid.”

If you can buy it at any price

Stephenson was hoping LTE 4G wireless service could provide a rural broadband solution, a central theme in AT&T’s lobbying campaign for a buyout of T-Mobile, since abandoned.

“That having been set aside, now we’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now,” Stephenson said.

Stephenson earlier told a July meeting of the National Association of Regulatory Utility Commissioners that DSL, the most common form of broadband in rural America, was “obsolete.”

The two announcements immediately raised questions in South Carolina and Georgia where AT&T and other telecommunications companies are fiercely lobbying for restrictions on community-owned broadband.

Broadband advocates in both states are wondering why the company is spending money trying to stop other broadband projects while not spending on building better broadband service in those areas themselves.

While simultaneously complaining about the spiraling costs of sports programming such as MSG Networks, the nation’s two largest cable operators are planning to cut checks worth $80 million to help bail the NY Mets baseball team out of some of its long term debt.

The New York Times reports both Comcast and Time Warner Cable are preparing to funnel funds into the team through regional sports network SNY.

Time Warner Cable and Comcast are nearing a plan to finance SNY’s purchase of four shares in the Mets, worth $80 million, said one person e with knowledge of the plan who was not authorized to speak publicly.

[...] That means they will have much-needed cash to pay off their substantial debts. But it would be a slightly quirky way of doing it. The deal would mean 16 percent of the Mets would be owned by SNY. The Mets’ parent company, Sterling Equities, owns 70 percent of the network.

[...] Lee Berke, the president of a media consulting company, said that Time Warner Cable and Comcast “don’t want to see the team stumble as it has been, because it directly impacts what they’re putting on TV. This is shaping up as a multiyear downswing for the Mets, and this is a way to keep them above water.”

[...] As for Time Warner Cable and Comcast, it was not immediately clear why they would not invest directly in the Mets. But the two companies clearly want to put money into Wilpon’s financially beleaguered hands (the club has lost some $120 million in the last two years), even if it has to be routed through SNY, to ensure that the team meets its $200 million goal.

[...] Together, Time Warner Cable and Comcast own about 30 percent of SNY. The network started carrying Mets games in 2006.

That investment comes at the same time cable operators are increasingly vocal about sports programming costs.

“ESPN, through … sheer muscle, has been able to say to us, ‘You will carry this service on the lowest level subscription you offer, and you will make all of them pay for it,’” Matt Polka, CEO of the American Cable Association, a trade group told Newsweek. “My next-door neighbor is 74, a widow. She says to me, ‘Why do I have to get all that sports programming?’ She has no idea that in the course of a year, for just ESPN and ESPN2, she is sending a check to Disney for about $70. She would be apoplectic if she knew … Ultimately, there’s going to be a revolt over the cost. Or policymakers will get involved, because the costs of these things are so out of line with cost of living that someone’s going to put up a stop sign.”

Cable analysts continue to be astonished by an inflation rate in sports programming rates that rivals health care costs.

“Every time [there is] a huge increase we can’t believe it, and then there’s another huge increase,” says Laura Martin, an analyst with investment bank Needham & Co. “The rapidly rising cost of sports, especially the new NFL contracts, increases the likelihood that sports will be forced by the government to be on a different tier within three years, by our estimates.”

Cable industry investment in sporting teams is now becoming a familiar headline.  In early January, the Los Angeles Times reported Time Warner Cable was considering buying the Los Angeles Dodgers at a price that could exceed $2 billion.  It would compliment two new regional sports cable channels Time Warner plans to launch in southern California featuring the Los Angeles Lakers.

AT&T 3G MicroCell

AT&T has lost another customer.

PC World‘s Tony Bradley noticed reception on AT&T’s network in suburban Houston has been losing bars in more places than it has maintained over the last few years.

“[...] for reasons unknown to me the AT&T network in my area has been getting steadily worse. There have been a couple of weak spots in the same location for years. Rather than improving and eliminating those weak spots, the weak spots became dead zones…and then proliferated.

I don’t live in the boonies. I live in suburban Houston in a community that is very near a major highway, and yet there are four or five areas with literally no service. I could almost understand if the signal decreased, or if it switched from 3G to the older Edge network in places, but in 2012 in an affluent suburb near a highway there is no excuse for a company like AT&T to have any area where my phone literally displays “No Service”.

Even with the growing dead zone epidemic, I was still reluctant to switch. I maintained that the grass is always greener, and that I was better off to stick with the devil I know. That is, until I moved.

I only moved four miles, and I am still in the same community I was in before. However, in my new house the AT&T signal is too flaky and unreliable. I have to walk to special places in my house to get a workable signal, and even then I am told constantly that I am “breaking up” by the person on the other end of the line. I often miss calls because there is no signal and my phone doesn’t even ring. I don’t realize I even had a call until I receive the voicemail.”

AT&T’s response to these kinds of reception problems is to suggest customers purchase one of their 3G MicroCell units, which delivers a wireless signal inside your home or business connected through your broadband account.  But Bradley took exception that AT&T would charge him $200 (negotiated down to $100) and a monthly service fee just to mitigate the company’s own reception problems.  AT&T has since lost Bradley as a long-lasting customer — he took his business to Verizon Wireless, which offers better reception in his neighborhood.

The columnist cannot understand why AT&T would treat a long-term customer so poorly.

“AT&T could have kept me happy, but chose to let me leave instead,” Bradley writes.  “So, let me get this straight. AT&T isn’t capable of delivering the service I am already paying for, and the proposed solution is that I spend $200 (or $100 after a lengthy and heated debate), plus additional money every month for the privilege of routing my calls over the broadband Internet service I am also paying for? That was really the last straw for me with AT&T.”

10-digit dialing is a nuisance in Canada too, where British Columbia and Alberta customers were told to dial the area code for every call.

Verizon FiOS’ “digital phone” product is a far cry from Verizon’s traditional landline service.  Some central New York customers now getting hooked up to the fiber-to-the-home service report they are frustrated because they have to dial an area code for every phone call, even those to friends and neighbors right next door.

Verizon told WSYR-TV that unlike traditional landline service based in your neighborhood, Verizon FiOS phone service is, in fact, a nationwide Voice Over IP (VOIP) service, and uses servers across the country to process phone calls.  Although many traditional VOIP services have since learned ways around the area code limitation, Verizon has not made a similar effort to allow customers to pre-designate an area code.  That would permit Verizon’s servers to assume any seven digit number dialed was within a particular area code and complete the call accordingly.

Instead, Verizon advises customers to learn how to use the included “speed dial” feature to make dialing more convenient.

Verizon’s competitors, including companies like Comcast and Time Warner Cable are quick to point out seven digit dialing is available from them, except where multiple overlaid area codes in the same geographic area exist.  So far, parts of western and central New York have endured area code splits, but for now each service area maintains just a single area code.

WSYR in Syracuse answers viewers’ suggested stories.  Today, it’s about why Verizon FiOS customers are forced to dial 10 numbers for every phone call.  (1 minute)

HissyFitWatch: Damn you FCC!

For the first time in a long time, AT&T did not get what it wanted from Washington regulators and legislators. The repercussions of the company’s failure to secure its controversial merger with Deutsche Telekom’s T-Mobile USA has been one HissyFit after another, including the resignation-retirement of Forrest Miller, a 30-year veteran who was the company’s head of corporate strategy and mergers and acquisitions. After heads rolled, there was the small matter of the multi-billion dollar “breakup fee” payable to T-Mobile. Now someone has to pay:  You.

At Stop the Cap!, we scrutinize quarterly conference calls at major telecommunications companies so you don’t have to. We’ve sat through renditions of “we’re sorry” when Charter Communications’ executive management allowed the company to be flushed into bankruptcy, we’ve heard the Excuse-o-Matic from Frontier Communications about why their broadband service is woefully overloaded with promises of better days ahead, and a whole lot of creative spin to emphasize cord-cutting-bad-news at the nation’s largest cable companies isn’t really a problem all — it’s the housing market, it’s the ‘seasonal residences’ or ‘college students going home’ problem… or sunspots.  Who really knows?  It’s definitely not that they’re charging too much.

Whether it has been Time Warner Cable’s Glenn Britt, or Verizon’s Ivan Seidenberg, chief executives always project a cool, calm, steady authority that leaves shareholders and financial analysts with an impression the adults are in charge, even if they tell little white lies to keep the stock price up.

And then there is AT&T’s chief executive — Chairman Emperor Randolph Stephenson, who used the occasion of AT&T’s 4th Quarter earning results conference call to become a spectacle that brought the house down.

As we look ahead, the issue that gives me the most concern, quite frankly, isn’t our ability to execute. The #1 issue for us as we move forward, and for the industry, I believe, it continues to be spectrum. This industry continues to see just explosive mobile broadband growth and is providing one of the few bright spots in the U.S. economy, but I think we all understand this growth cannot continue without more spectrum being cleared and brought to market. And despite all the speeches from the FCC, we’re all still waiting.

He didn’t stop there.  In an impromptu rant, Stephenson lectured Washington from afar, excoriating all-concerned for failing to agree with their multi-million dollar propaganda campaign that merging America’s second and fourth largest wireless carriers in a market with just four national providers was good for consumers and would bring wireless nirvana to the heartland and lower prices for all.  Evidently America was not ready to accept the word of AT&T-compensated telecommunications experts at the NAACP, the Special Dream Farm, the Shreveport-Bossier Rescue Mission and cattle ranchers a combination of T-Mobile’s spectrum and AT&T’s would ease the capacity crunch, bring 4G to Beaver, Oklahoma, and stop driving AT&T customers nuts with dropped calls and reception black holes.

How it usually works in Washington.

AT&T would have gotten away with their merger if it weren’t for those darned kids (consumers), the FCC and Justice Department ruining everything.

“The last significant spectrum auction was nearly 5 years ago now. And this FCC has made it abundantly clear that they’ll not allow significant [mergers and acquisitions] to help bridge their delays in freeing up new spectrum,” Stephenson complained. “So in the absence of auctions, our company and others in the industry have taken the logical step of entering into smaller transactions to acquire the spectrum we need to meet this demand. But even here, we need the FCC’s action and leadership, and unfortunately, even the smallest and most routine spectrum deals are receiving intense scrutiny from this FCC, oftentimes taking up to a year and sometimes longer before these are approved.”

Stephenson ignores the fact the FCC has rubber-stamped a number of wireless mergers over the past several years, which is why consumers no longer buy competitive service from Cingular, Alltel, Dobson Communications, Centennial Wireless, West Virginia Wireless, Unicel, Ramcell, or SureWest Wireless.  All of these former competitors are now a part of the nation’s two largest carriers AT&T and Verizon Wireless.  Even more impressively for the man in full denial, the FCC just quickly and quietly approved AT&T’s spectrum transfer purchase from Qualcomm.

“Now I hope I’m wrong, but it appears the FCC is intent on picking winners and losers rather than letting these markets work,” the chief executive said.

In other words, AT&T’s definition of letting markets “work” means letting them write their own laws governing the pesky concepts of antitrust, monopoly/duopoly market power, anti-competitive activity, etc.  AT&T has no problem picking winners and losers in the community-owned broadband front, lobbying its way through state legislatures trying to block new networks from being built, even while slapping usage limits on their own customers’ DSL and U-verse accounts because of “capacity” concerns.

In the wireless marketplace, Charlie Sheen would declare AT&T “winning,” considering it has achieved 1/3rd of the U.S. wireless market.  It wants more of course, even though Trefis, a market research firm, noted that had the FCC granted Stephenson’s wishes for three national carriers, AT&T, Verizon Wireless and Sprint “will control more than 90% of the U.S. wireless market, resulting in lower competition and higher prices for consumers.”

No problem there.

Stephenson also noted a lot of the company’s close friends were on their side (and handsomely compensated along the way we might add):

A lot of recent comments and speeches about certain members of this FCC suggest that they and not Congress should decide how spectrum auctions are conducted, including who can participate and what the conditions should be for participating. Meanwhile, we pile more and more regulatory uncertainty on top of an industry that is a foundation for a lot of today’s innovation*, making it difficult for all of us to allocate and commit capital. And in this industry, we all know capital investment equals jobs*. So the end result of this is we have a industry that is just really stuck in terms of creating real capacity*.

(*- except when community-based, publicly-owned networks are involved. They must be stopped at all costs.)

No matter that AT&T continues to sit on earlier spectrum acquisitions it continues not to use.  It only grudgingly agreed to roaming agreements with the company it preferred to dismantle altogether: T-Mobile.  In earlier, accidental disclosures, it was clear even before the merger and the newly-reticent FCC, AT&T preferred to raise prices, restrict service, and hang onto its profits instead of sufficiently investing them back into its network.  Verizon Wireless has a 4G network, no dropped-call-syndrome, fewer signal black holes, and no apparent spectrum panic attacks.

Part of Sprint's fact sheet opposing the merger deal.

AT&T bit off more than they could chew through, and now faces the humiliating prospect of paying off its gambling debts.  Only now, AT&T has effectively declared they are not going to pay for their costly mistake. Customers are.

Stephenson: Payback time.

The company introduced new, higher prices for its smartphone data plans this month, and intends to continue to increase prices and crack down on data use with speed throttles in 2012 and blame it on the “spectrum crunch”:

“In a capacity-constrained environment, usage-based data plans, increased pricing, managing the speeds of the highest volume users, these are all logical and necessary steps to manage utilization,” Stephenson said.

But AT&T’s chief executive also told shareholders repeatedly those increased prices were key to boosting company revenue and profits:

“We’ll expand wireless and consolidated margins. We’ll achieve mid-single-digit EPS growth or better. Cash generation continues to look very strong again next year. And given the operational momentum we have in the business, all of this appears very achievable and probably at the conservative end of our expectations.”

AT&T’s chief financial officer John J. Stephens put a spotlight on it:

In 2011, 76% of our revenues came from wireless and wireline data and managed services. That’s up from 68% or more than $10 billion from just 2 years ago. And revenues from these areas grew about $7 billion last year or more than 7% for 2011. We’re confident this mix shift will continue. In fact, in 2012 we expect consolidated revenues to continue to grow, thanks to strength in these growth drivers with little expected lift from the economy.

[...] We also continue to bring more subscribers onto our network with tiered data plans, more than 22 million at the end of the quarter, with most choosing the higher-priced plan. As more of our base moves to tiered plans and as data use increases, we expect our compelling [average revenue per subscriber] growth story to continue.

While a downturn economy continues to afflict middle and lower income America, it doesn’t seem to be doing much harm to Time Warner Cable’s profits.

America’s second largest cable operator saw profits jump more than $150 million higher to $564 million last quarter, compared to $392 million at the same time the year before.  Time Warner’s revenue grew by 4% to $5 billion in the fourth quarter alone.  In fact, the company is performing so well, executives announced they would return $3.3 billion in earnings to shareholders through share buybacks and dividend payouts, in addition to the forthcoming $4 billion share repurchase program.  Wall Street liked what they saw, boosting shares 7% after the company posted its quarterly and annual results on its website.

Time Warner’s biggest success story remains its broadband service, which consistently delivers the company new subscribers and has helped offset the loss of video subscribers, numbered at an additional 129,000 who “cut the cord” in the fourth quarter of 2011.

Time Warner Cable earned $1.148 billion in revenue from broadband in the last quarter, an increase of 8.6% over last year.  For 2011, the cable operator earned $4.476 billion selling residential Internet access, also representing an 8.6% growth rate over earnings across 2010.

The company attributed this to “growth in high-speed data subscribers and increases in average revenues per subscriber (due to both price increases and a greater percentage of subscribers purchasing higher-priced tiers of service).”

The increased costs incurred by Time Warner Cable to upgrade and expand their network and cable systems were well offset by the aforementioned price increases and subscriber upgrades.  The company increased capital expenditures to $942 million in the last quarter.  Results over the full year show just a 0.2% overall increase in capital investment, now at $2.937 billion.  System upgrades, Time Warner’s plans to move their systems to all-digital cable television, the ongoing rollout of DOCSIS 3.0, new home security and automation services, and investment in online video and data centers are included in these costs. But a more significant reason for the increase comes from the company’s ongoing expansion into business services, which requires wiring more office buildings for cable.

Britt

Time Warner Cable CEO Glenn Britt led off the conference call with investors with an explanation for the increased expenses.

“We plan to continue our aggressive growth in business services by expanding product offerings, growing our sales force, improving productivity and increasing our serviceable footprint. This means continued investment, both in people and in capital,” Britt said. “Projects include expansion of our content delivery network, which powers our IP video capability, our 2 international headends, completion of DOCSIS 3.0 deployment, and conversion to all-digital in more cities. We expect to be able to accomplish this while maintaining the capital spending of the last 2 years — that is, between $2.9 billion and $3 billion, which represents a continued decline in capital intensity.”

Nothing in Time Warner Cable’s financial disclosures provides any evidence to justify significant changes in their pricing model for broadband, which currently delivers flat rate, unlimited service to customers at different speed rates and price points.  In fact, the company’s investments in DOCSIS 3.0 upgrades, which can support faster broadband speeds and a more even customer experience, have already paid off with subscriber upgrades.

Robert D. Marcus, president and chief operating officer, noted subscribers are increasingly considering faster (and more profitable) broadband tiers.

“Once again, high-speed data net adds over-indexed to our higher-speed tiers,” Marcus noted. “Roughly 3/4 of residential broadband net adds were Turbo or higher. And DOCSIS 3.0 net adds accelerated for the eighth consecutive quarter to an all-time high of 54,000.”

Time Warner’s biggest challenges continue to be the current state of the economy, which has made subscribers much more sensitive to pricing and rate increases, and cord cutting traditional cable television service.

“One group is extremely price-conscious, perhaps due in part to the ongoing economic malaise,” Britt said. “The other group is willing and able to pay for more features and service. We’re going to focus more attention on products and services that best meet each group’s needs rather than pursuing traditional one-size-fits-all solutions.”

That is clearly evident in the company’s bundled service options, including increasingly aggressive discounted pricing for new customers and for those threatening to leave and Time Warner’s super-premium Signature Home service, which delivers super-profits.  Average revenue from Signature Home customers averages $230 a month.  Traditional “triple play” customers who buy phone, Internet, and cable service only bring the cable company an average of $150 a month.

The company’s plans for 2012 do not include a specific statement about implementing an Internet Overcharging scheme like usage billing or usage caps.  But it is unlikely such an announcement would be made explicitly at an earnings announcement.  In the last quarter, Stop the Cap! reported comments from chief financial officer Irene Esteves that the company was still very interested in the concept of selling broadband with usage pricing as a “wonderful hedge” against cord-cutting.

Esteves told a UBS conference she believes usage-based pricing for Time Warner Cable broadband will become a reality sooner or later.  Charging “heavy users” more would already be familiar to consumers used to paying higher prices for heavy use of other services, and she claimed light users would have the option of paying less.

But despite favorable reception to the idea of usage pricing by Wall Street, Esteves acknowledged the company’s past experiments in usage pricing didn’t go as planned, and she suggested the company will introduce usage pricing “the right way rather than quickly.”

Other developments and highlights

• 

  Time Warner faces Verizon's $500 rebate offers in NY City

  Time Warner Beats Up DSL: Time Warner Cable’s most lucrative source for new broadband customers comes at the expense of phone companies still relying on DSL to deliver broadband service.  As DSL speeds have failed to stay competitive with cable broadband, the cable operator has successfully lured price-sensitive DSL customers with attractive ongoing price promotions delivering a year of standard 10/1Mbps cable Internet access for $29.99 a month, often less expensive than the total price of DSL service that frequently delivers slower speeds.

• Stalled Verizon FiOS deployment has limited the amount of competition Time Warner faces from fiber optics to just 12% of the company’s service area.  Where competition does exist, especially in New York State, Time Warner has had to stay aggressive to retain customers with deeply-discounted retention deals to keep up with Verizon’s high value rebate gift cards and new customer offers.  AT&T now provides U-verse competition in about 25% of Time Warner’s service area, but like satellite, AT&T U-verse pricing is less heavily discounted.
• Retention pricing and new customer deals deliver lower prices than ever.  In November, Time Warner started selling a triple play offer for $89.99 a month that includes DVR service and now also includes deep discounts or free 90 day trials of premium movie channels. That is $10 less than the same time last year.
• Premium movie channels continue to take a major hit as subscribers try to reduce their bills, especially after Time Warner began increasing rates on those networks.  HBO now sells for as much as $15 a month in many areas.  Time Warner Cable hopes to ‘revitalize’ premium movie channels with online video services like HBO and Max Go and promotional discounts.
• Long-standing customers of Time Warner’s “triple play” package received a “thank-you gift” — free voice-mail in 2011, something that will continue in 2012.
• Customers signing up for Time Warner’s premium-priced Wideband (50/5Mbps) service ($99/month) are being offered free phone service to sweeten the deal.

What to Expect in 2012

• Time Warner is moving forward to create its own Regional Sports Network for southern California;
• Los Angeles will continue to see large-scale expansion of Time Warner’s growing Wi-Fi network, available for free to premium broadband customers, with thousands of new access points on the way;
• The cable company will introduce Wi-Fi service in other, yet-to-be-announced cities in 2012, with up to 10,000 access points planned.
• Time Warner will be making its “digital phone” product more attractive with lower prices and more features, especially in product bundles, as consumers increasingly discard landlines;
• Expect to see the end of analog cable television in a growing number of Time Warner Cable areas, requiring customers to use new equipment (initially provided free) to continue watching on older televisions and those without existing set top boxes.
• Time Warner will continue to expand its “TV Everywhere” project to include live streaming TV on smartphones, video game consoles, computers, and more.  On-demand programming will be available as well sometime this year across all platforms.
• A nationwide channel re-alignment will move subscribers to consistent channel numbers across the country, in part based on grouping them together into “genres.”  Many areas already have digital cable channels arranged this way, but now they will be consistent from coast-to-coast.
• Time Warner will complete DOCSIS 3 deployment in all areas this year.
• The company is moving to introduce 2-hour service call windows almost everywhere, and 1-hour windows and weekend appointments in some markets.  Several cities now allow customers to select specific times for service appointments.
• Self-install kits will become increasingly available for different products, allowing customers to install equipment themselves;
• Time Warner’s IntelligentHome home security, monitoring, and automation product will expand beyond its launch markets (Syracuse and Rochester, N.Y., Charlotte, N.C. and Los Angeles/Southern Calif.).  The product currently has customers in the thousands, considered relatively small.  But Time Warner has learned subscribers are using the service in surprising ways, which will let them adapt their marketing.  Among the most popular features: remotely watching your pets at home.

Most Memorable Quote: “I think, more than anything else, our pricing strategy is dictated by what the marketplace will bear as opposed to what our underlying cost structure is.” – Robert Marcus, president and chief operating officer, Time Warner Cable

Christmas in January.

AT&T and some of the company’s best friends in Congress have attached wireless America’s legislative wishlist to the must-pass Payroll Tax Bill that will temporarily reduce Social Security taxes for millions of Americans.  Now AT&T and other cell phone companies want their piece of the action.

Michael Weinberg at Public Knowledge has sounded the alarm attacks on Net Neutrality, spectrum auctions, and White Space Wi-Fi have turned up in amendments to a bill that Big Telecom is convinced must pass.  Weinberg explains:

No Net Neutrality Protections.  Forget your feelings about the FCC’s formal Open Internet Rules.  An amendment by Rep. Marsha Blackburn would prevent any restrictions on network management, block any requirements to make connectivity available on a wholesale basis (which would increase competition), and stop the FCC from passing a rule allowing users to attach any non-harmful device to the network.  As a result, the winner of the spectrum auction would be able to throttle, block, and discriminate however it sees fit – something that runs counter to any definition of network neutrality.

No Safeguards Against Further Consolidation.  It is no secret that one of the reasons that there are only four nationwide wireless carriers (and two dominant ones) is that only a few companies control most of the available spectrum in the United States.  This amendment would prevent the FCC from making sure that new spectrum goes towards new or under-provisioned competitors instead of being further consolidated by AT&T and Verizon.   That’s probably why AT&T is pushing so hard for this amendment.

No Super-Wifi.  One of the greatest boons of the transition from analog to digital TV broadcasting was supposed to be the creation of unlicensed “whitespaces” or “super-wifi.”  This new spectrum – which is much better at communicating long distances and through walls than current wifi spectrum – would be used cooperatively by everyone and usher in a new era of wireless devices.  However, a third amendment would destroy the FCC’s power to allocate some of this great spectrum for unlicensed uses.  That means that opportunity would simply pass us by.

Weinberg notes consumer advocates like Public Knowledge are now fighting all three amendments.  There are opportunities to strip them from the bill as it works its way through the legislative process.  Those backing the amendments hope the public doesn’t find out.

They just did.

A group whose national umbrella organization has close connections to the nation’s largest phone companies estimates 5.3% of residents in the state of Tennessee now have access to world-class fiber broadband at speeds up to 1Gbps, but no thanks to AT&T or Comcast.

As part of updated broadband availability estimates, the group noted that only a fraction of the state gets access to the community-0wned Chattanooga-based utility that provides fiber to the home service, EPB.

Key findings from this update include:

• 95.2% of Tennessee households have access to fixed broadband service of at least 768 Kbps downstream and 200 Kbps upstream (excluding mobile and satellite services).
• 93% of Tennessee households have access to fixed broadband service of at least 3 Mbps downstream and 768 Kbps upstream (excluding mobile and satellite services).
• 4.8% of Tennessee households remain unserved by any fixed broadband provider, representing approximately 120,000 unserved households that do not have access to a fixed wireless or wired broadband service offering (excluding mobile and satellite services).
• Across rural areas of Tennessee, the percentage of unserved households by any fixed broadband service is 8.4%, representing approximately 110,000 unserved rural Tennessee households.
• 5.3% of Tennessee households now have access to broadband service of at least 1 Gbps, marking the first time in Tennessee.

Most households receiving the slowest speeds get them from phone-company marketed DSL service and some fixed wireless ISPs operating in the state.

In Chattanooga, consumers have a choice between AT&T U-verse in selected neighborhoods, Comcast Cable, or EPB Fiber.  Recently, Christopher Mitchell at Community Broadband Networks alerted us that The Chattanoogan newspaper shared the difference between Comcast and EPB customer service:

You’ve got to be kidding me, Comcast! Several days ago our On Demand stopped working with a message to contact customer service and report that error seven occurred.

My husband called and after being given the self-help/troubleshoot option over the phone selected and requested a signal to be re-sent to the box. The box had already been unplugged, the appropriate amount of time waited, and the box plugged back in. No luck. The box was sent the refresh signal…it didn’t work; surprise.

So, he called back and spoke with someone who wanted to re-send the signal again and if that didn’t work then a technician would be needed.

[...]

I called Comcast this morning to schedule the technician to be told that it was going to cost me $30 for them to come out regardless of the problem. Let’s see, Comcast’s DVR box that they own and I rent shot trouble and I have to pay them another $30; I asked at least twice – “if Comcast’s equipment is the problem, I still have to pay $30?” “Yes, mam”.

They should bring out a replacement DVR for me, adjust my account for the days we’ve been without the On Demand plus an amount plus or minus $30 for the time we’ve had to take to mess around with this; not counting the time that will have to be arranged to be taken to have their technician come out.

Since I’m going to have to arrange to take more time, maybe we’ll just have someone else come out and put in something other than Comcast and they can have their broken DVR and all their other stupid little additional cable boxes returned to them.

Melanie Henderson
Hixson

EPB provides municipal power, broadband, television, and telephone service for residents in Chattanooga, Tennessee

The community-owned broadband alternative, EPB Fiber

We experienced the same “customer service” issues with Comcast. We finally cancelled our service when the tornado came through our neighborhood and we were forced to move for six months. When we finally moved back home we became EPB customers.

We have had one instance where we needed to contact customer service, and the problem was fixed quickly and easily by the most polite customer service rep I’ve ever dealt with.

Comcast came by recently to offer us a “substantial savings” if we’d make the switch back to them. My question was, why now? I was a customer for years and treated poorly as rates increased exponentially. Now the offer the discount? No thanks.

For the $5 extra per month that we pay for EPB, we receive better features, prompt and polite customer service, and an all around trouble free experience. Thanks EPB!

Leah Crisp
Harrison