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Charter Announces Further Time Warner Cable Upgrades Are On Hold Until 2017

Phillip Dampier August 9, 2016 Broadband Speed, Charter Spectrum, Consumer News 9 Comments
Maxx is dead.

Maxx is dead.

Charter Communications executives told Wall Street analysts that Time Warner Cable’s upgrade program has been suspended, to be replaced with Charter’s own previously announced plan of upgrades and “simplified pricing” sometime in 2017.

Time Warner Cable was responsible for a lot of the capital expenditures underway at the combined Charter-TWC-Bright House venture just before the merger deal closed in May. Christopher L. Winfrey, Charter’s chief financial officer and executive vice president, told investors Time Warner was on a small spending binge, rushing in orders for new cable broadband technology to hurry Maxx upgrades to customers before Charter took over operations.

Winfrey eased Wall Street’s concerns about Time Warner Cable spending 21% of revenue on capital expenditures during the last quarter, promising the more modest upgrades forthcoming from Charter will allow for future spending reductions. More immediately, Winfrey reassured investors the days of Time Warner Cable’s aggressive Maxx upgrade effort was over.

“There is, obviously, the significant amount of all-digital activity that was continuing at TWC,” Winfrey told analysts. “And that will be largely put on hold as we put in the Charter all-digital strategy the beginning of next year.”

Charter plans to cancel upgrades that would have established multiple Time Warner Cable speed tiers ranging from 50-300Mbps. Instead, Charter will roll out two speed tiers to Time Warner Cable customers — 60Mbps for around $60 a month and 100Mbps for around $100 a month for broadband-only customers.

Rutledge

Rutledge

“In the fall, we will begin to rebrand Time Warner Cable and Bright House and launch our Spectrum pricing and packaging in a number of key markets totaling over 40% of our acquired passings with the remainder in the first half of 2017,” said Charter CEO Thomas Rutledge.

Customers in certain states — notably New York — will be able to keep their current Time Warner Cable package for several years. Customers in other states will be pushed harder to transition into Charter’s simplified tiers.

“In 2017, the all-digital project at Time Warner Cable and Bright House markets will use the Charter all-digital strategy, which uses fully functioning two-way set-top boxes with video on demand and advanced guide functionality on every TV outlet,” said Rutledge. “We expect the project to be completed by 2018. We will also extend our practice of performing electronic connections instead of physical truck rolls as we go all-digital, allowing us to fully scale our self-installation and self-service practices.”

Charter only advertises 60Mbps internet access to most customers on its website.

Charter only advertises 60Mbps internet access to most customers on its website.

“Our plan is to have Spectrum Guide available in most Legacy Charter markets by the end of this year,” added Rutledge, referring to the on-screen channel guide. “We will launch Spectrum Guide in TWC’s larger markets by the middle of 2017 and other TWC and Bright House markets following through the year and likely continuing through 2018 as we complete the all-digital project.”

Rutledge was critical of Time Warner Cable and Bright House’s myriad of service tiers and prices.

“Through different metrics and stages of development, we can see that TWC and more recently, Bright House had both become reliant on rate increases and retention offers, each of which has various short and long-term effects including encouraging customers to initiate more transactions,” Rutledge said. “We’ve addressed these types of issues at Legacy Charter and we’ll do so at TWC and Bright House during the Spectrum pricing and packaging migration.”

That means Charter intends to dramatically cut the number of service and pricing options and convince customers to stop switching to promotional offers that they eventually abandon when the promotion ends. Charter prefers stable prices for services and reducing the amount of customer retention packages they have to offer to price-sensitive customers. As prices reset and increase, increased call volumes results as customers negotiate for a better deal. Removing the incentive to negotiate is seen as a cost saving maneuver and keeps customers on Charter’s regular price packages longer.

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Ty
Ty
7 years ago

weird how the same day Charter announces this WOW! announces they’re rolling out 1Gbps internet to several markets by the end of 2016 and more (hopefully Columbus Ohio) in 2017! and WOW! now has 600mbps internet available! WOW!’s 300mbps internet is only $74.99 a month (internet only) so Charter will have an extremely hard time getting people to pay $100 for 100mbps internet AND WOW!’s 600mbps internet is $94.99 a month so Charter will likely fail big time here in Columbus Ohio

Mike D.
Mike D.
7 years ago

Eliminating the Retention Dept. will not save them money unless the tiers are low enough to be competitive with other providers who do have Retention Dept’s. (You know, the providers who actually want to keep customers).
Unfortunately for Spectrum nowhere in the last 40 years has there been a cable company that wasn’t charging more for far less.

Seluryar
Seluryar
7 years ago

Saw this coming a thousand miles away that they were going to price their speeds this way, And I am willing to bet that even if they did continue with Maxx upgrades across the country, they would have priced it the same way doing away with the free speed upgrade part.(as in $200 for 200mbps and $300 for 300mbps)

James R Curry
James R Curry
7 years ago

“Customers in certain states — notably New York — will be able to keep their current Time Warner Cable package for several years. Customers in other states will be pushed harder to transition into Charter’s simplified tiers.”

Very glad that I’m waiting for my install date from Google Fiber, now.

michael
michael
7 years ago
Reply to  James R Curry

We are in NYC. Going from bad to worse – as much as I do not like TWC, Charter seem they will offer less but still charge more. Finally FIOS almost finished in our neighborhood. From looks of the plans laid out I will have to lock myself into a long contract but will be worth it. My TWC bill is so high and I will pay less than half for the same services with FIOS

John
John
7 years ago

Oh, there will be a retention dept. or retention activities of some sort, down scalers, and people who cannot afford
price points will have to offered a sticky alternative or they leave.

Chris Grant
Chris Grant
7 years ago

That pricing won’t fly in Cincinnati. I can get 1 Gbps down/250Mbps up for $100 from Cincinnati Bell, for standalone internet

SteveP
SteveP
7 years ago
Reply to  Chris Grant

I’m not sure TWC ever did care much about Cincinnati… after the Maxx program being around for 2.5+ years, they never did give me any indication of the upgrade even being scheduled. I’m going for Fioptics when it gets to my area.

SendDavid1
SendDavid1
7 years ago

If you’re in NY, you can submit a claim for a refund with David, Inc.–50% of claims get refunded: http://bit.ly/2c6NxVl

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