The days may be numbered for Sunflower Broadband

A Kansas cable system notorious for Internet Overcharging is nearing a deal to be acquired by a cable overbuilder that does not usage cap broadband customers.

Sunflower Broadband, an independent cable system providing cable, phone, and broadband service to 30,000 Lawrence residents, is expected to be acquired by Georgia-based cable overbuilder Knology, which has been on a buying spree of late.  The asking price – $127 million dollars, according to a report in the cable trade journal Multichannel News.

Sunflower has been overcharging their broadband customers for years with schemes like usage caps and a flat rate service plan that delivers speed throttled broadband service to customers.  Sunflower has remained a hot topic for Stop the Cap! because we hear so many complaints from their long-suffering customers.  In fact, no independent cable operator has generated more reader complaints than Sunflower Broadband, almost all targeting the company’s unjustified usage caps.

Broadband Reports reminds us Sunflower was among the first to implement the idea of low caps and high overages ($2 for each additional gigabyte).  Customers also routinely complain about Sunflower’s stingy upstream speeds, maxed out at just 1Mbps for their $60 Gold tier.

None of the details about Sunflower Broadband’s impending sale can be found in the local newspaper — the Lawrence Journal-World or the local “Channel 6″ news operation.  That’s ironic, considering the same parent company that owns Sunflower Broadband, The World Company, also happens to own the newspaper and Channel 6.  It took a cable trade publication based hundreds of miles away to break the story — not exactly a shining moment for journalism in Lawrence, especially considering an LJWorld reporter need not break a sweat to chase the story.

Part of the reason for the sale may have been AT&T bringing U-verse competition to Lawrence.  U-verse does not have customer unfriendly usage limits.  With AT&T ready to usher away many of Sunflower’s customers, management may have decided now was a good time to sell.

The good news for Lawrence residents is that none of Knology’s cable systems engage in Internet Overcharging schemes, so Sunflower’s usage caps may be gone after the sale.

Still, some Lawrence residents are concerned about the implications of a Knology takeover.  The Lawrence Broadband Observer is among them:

I browsed Knology’s corporate web site and was actually pretty unimpressed. To put it mildly, Knology is well behind Sunflower both geographically and technically. Knology offers service in rural areas much smaller then Lawrence, like Storm Lake, Iowa and Dothan, Alabama. They also offer service in a few towns that are equal or larger then Lawrence like Charleston, South Carolina.

Technically, Knology is well behind Sunflower in what they offer customers in other cities. Top internet speeds (albeit cap-free) are only in the 8-10 megabit range, five times slower then Sunflower’s new DOCSIS 3 offerings. On the television side, while it varies from city to city, Knology generally offers only 30 or so HD channels, which is less then half of what Sunflower offers. Knology offers a rudimentary DVR, but nothing like Sunflower’s multi-room options.

Perhaps Knology is interested in buying Sunflower to learn how to offer more advanced services, knowledge they can take to their other markets. I don’t know, but it seems like this is a case of a large buggy-whip manufacturer buying out a smaller company that makes automobiles.

Most of Knology’s network of systems have been acquired from other companies and providers.  Technically, they are a cable “overbuilder” because they do overlap other providers in some areas, such as Knoxville, Tenn., where they compete with Comcast.  In many communities, they are most common in rental parks and apartments.

Knology’s customers in other cities have usually suffered some transitional glitches (Knology uses a more “advanced e-mail system” they eventually forced their PrairieWave customers to join), but overall they have usually increased broadband speeds in their markets and add lots of new HD channels.  Knology is aggressively deploying DOCSIS 3, something Sunflower already has, so few changes should be expected there.  They do not have a history of downgrading customers.

Clues about the impact of a Knology buy can be found in communities like Rapid City, S.D., who saw their cable system switched from Black Hills FiberCom to PrairieWave to Knology.  Rapid City residents first saw changes to the cable system’s technology and billing.  That was followed by the introduction of new services and packages, and then finally the name change to Knology.

With the anticipated sale, existing Sunflower customers (and ex-customers) might want to impress on the new owner that Internet Overcharging schemes like usage caps and throttled speeds are unacceptable, and you want an immediate end to both.

Remember too it could be worse — Mediacom could have been the buyer.

Comcast is back with another rate increase effective April 1st, amounting to 3.5 percent for many cable, broadband, and telephone customers.

Although prices vary depending on your specific service area, the range of the price increase is more consistent.

In southern New Jersey, for example, here is the breakdown — all prices are by the month:

• Expanded/Standard service cable-TV tiers are increasing $2.  Expanded service customers could pay up to $50.10, Standard customers $60.55;
• Triple Play customers will see a $5 increase in the second year of their two-year contract from $114.99 to $119.99.  First year pricing remains $99 for new customers;
• Digital Premium Packages are increasing $2;
• Economy Broadband (1Mbps) increases $2, Performance (12Mbps) increases $2, Blast! (16Mbps) increases $2, Ultra sees no price increases (but goes away for new customers effective 4/1);
• Comcast phone line prices are also increasing in certain cases;
• Each additional DVR drops by $5 — Verizon FiOS was hammering Comcast about DVR pricing.

There are no rate changes for business service customers or subscribers with “limited basic service.”  There is also no change in the company’s broadband usage allowance — 250 GB, the only part of Comcast’s service that seems to stubbornly remain at the same level year after year.

Comcast, the nation’s largest cable operator, blamed the mid-year price increases on increased programming and other business costs.

But the company is not exactly hurting.  Comcast’s 4th quarter earnings last year jumped 132 percent to $955 million dollars.  Rate increases that are designed to drive consumers into profitable service bundles, combining television, Internet, and telephone service, guarantee even better financial results in 2010.

Verizon is already capitalizing on Comcast’s rates by offering residents in southern New Jersey an even better price for Verizon FiOS — dropping from $109.99 for two years to $89.99, not including taxes and fees.  But like Comcast, Verizon wants you take a bundle of services, or else face higher prices.  The company recently increased the price for FiOS TV to $64.99 for standalone service.

A controversial proposal by Montana’s largest cable operator to use public funding for construction of a fiber optic network linking the state’s seven Indian reservations has been rejected by federal officials.

Bresnan Communications sought $70 million broadband stimulus grant to construct the 1,885-mile fiber-optic network to improve broadband connectivity.  Independent and cooperative telephone providers objected, claiming the proposal would duplicate services they already provide.

The debate over broadband stimulus funding in rural Montana has been contentious, particularly after incumbent telephone providers accused Bresnan of lying on their application — implying funds would directly improve broadband service to Native American communities.  They accused the cable operator of using public funds to enhance their own “middle mile network,” infrastructure that helps Bresnan distribute broadband traffic between its central offices and data centers, but not “the last mile” connection customers actually rely on to obtain service.

Montana is not alone in the debate over how federal broadband stimulus money should be spent.  With a limited pool of funds, and an overwhelmed National Telecommunications and Information Agency tasked with processing an unexpected flood of applications, funding decisions have become increasingly political, and many incumbent providers have learned they can jam up an applicant just by flooding federal agencies with comments opposing projects that impact on their service areas.

KULR-TV in Billings covered the NTIA Grant Broadband Workshop held last January and also covered Montana’s woeful existing broadband speeds in these two reports. (1/19/2009 & 8/30/2009 – 2 minutes)

Because “last mile” projects are the most threatening to incumbent providers, these applications typically get the most opposition.  The NTIA, in an effort to reduce their workload, has in turn started focusing on “middle mile” projects which often benefit incumbents, pushing public tax dollars into pre-existing private networks.  That looks great on provider balance sheets — that’s money they don’t have to raise from stockholders or other investors.  Diverting those funds away, even from currently unserved areas, also protects providers’ flanks from the potential threat of competition, both now and in the future.

In Montana, chasing few potential customers spread out over vast distances in rural areas makes the potential threat from competition even scarier.  There, many small phone companies exist as co-ops, less concerned with raking in profits.  They fear the potential threat Bresnan Communications could bring to their viability if the cable operator gets a stronger foothold in their territories, especially when using tax dollars to do so.  But is the threat that large for well-run, customer-oriented companies and co-ops?

Many rural areas served by co-ops and other small independent companies actually receive better and faster broadband service than their more urban counterparts, argues Bonnie Lorang, general manager of Montana Independent Telecommunications Systems, an independent phone company trade group.  That’s because the state’s large urban phone company – Qwest, does not provide DSL into more distant suburban and rural service areas, and has only reached 75 percent of its customers with broadband service.  Smaller independent providers, particularly member-owned cooperatives, are accustomed to serving residents Qwest has been slow to reach.

While true for those forced to rely on Qwest DSL service, those with access to cable modem service can do better.  Bresnan provides up to 8Mbps service for residents in its mountain west region covering parts of Wyoming, Montana, and the western slope of Colorado.  Expanding Bresnan’s service where economically feasible remains a priority for the company, and broadband stimulus funding may make the difference between an “unprofitable” area and one that can be profitable if certain infrastructure costs are underwritten.

“Bresnan has a history of investing in communities that are not considered larger communities,” according to said Shawn Beqaj, spokesman for Bresnan. “Our philosophy is that smaller communities deserve every bit of the services that large communities have.”

Bresnan’s grant application received support from Montana governor Brian Schweitzer, the state’s Native American population, and some consumers unhappy with their current broadband choices, if any.

Montana's phone companies are running these print ads objecting to the broadband stimulus proposal from Bresnan Communications (click to enlarge and see the full ad)

On the other side, the phone companies and their trade groups: the Montana Telecommunications Association and Montana Independent Telecommunications Systems, and the state’s utility oversight agency.  They protested Bresnan was unnecessarily duplicating existing service, and potentially getting taxpayer money to do so.  They also hinted Bresnan exploited Native Americans in an application tailor-written to appeal to federal officials seeking improved service for disadvantaged and challenged minority groups.  Besides, the phone companies argued, Bresnan broke the rules from the outset by only agreeing to provide $6 million in company-provided matching funds, less than the 20 percent in matching dollars required by the stimulus program.

“If an area is unserved, prove it and spend the money on that,” Geoff Feiss, a representative of the Montana Telecommunications Association (MTA), told the Billings Gazette.  “But don’t spend $70 million on an overbuild network that’s going to deprive investment from existing networks and leave behind collateral damage that we’ll never recover from.”

Montana’s Public Service Commission ended up on the side of the MTA, calling Bresnan’s proposal “seriously flawed.”

Bresnan and their allies shot back that phone companies complaining about federal dollars being spent on broadband projects was hypocritical, considering many of those companies receive government assistance from the Universal Service Fund to stay in business themselves.

Consumers looking for broadband were left in the middle or left out entirely.  Many residents of the state are forced to rely on dial-up, satellite, or have been left indefinitely on waiting lists for future DSL expansion projects that take forever to materialize.  Choice is an option too many residents don’t have.  The Great Falls Tribune shared a story familiar to many Montanans:

Tim Lanham can’t get Qwest DSL at his eastside Great Falls home. It’s available to his neighbors across the street and at his office a block away.

He’s called Qwest about the situation, but typically can’t get through to a real person. The whole thing is frustrating, he said.

Lanham used to use Sofast. After its service went down, he switched to a Verizon Wireless card, but that can only be used on one computer at time. Now he has broadband Internet through Bresnan. Still, he wishes he had more options.

“I’d like the different options,” Lanham said. “Essentially they leave us with very few choices.”

At the heart of the debate is how to address the “digital divide” between those with Internet access and those without, and improving connectivity for those stuck with outdated, expensive, and slow “broadband.”

The state’s utility commission believes Montana’s primary problem exists in “the last mile,” namely getting broadband service to rural residents who currently are forced to use dial-up or satellite fraudband service that offers slow speed, tiny usage allowances, and a high price tag.  In most cases, telephone companies have deemed these rural residents too few in number and too far apart to make investments in DSL service worthwhile.  Using broadband stimulus money to subsidize the costs of providing service to rural America provides a direct path to broadband for those who may not obtain access any other way short of moving.

Larger providers have been urging that less money be spent on “last mile” projects and that funding be redirected into “middle mile” projects, which could dramatically reduce the costs companies have to pay to maintain and upgrade their own backbone infrastructure.  Examples of these kinds of projects include installing fiber optic cables between telephone company central offices or extended service “remotes” which reduce the distances between customers and telephone company facilities, extending the distance DSL can cover in rural areas.

For now, Montana will have to wait for both.

Bresnan officials will meet with tribal and state commerce officials before deciding what to do next.

Walter White Tail Feather, director of economic development for the Assiniboine and Sioux tribes on the Fort Peck Indian Reservation in northeastern Montana, told the Gazette he hopes Bresnan reapplies for the funding.

“We think we can make a better proposal this second round,” he said. “This first one was a learning experience. … What we really are doing is working with the state to empower ourselves as a tribal government to create a business, to create opportunities that we don’t have.”

The state’s small phone companies may have won the battle, but are now concerned they could ultimately lose the war over obtaining broadband stimulus money themselves, at least from the NTIA.

Jay Preston, chief executive officer of Ronan Telephone Co., told the Gazette two federal agencies now will be deciding who gets broadband stimulus money: The National Telecommunications and Information Administration and the Rural Utilities Service.

The NTIA “seems to be really, really focusing on the middle-mile idea,” Preston said, while RUS probably will approve funds for rural telephone companies that already are the federal agency’s customers. The RUS loans money to rural co-ops for a variety of projects.

Regardless of where the money comes from, frustrated Montana residents just want better service.  The state ranks dead last, tied with Alaska, in broadband speed, according to a study from the Communications Workers of America.  Residents enjoy an average broadband speed of just 2.3Mbps.

Already-broadband-challenged Montana residents faced a major headache when one of the state’s large Internet Service Providers, SoFast, suddenly shut down last November.  KFBB-TV in Great Falls followed the story over three days in these three reports from November 10-13th, 2009.  (5 minutes)

The Billings Gazette mapped out Montana's fiber landscape

Source: Trefis

At a time when digital cable revenues are anemic, and rate hikes are among the most important factors for keeping average revenue per customer as high as possible, Time Warner Cable’s broadband division is just a percentage point or two from becoming the most important service on offer from the nation’s second largest cable provider, at least as far as the stock price is concerned.

Trefis, a forward looking valuation analyst, says future growth at Time Warner Cable will largely come from consumers looking for broadband connectivity. While the company’s digital cable division still constitutes the majority of its stock price estimate, 36 percent, the broadband division has now achieved a close second — 35.1 percent, according to Trefis.

Time Warner Cable maintains an 11 percent share of America’s broadband market, a number expected to grow to 13 percent over the course of the next few years.  Trefis predicts a corresponding increase in the stock price as consumers continue to be driven to the cable operator, particularly from less robust DSL service sold by telephone companies.

Trefis notes the need for speed is a driving factor, and the company can expect to also benefit from customers bundling multiple services together when signing up.

City by city, Comcast is continuing its quest to make the switch to digital cable for an increasing portion of  its cable programming lineup.  Although the majority of subscribers will encounter letters from Comcast switching only a portion of the analog cable lineup, it’s a safe bet Comcast is looking to an all-digital future sooner or later.

Coming less than a year after the switch to digital broadcast television, the march to digital cable is causing confusion for subscribers who don’t understand the difference.

Analog cable television has been around for more than 20 years in most American cities.  It’s the kind of cable television that doesn’t usually need a converter box on top of the TV.  Just plug the cable line into the back of your television set, let the TV find and map available channels, and you can use your standard TV remote to enjoy basic or enhanced basic cable television.  Of course, if you subscribe to premium channels like HBO or Showtime, a box is required to descramble the encrypted signal.

Cable operators began launching “digital cable” in the 1990s, expanding the lineup of programming with hundreds of new channels that are compressed into a digital format, with a half dozen or more digital channels fitting in the same space used by just one analog channel.  Space on the cable line is getting increasingly crowded as cable systems launch new HD channels, support telephone service, and expand broadband service and speeds.

To make room, several of those old school analog channels have to go… digital.  If you already have a set top cable box — you probably won’t even notice the changeover.  But if you don’t have one of those boxes in your home, and your television doesn’t support CableCARD technology, Comcast has some bad news for you.  Sooner or later, you’ll either have to get a set top box or lose an increasing number of channels on your cable dial.

Comcast's digital adapter doesn't support HD channels

Comcast’s digital cable expansion is their solution to the traffic jam on their cable lines.  Some other cable companies take a different approach.  Knowing that many customers hate cable boxes, they’ve left analog channels alone, instead transmitting digital channels only to those homes actually watching them.  If nobody in your neighborhood is watching Current or Fox Business News, why waste the space to send those signals down the line to… nobody.  Time Warner Cable doesn’t for many of their digital channels.  If one lives in an eclectic viewing neighborhood, there are problems with this approach.  Potentially, if enough homes want to watch these lesser-viewed networks, and Time Warner runs out of the space it sets aside to carry a certain number of these channels, the subscriber will see a video busy signal — a message stating the channel is temporarily not available, at least until someone nearby changes channels, making room for the network you want to watch.

Comcast's digital solution is a problem for those who hate "the box" for weaving a rat's nest of cables behind one's television.

In most communities, Comcast will provide up to three digital adapter boxes at no charge, if you install them yourself on each television in your home.  Additional boxes are usually $1.99 per month.  That’s fine if you are still using an older television set and don’t care about HDTV programming — the digital adapters Comcast provides don’t support HD.  If you do want HD channels, you’ll need Comcast’s traditional converter box, which runs about $7 a month per television, or a CableCARD, if your television supports it.  Comcast also has elaborate instructions for customers with multiple TV inputs to support both standard and high definition signals, some through the digital adapter, others not, but it requires a lot of cables.

Customers who loathe boxes and don’t want to pay for them are upset by all of the changes, and either must cope with the new box, or gradually lose more and more analog channels as the conversion continues.  Broadcast basic customers getting only local channels from Comcast are unaffected by all of this, at least for now.  Owners of modern HD television sets aren’t impressed either — their sets, capable of receiving QAM digital cable channels without a box are no help because Comcast encrypts its digital cable lineup in many areas.

But the company still thinks of the project as a service upgrade for its customers, even dubbing it Project Cavalry on their company blog. When one customer wondered why the new equipment wasn’t available in his area yet, a company blogger responded, “We will not be “cherry picking” … all our systems will get the benefits. The Comcast Cavalry just hasn’t swept through your area yet, stay tuned.”

When asked why the devices don’t support HD channels, the response:

The DTA was designed as a low-end, basic device to do one thing and one thing only … convert digital signals back to analog for display on an analog TV. That’s all, no higher end outputs, no VOD, no HD, no interactive guide. Keeping the device simple as described is what kept the price down enough that we can provide so much free equipment to our customers. Also, the RF output makes it compatible with the absolute maximum number of TVs, which is critical to the program. As a digital device, however, it does offer dramatically-improved picture quality over analog even through the RF output.

Watch Comcast’s tutorial on installing their Digital Adapter. (4 minutes)

Watch a coast-to-coast series of news reports detailing the Comcast transition to digital, starting with the message customers see on their now-missing favorite channels. (15 minutes)

Consumers are increasingly cutting down their cable packages to keep their monthly bill down

Cable television customers have finally reached their limit.  For years, annual rate increases well in excess of inflation have annoyed customers, but beyond complaining, few actually dropped service.  That has begun to change as the economy, consumer debt, job fears, and other expenses have finally provoked customers to begin paring back on their cable package.

According to research from Centris, a consumer research organization, a virtual ceiling of tolerance for cable rate increases appears to have been reached for many subscribers.  Although consumers are not dropping cable en masse, they are not simply accepting a higher bill either.  They are dropping services from their cable package.  In 2008 and 2009, premium movie channels and pay per view suffered most from customer downgrades.  Consumers with multiple premium movie channels started by dropping one or two of them, and their use of pay per view service also dropped.  As the financial impact of the recession wore on, the next round of rate increases caused additional erosion — by late 2009 many consumers discontinued all of their premium services.

The goal?  To reduce or at least maintain a consistent monthly bill.  The average amount consumers are paying for digital cable dropped from $79 a month in the third quarter of 2008 to $70 in the third quarter of 2009.  That decline didn’t come from discounts from the industry — it came from dropping channels and services. In 2010, consumers are still pruning away, now impacting digital basic cable and smaller add-ons like sports and movie tiers.  They are also phoning their provider threatening to cancel service altogether if additional discounts cannot be found.  Cable operators, not surprisingly, have managed to find plenty of savings for consumers who ask and stand their ground, ready to walk away from cable.

The cable industry has sought to promote bundled services as an anti-erosion measure.  It’s much harder to walk away from a provider supplying your television, Internet, and phone service, especially if they lock you into a multi-year service agreement with a cancellation fee.  The savings promoted from bundled services come largely as a result of steeper price increases on standalone products and services, manufacturing “added value” for so-called “triple play” packages.

Some customers have divorced from pay television service altogether, deciding relentless price increases and the 500 channel universe shoveled in their direction just isn’t worth the price.  For many American families, however, such drastic cord cutting would border on traumatic, and they haven’t managed such a drastic step.

Luckily, a growing number of consumers have discovered taking the Luddite approach to television entertainment isn’t a requirement any longer.

Cutting the Cord With Online Viewing

With the growing penetration of fast broadband service in homes across the country, online video has rapidly become one of the most popular online services, particularly when it’s available for free.  The benefits don’t stop at the cost — programming catalogs are becoming increasingly deep and diverse allowing fans to watch entire seasons of shows on-demand, with a limited commercial load.  A consumer looking for something to watch might easily find more entertainment online than wading through hundreds of cable channels of niche and re-purposed programming (and program length commercials).

Cable companies are well aware of the trend towards online video.  First considered part-curiosity, part-piracy, today online video is provided by the major American networks, cable programmers, independent filmmakers, YouTube, and of course, Hulu.  It isn’t just for those torrent sites anymore.  And there is plenty of room for online video to grow.

The industry uses research companies like Centris to carefully track subscriber trends.  They want to be out in front of any sea change in viewing practices that could impact their business model and their revenue, and avoid repeating the mistakes others made in ignoring a potential threat for too long.

Wall Street is well aware of the potential threat as well.

Craig Moffett, a cable industry analyst with Sanford C. Bernstein is among the most prominent trend-watchers for the cable industry.  He sees some warning signs for the future.

“Still no evidence of cord-cutting, but as prices spiral higher, the stresses on the system are unquestionably growing,” Moffett said.

So far, the cable industry has decided the best way to fight potential losses is to get into the game themselves on their terms.  Comcast and Time Warner Cable, the nation’s largest cable operators, are launching their TV Everywhere concepts, which provide their broadband customers with online access to a myriad of cable programming, on demand, and currently for free.  The catch?  You must be a verified, current pay television customer.  If you want to watch a basic cable show, you need a basic cable subscription.  Want to watch Bill Maher online?  You can, assuming you are a verified HBO premium television subscriber.

Comcast’s system is already up and running.  Time Warner Cable is expected to roll out their system sometime this year.

The industry is even selling the public they applaud the online video experience as a win for customers.  Time Warner Cable president and CEO Glenn Britt said, “TV Everywhere is an all-around win for those of us who love television. It will give our customers more control over content and allow them greater access to programs they are already paying for, while enhancing the distributors’ and networks’ robust business model that encourages the creation of great content.”

He didn’t say it also protects Time Warner Cable’s flank from cord-cutting.  Lose the cable subscription and your access to online cable programming goes with it.

But the question remains, is that enough to protect cable television revenue?

The answer might be no.

Bloomberg News reported on ‘The Invasion of the Cable Killers’ — new hardware that lets you bypass cable, back on September 15, 2009.  (2 minutes)

The Coming Online Viewing War: The Players Assemble

Who owns and controls programming ultimately controls the distribution of it.  Time Warner Cable took several shots at Fox a few weeks ago when threatened with the loss of Fox programming over a contract dispute.  Alex Dudley, spokesman for Time Warner Cable, told NY1 viewers much of Fox’s programming is available online for the taking, so even if the network was thrown off the cable company’s lineup, viewers could simply bypass the dispute and watch online… for free.  His message – the dollar value Fox places on its programming is diminished when it gives it away for free online.

The fact so much of network programming is available online for free is part of the dispute over how much cable operators should pay to carry networks on their cable systems.  When the industry passes along those carriage fees to consumers, will that be the last straw for some who will drop their cable subscription and simply watch everything online?

“They’re the ones who are going to resist these price increases that the programmers are trying to push,” said Dudley. “One need look no further than the music industry for an example of what happens when consumers feel taken advantage of by an entire industry.”

Dudley’s remark is more telling than he realizes.  The cable industry is well aware of what happened when the music and newspaper industry ignored nascent challenges to their business models like piracy or free access to their content.  To cable operators, the music and newspaper industries’ online experiences are lessons to be learned and not repeated.  The music industry waited too long to crack down on piracy and lost pricing power as consumers simply stole what they rationalized was overpriced.  The newspaper industry failed to erect pay walls to control access to their content, and newspaper subscribers dropped print subscriptions to read everything online for free.  Cable industry control of content and distribution is key to protecting their business model for pay television.  More on that in a moment.

Now two other parties want to be heard on this matter — consumer electronics manufacturers and advertisers.

The Roku box is popular among Netflix subscribers who want to stream TV shows and movies to their television sets

This week, Advertising Age is running a story on the implications of cord-cutting.

The magazine takes note that online viewing doesn’t require a computer any longer.  Samsung, Boxee, Apple TV, and even Microsoft, manufacturer of the XBox, are now selling devices that bypass cable television and grab online video for users, often for free.

Netflix has already managed that for a monthly fee, and is rolling out service on all sorts of devices, from a set top box that streams content from the web to your television to video game consoles, and now even builds-in the service to some televisions and Blu-Ray DVD players.  Microsoft’s XBox Live service could be germinating a cable television service of its own, as it seeks to license content from programmers starting with Disney’s ESPN.

All of these services, along with traditional laptop or home computer viewing, could evolve into formidable challengers for the pay television industry.  Oh, and some new televisions on offer at this year’s Consumer Electronics Show build in support for Skype, a Voice Over IP telephone service, so phone revenue could be at risk as well.

Advertising Age believes this could be one of the entertainment industry’s biggest business battles of the next few years as millions, if not billions of dollars are at stake.

For the moment, the public face of the debate is a combination of downplaying its potential impact while the players quietly position themselves and their assets for the fight certain to come.

Both Dudley and Britt at Time Warner Cable call the potential trend towards online viewing interesting, but not much of a threat at the moment.

“We see some interesting stuff out there, but right now people are watching more TV than ever; cable-cutting is largely on the fringe,” said Dudley.

“A lot of manufacturers have come out and made announcements, but I don’t think they really are in a position to erode the pay-TV subscriptions that the cable industry has today,” said Park Associates research analyst Jayant Dafari.

“For many people, cable works just fine; the quality is great; the DVR functionality is great; the only gripe they have is that they’re paying for it,” Boxee’s founder and CEO Avner Ronen told Advertising Age. But “there is a growing generation out there where the whole definition of entertainment is changing, and their main source of entertainment is the internet.”

CNBC covered last week’s announcement of a partnership between Nintendo and Netflix to provide Netflix on the popular Nintendo Wii, in this exclusive interview with Reed Hastings, chairman and CEO of Netflix and Reggie Fils-Aime, Nintendo of America president & COO (January 13, 2010 – 5 minutes)

‘If It Becomes A Problem, We’ll Just Cut Them Off‘

The cable industry is in a comfortable position to leverage its control over programming and distribution to ultimately limit any competitive threat from online viewing.  In addition to mega-deals like Comcast’s acquisition of content-rich NBC-Universal (a partner in Hulu), the cable industry owns, controls, or can leverage carriage of its cable lineup contingent on programmers not giving away too much for free.  Advertising Age:

One tech exec, who asked not to be named, predicted that the minute cable operators start to feel the disruption, they will clamp down and use their market power to keep TV and films from seeping into next-generation devices. They’re already putting the squeeze on networks; any free distribution is an argument for lower cable distribution fees.

Stop the Cap! is also a player in this struggle, because a key component of the cable industry’s control of programming is the means it is distributed to consumers, and cable modem service representss one half of the duopoly most Americans find when shopping for broadband.  One potential strategy to eliminating the cord-cutting option is to enact Internet Overcharging schemes like usage limits and consumption billing that effectively makes it impractical for a consumer to “switch” to broadband for all of their online viewing.  Switching to the other half of the duopoly may not be an alternative. As online video projects like TV Everywhere will also be available to telco TV partners who wish to participate, there is every incentive to also limit video consumption on Verizon’s FiOS or AT&T’s U-verse systems.

Effective competition against entrenched players in the marketplace is impossible if those players control the content, the means of its distribution, and the ability to cut you off if you watch too much or switch to an independent competitor.

But this is history repeating itself.  Many of the same players and interests followed the same protectionist path against another competitor – satellite television.  It took strong regulatory policy from Washington to force a fair and level playing ground for an industry that didn’t want to sell content to its competitors, overcharged for access, and kept effective competition at bay for years, all while happily increasing rates for beleaguered consumers.

Here we go again.

More than a month after Mediacom promised customers their e-mail glitches were solved, problems continue to plague Mediacom customers in Iowa who continue to discover missing e-mail, inaccessible accounts, and delayed messages.  The problem has worsened to the point it merited coverage on the evening news in Des Moines.

Mediacom’s efforts to switch to an “in-house” e-mail system to improve service have caused repeated problems for Mediacom customers who simply can’t get to their e-mail.  The company blamed the problems on “software upgrades” which bring the system down while updates are installed.  Mediacom claims to try and limit downtime to the early hours of the morning when most customers won’t notice.

But they do.

Consumer Reports just released rankings of cable operators in its February 2010 issue and Mediacom rated near the very bottom — 15th of 16 companies providing TV service, dead last among 23 cable “digital phone” providers, and 24th out of 27 Internet providers, and that was only because the very worst-rated Internet providers deserve a special place in hell for their fraudband satellite service.

Mediacom’s worst ratings?  Their lousy reliability and customer service.

“We recognize that we have to continue to do a better job in customer service, and in the past year we committed significant resources to service improvements,” Phyllis Peters, a Mediacom spokeswoman, told the Des Moines Register.

While those service improvements work their way through the system, Mediacom customers don’t have to wait.  They can obtain a Gmail address in seconds and bypass Mediacom’s e-mail nightmare for good.

WHO-TV in Des Moines, Iowa tells the story of an ALS sufferer who depends on e-mail service contending with Mediacom’s inability to provide it. (3 minutes)

Lawrence, Kansas is a unique place to live.  Its local newspaper, the Lawrence Journal-World, was one of the first in America to begin an online edition in 1995.  Its owner, The World Company, just so happens to also own the independent cable system serving the community, which also provides broadband and phone service to the city’s 90,000 residents.  Its biggest competitor is AT&T, which has been upgrading parts of Lawrence with its U-verse system to stay competitive.

Sunflower Broadband, which provides a “triple play” package of Internet, cable TV and telephone service, has remained controversial among service providers because it instituted an Internet Overcharging scheme with usage caps and overlimit fees.  The company has been used by the American Cable Association, a trade and lobbying group serving independent cable operators, as a poster child for effective rationed broadband schemes that reduce demand and increase broadband profits.

Lawrence, Kansas

Customers generally have loathed usage caps, particularly when they were stuck choosing between Sunflower’s faster, usage capped broadband service or a low speed DSL product from AT&T.  Stop the Cap! receives more complaints about Sunflower Broadband than any other provider, except Time Warner Cable during its own Internet Overcharging experiment in April 2009.  Lawrence residents appreciate the relatively fast speeds Sunflower can provide, but complain they can’t get much use from a service that limits customers to a set allowance and then bills them up to $2 per gigabyte in overlimit penalties when they exceed them.

Last fall, things started to change in Lawrence as AT&T began offering it’s U-verse service in parts of the community.  We began receiving e-mail from Lawrence residents pondering a new service plan Sunflower Broadband introduced — Palladium, an unmetered broadband option priced at $49.95 per month.  It sounded like a good deal, perhaps introduced to protect them from U-verse customer poaching, until they noticed Sunflower was  selling the plan without a fixed downstream or upstream speed.  In fact, no speed was mentioned at all.  Indeed, Sunflower’s Palladium is nothing new to those living abroad under various cap ‘n tier broadband regimes.  It’s comparable to New Zealand Telecom’s Big Time plan, where customers need not fear overlimit fees and penalties, but have to live with a “traffic management” scheme that gives priority to customers on other plans living under a usage cap.

In other words, Palladium customers get last priority on Sunflower’s network.  If the network is not congested, these customers should enjoy relatively fast connections.  But during primetime, expect speeds to drop… and dramatically so according to customers writing us.

Sunflower Broadband's Internet pricing - add $10 if you want standalone service

That customers debate just how slow those speeds can get testify to the nature of cable’s “shared infrastructure.”  Groups of subscribers are pooled together in geographic areas and share a set amount of bandwidth.  As usage increases, so does congestion.  Responsible operators measure that congestion and can split particularly busy neighborhoods into two or more distinct “pools,” each sharing their own bandwidth.  Based on the variable reports we’ve read, it’s apparent Palladium works better in some parts of Lawrence, namely those with fewer broadband enthusiasts, than others.

Network management is a major concern of Net Neutrality proponents.  It allows an operator to artificially impede traffic based on its type, who generates it, and potentially how much a customer has paid to prevent that throttling of their speed.  In the case of Palladium, network management is used to give usage-capped customers first priority for available bandwidth, and push Palladium customers further back in line.

Judging the quality of such a service is a classic case of “your results may vary,” because it is entirely dependent on when one uses the Internet, how many others are logged in and trying to use it at the same time, how many customers are saturating their connections with high traffic downloading and uploading, and how many people are sharing your “pool” of bandwidth.  Oh, and the quality of your cable line can create a major impact as well.

Sunflower Broadband representatives claim Palladium is “optimized for video” and should provide at least 2Mbps service during peak usage and up to 21Mbps service at non-peak times.  That’s a tremendous gap, and we wanted to find out whether most customers were getting closer to the low end or the high end of that range.

Back in October, we wrote a request in the comments section of the Journal-World asking customers to e-mail us with answers to several questions about their experiences with Sunflower Broadband:

• 1) whether you ever exceed the cap.
• 2) do you think there should be one.
• 3) would you prefer faster speed with a cap or slightly slower speed with no cap.
• 4) your experience with the new unlimited option.
• 5) whether you would contemplate switching to AT&T U-verse if it meant escaping a usage cap, even if it had slower speeds.
• 6) Would you pay more for faster speed and no cap?
• 7) your overall feelings about Sunflower Broadband.

We heard from just over two dozen readers sharing their thoughts about the company and its service.  The response was mixed.

Generally speaking, customers hate the usage caps Sunflower Broadband maintains on most of their broadband tiers.  All thought it was unfair and unreasonable to limit broadband service under Sunflower’s Bronze tier to just 2GB per month and their Silver tier to just 25GB per month.  Most customers who wrote subscribed to the Silver tier of service with 7Mbps/256kbps speeds at $29.95 per month.  They also paid a $5 monthly modem rental charge.  Those who wrote who fit the “broadband enthusiast” category were internally debating whether the Gold plan, with its assured 50Mbps/1Mbps speeds for $59.95 per month was a better option, even with a 120GB allowance, or whether they should opt for Palladium’s $49.95 option to escape the usage cap.

Among enthusiasts, some felt Sunflower responded to customer demands by offering an unlimited plan in the first place, and thought it was an acceptable trade-off to obtain lower speeds at peak usage times for a correspondingly lower price, and no cap, as long as speeds were reasonable at all times.  Others were offended they had to make the choice in the first place.

“If I lived anywhere else, I wouldn’t have to choose between a throttled service or one that asks for $60 a month for 120GB of service,” writes Steve from Lawrence.  “AT&T DSL for me is 1.5Mbps service because I live close to the edge of the distance limit from AT&T’s exchange.”

But Justin, also from Lawrence, has a more favorable view. “I hate their usage cap with a passion, but when you look at what small cable companies usually offer their customers, it’s slow speed service at terribly high prices,” he writes. “At least Sunflower did DOCSIS 3 upgrades and can offer big city speeds here.  How long will that take other small independent providers?”

Troy adds, “at least they gave us one choice for unlimited service.  Time Warner Cable and Comcast sure didn’t.”

About half of those who wrote did exceed their usage cap by underestimating the amount of usage in their respective households.  Most of those who did were on the Silver plan.

Dave writes, “I knew right off the bat the Bronze tier was ridiculous for anyone to choose, and our family has three teenagers so we knew that was not an option.  We tried the Silver plan when we switched from AT&T DSL service and blew the lid off that 25GB cap probably within two weeks and got a crazy bill.  At least Sunflower forgave the overlimit fees for the first month, but they could afford to because we upgraded to Palladium, paying them $20 more per month.”

One customer's dismal Palladium speed test result from last October, likely the result of a signal problem

Angela, who shares an apartment with two other roommates had their share of fights over who used up all the broadband allowance.

“We have a wireless network and everyone splits the bill, but when we ran up almost 200GB of usage, we freaked.  Nobody would admit to using that much Internet.  Thanks to my boyfriend, we discovered our wireless router was wide open and one of our lovely neighbors probably hopped on to enjoy,” Angela writes.

Sunflower also forgave their overlimit bill for the first month, but they decided to take advantage of an introductory offer from AT&T and switched to U-verse and are much happier.

“At least with AT&T, we know what our broadband bill is going to be and we don’t have fights or worries about getting a huge bill from Sunflower,” she adds.

Among those answering our question about reduced speed in return for no cap, the consensus view was “we would need to know what speed they are providing.”  Broadband speed was important to most who wrote.  While many may not be able to discern a difference between 10 and 20Mbps service for most online activities, obtaining 2Mbps service when expecting closer to 20Mbps is readily apparent, and that was the biggest problem with Palladium users unimpressed with its performance.

“Palladium is god awful, and close to unusable on the weekends and during the early evening when everyone is online,” writes Kelly, also in Lawrence.  “We have college students all over the neighborhood and these people can’t be unconnected for a minute, so I’m not surprised Palladium crawls when everyone is online.”

Kyle, a regular Stop the Cap! reader writes the whole concept of Palladium leaves a bad taste in his mouth.

“Palladium is the equivalent of going into a restaurant and eating leftovers — whatever speed is leftover, it’s yours.  Sometimes it might be a whole meal, other times scraps!  It’s an example of crappy customer service coming from a provider which doesn’t have much competition (although maybe that will change with U-verse),” he says.

Kyle is on the Gold plan, but remains unimpressed with Sunflower:

“Is there another DOCSIS 3 system in the country that limits upload speed to 1Mbps or has a bandwidth cap this low (120 GB) with DOCSIS 3?”

Stop the Cap! also obtained access to the company’s subscriber-only forums and discovered considerable discontent with Sunflower’s broadband service.

“I recently switched over to Palladium to avoid the new Gold price gouging. I bought the new modem set it up and much to my surprise my speeds were HORRIFIC! Consistently 4.5Mbps service over the course of a week at various times. Upload speeds were so terrible it took 15 minutes to send emails with one minute movies,” writes one user.  “So, for $20 more a month Palladium offers much slower speeds BUT unlimited bandwidth (which according to Sunflower’s own statistics almost no one exceeds their limits anyway.)  What a rip-off. All I want is my old Gold back, same speed and price. I am absolutely disgusted with Sunflower. Calling Palladium “variable speed” is a lie. You are throttling customers – period.”

“So I have Palladium and the speeds are decent, usually around 10Mbps down (we won’t talk about up speeds.) But every time I run a torrent my speeds go down to about 500kbps. The second I turn off my torrent client and run a speed test again its right back up to 10. Has anyone else been having similar issues? It seems like Sunflower throttles my entire connection when they detect a torrent,” writes another.

One Lawrence resident claims he was blacklisted by Sunflower Broadband after criticizing them.

“Their blacklisting of me served as a warning to others after I spoke out nationally.  They are quite pissed and I’m not allowed to go to any event sponsored by them.  I even got removed from the local Twitter festival,” a person who I have chosen to keep anonymous writes. “The nutshell is that the bandwidth from DOCSIS 3.0 is extremely throttled for Palladium users. If they have done heavy downloading the throttle drops speed to about 2Mbps.”

For Lawrence residents who have decided they don’t like the choices Sunflower provides for broadband service, the good news is that AT&T is upgrading their network in the city to provide U-verse service, and many who wrote us have switched just because AT&T does not engage in Internet Overcharging caps and limits in Lawrence.

There is even a blog devoted to comparing Sunflower Broadband service with AT&T U-verse.  The Lawrence Broadband Observer has been reporting on the dueling providers since August.  His verdict: AT&T U-verse wins for broadband for its more stable speeds, and no Internet Overcharging schemes, even if it costs more:

We decided to go with U-verse for our Internet service, canceling our Sunflower Broadband Internet, which we had used for over 13 years. U-verse’ top line internet costs $15 more per month then Sunflower’s; we decided that the advantages of U-Verse for Internet were enough to make this extra $15 per month a reasonable value.

Furthermore, the speed of U-verse has been remarkably consistent, always ranging between 16 and 17Mbps down and about 1.4Mbps up, no matter the time of day.

While Sunflower’s service is very fast at certain times of day, it frequently slows down during evenings or other times of heavy network use, sometimes to less then half of the speed we were paying for.

The other primary reason we went with U-verse was because U-verse does not have bandwidth overage fees or any kind of bandwidth limits. Although we have been careful with Sunflower and managed to avoid any bandwidth overage charges, having “the meter running” all the time was annoying, and we worried that we could always be surprised with an unexpected charge. With U-verse we do not have this worry.  One could almost think of the $15 extra for U-verse as an insurance policy…it buys peace of mind not having to worry about bandwidth overages.

After much sound and fury, and plenty of media attention, Fox programming remained on Time Warner Cable and Bright House Networks systems through the New Year’s festivities, as the three companies reached “an agreement in principle” to make cable customers ultimately pay more for the right to watch Fox broadcast stations and cable networks.

The wide-ranging agreement covers all of Time Warner Cable’s more than 12 million subscribers as well as 2.4 million Bright House customers.  The deal encompasses Fox-owned, Fox-affiliated television stations covering nearly four million Americans and Fox’s sports and entertainment cable networks seen nationwide.

The major point of contention between Fox and the two cable companies was the fee for carriage rights to Fox television stations.  Known as “retransmission consent,” cable operators must obtain permission from television station owners before they are allowed to put them on cable lineups.  For years, broadcasters were happy just getting clear pictures to cable’s extended reach into suburban and rural communities.  But over the years, broadcast interests have sought cash payments from cable operators in return for that consent.

Leveraging their popularity, station owners feel they have plenty to room to negotiate higher payments, and the cable industry has tried to avoid setting any precedent for cash payments, fearing a new benchmark set with one station owner will soon become the asking price for every other major station in a community.  Cable operators have traditionally signed agreements that launch station or network-owned cable channels instead of large direct cash payments, but Fox’s game of hardball suggests those days are over.

While none of the companies involved would disclose the terms of the final agreement, industry analysts suggest the parties met somewhere near the middle of their respective asking price.  Fox had demanded $1.00 a month per subscriber for each of its affiliated television stations, while Time Warner Cable suggested a quarter per month per subscriber was a fair offer.  Most agree the final deal is in the 50-60 cent range, not including any extras Time Warner Cable threw in on the cable network side.

Chase Carey

All of the parties represented at the negotiating table were pleased with the outcome.

“We’re pleased that, after months of negotiations, we were able to reach a fair agreement with Time Warner Cable — one that recognizes the value of our programming,” News Corp. president and COO Chase Carey said in a press release. Time Warner Cable president and CEO Glenn Britt adds that his company is “happy to have reached a reasonable deal with no disruption in programming.”

Amusingly, Bright House Networks’ own press release is a mirror copy of Time Warner Cable’s — only the names have been changed:

“We’re pleased that an agreement has been reached with no disruption in programming for our customers,” said Steve Miron, Chief Executive Officer, Bright House Networks.

Who wasn’t represented at the negotiating table?  Customers.  Ultimately, whatever amount agreed to, it will be added to customers’ bills in future rate increases.

If other networks seek similar terms, cable operators may have to fork out as much as $5 billion a year — and would likely pass the cost on to subscribers, Craig Moffett, an analyst at Sanford C. Bernstein in New York told Bloomberg News.

“The broadcast networks are really struggling to find a viable business model,” Moffett said. “They’re looking at the cable networks that make money both on advertising and the money that the cable operators pay them and saying, ‘We need a dual revenue stream to survive too.’”

CNBC reports on the deal reached just in time to prevents sports fans from missing out on their New Year’s football games on Fox. (2 minutes)

Apparently the “fight back” component of Time Warner Cable’s campaign against the high cost of cable has not been a stunning success because the nation’s second largest cable operator continues to roll over its subscribers with some striking rate hikes, this time across upstate New York.

The usual promotional brochure began appearing in mailboxes across the state, filled with glowing words about all of the wonderful things Time Warner Cable did for you since your last rate increase, and promises for more wonderful things to come… along with fine print language at the bottom subtly labeled “2010 Rates.”  They don’t even call it a rate increase anymore, although it will cost most video and broadband subscribers in Rochester an additional $7.70 a month — $92.40 a year, effective February 1st.

After the company complained back in April it “needed” to engage in Internet Overcharging experiments to use that revenue to upgrade networks, the additional $3 a month/$36 a year they will get from millions of Road Runner subscribers in New York alone should be more than enough to do just that.  Those on lower speed economy tiers are also facing rate hikes: $3 a month for Road Runner Lite and $4 a month for Road Runner Basic, reaching $22.95 and $29.95 a month in Rochester, respectively.

As a concession to Rochester, one of the last remaining cities in New York still stuck with 384kbps upload speeds, the company will increase the upload speed for the division’s Standard Road Runner service customers to 1Mbps sometime in 2010.  Those with Road Runner Turbo will probably see upload speed increasing to 2Mbps, accordingly.  But Rochester still isn’t on the upgrade list for DOCSIS 3, bypassed because of the very limited competition Frontier offers the cable company locally.  Verizon FiOS fiber to the home service is being provided in most other large New York cities.

You probably didn’t ask for it, but you’re going to get it anyway: NBA TV HD and the Sundance Channel was added today to the Rochester-area’s digital cable tier.

Time Warner Cable's new rates for the Rochester/Finger Lakes region of western New York become effective February 1st.

Meanwhile in the state capital Albany, news of the rate increase was particularly unwelcome in the hard hit upstate economy.  The Albany Times-Union called the rate increase “an insult” on hard-hit New Yorkers:

Your neighbor lost his job, the housing market is in the tank, and the economic recovery is nowhere in sight.

And now to add insult to injury, as other household costs rise, your cable TV bill is going up next year too — in some cases by nearly 10 percent.

Time Warner Cable sent a flier to local customers this month with the new prices. Except for the most basic package, all the rates are going up. The “basic with standard” TV package, which includes dozens of mainstay cable channels such as CNN, ESPN and Comedy Central in addition to local broadcast channels, will rise 9.7 percent to $61.95 a month from $56.45 currently.

The company’s “All the Best” package that combines TV with Internet and phone service will go from $139.95 a month to $146.95 a month, an increase of 7 percent.

WTEN-TV Albany reports that Time Warner Cable’s latest rate increase will cause many upstate New York residents to drop premium channels in even greater numbers to economize. (2 minutes)

Verizon FiOS, for now anyway, will be cheaper than most of Time Warner Cable’s packages in Syracuse.  The Salt City faces rate increases averaging six to eight percent.  Time Warner Cable spokesman Jim Gordon blamed the rate hikes on the same things cable always blames rate hikes on — increased programming costs.  From the Syracuse Post-Standard:

Time Warner spokesman Jim Gordon said there are two major reasons for the increase: higher prices charges by the providers of programs and the rising cost of doing business. Customers are using more services more often, Gordon said, and cable is becoming more important in people’s lives.

In 2009, the number of channels on which the “start over” feature is available rose from 45 to 90, and customers used the feature 10 million times, he said. Customers also watched 85 million videos on demand, he said. “People are staying home more, and they’re hunkering down and they’re utilizing these services,” he said.

Cable operators are free to raise rates on everything except the basic service of broadcast and educational channels, for which operators need permission of regulators.

Below is a list of popular packages and corresponding rate increases:
• Talk ‘n’ View package, of telephone and cable television service, will rise from $100.50 to $108.95 – an increase of about 8 percent.
• Surf ‘n’ View, a combination of Internet and cable television, will increase from $105.50 to $111.95, an increase of 6 percent.
• All the Best, which combines cable, internet and phone, will rise from $135.50 to $144.95, or 7 percent.

Prices are slightly lower with Verizon Communications Inc.’s FiOS, which recently entered the Central New York market and offers a basic package of telephone, Internet and cable television for $109.99 to $129.99.

Further north in Watertown, rates are also increasing by 6 to 8 percent starting February 1st, the second increase in the past 11 months. Time Warner last raised its rates in March.

Time Warner Cable spokesman Jim Gordon said the current increases are due to price increases by programmers and an increase in the company’s cost of doing business. Gordon also cited an increase in the use of the company’s features including “Start Over” and video on demand.

“People are staying home more because of the current economic situation, and customers are finding value in these enhancements,” Gordon said.  The Watertown Daily Times notes Gordon doesn’t think subscribers will mind enough to leave.

“Our goal in doing this is to enhance the customer experience,” Mr. Gordon said.

Mr. Gordon said he doesn’t think the rate increases will prompt many Time Warner Cable customers to switch to another provider, because of the local customer service the company offers.

“We’re more than ready to compete,” Mr. Gordon said.

Customers can expect to see the following increases on their cable bills this year:

• A combination of standard and basic cable service costs will increase from $62.50 to $67.75, an increase of about 8 percent.
• The Surf ‘n’ View package will increase from $105.50 to $111.95, an increase of about 8 percent.
• The Talk ‘n’ View package will increase from $100.50 to $108.95, an increase of about 8 percent.
• The All the Best package, including cable, phone and Internet service, will rise from $135.50 to $144.95, an increase of about 7 percent.

Verizon FiOS, a new cable provider in the area, has a basic package that includes cable, telephone and Internet service for $109.99 to $129.99.

Satellite television provider DirecTV also has announced rate increases of 3 percent to 5 percent, which also will take effect Feb. 1.

Watertown residents noted the irony of the company’s “Roll Over or Get Tough” campaign in light of today’s rate increase.

“Imagine if you went to the supermarket and they told you that you had to buy 100 items you didn’t want and would never use for ever item you actually wanted. This is how Time Warner Cable operates,” one writes.

A Raymondville resident remarks, “Isn’t it strange after Time Warner solicits its customers to support their get tough effort to fight with the Fox networks in negotiations over price increases for programming that they can institute one of their own? Is this the real reason that they lobbied all of their customers? Is this the beginning of setting things up so that we end up paying for every channel that we watch? If enough people push to get rid of the junk they give us, that we never watch, so we get a package we will? It almost sounds like a shell game in which the pea is not under any of the shells, a no win situation for subscribers no matter how it shakes out. New businesses have been created here ones in which someone has figured out how to get money from consumers without really doing anything to get it. The New American Way. Welcome to the new Millennium.”