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Cable Stock Fluffer Craig Moffett Encourages Cable Operators to Add Usage Caps Before Title II Takes Effect

"More Caps" Moffett

“More Caps” Moffett

If you are a cable executive looking to further gouge customers captive to your “only game in town” broadband speeds, now is the time to slap around customers with usage caps and overlimit fees, because your company may no longer be able to do that after June 12, when the FCC’s new Title II regulations officially take effect.

“If you’re a cable operator, you might want to strike while the iron is hot,” said MoffettNathanson principal and senior analyst Craig Moffett, who has shared his love for all-things-cable with investors for years.

Moffett regularly asks cable industry executives about when they plan to introduce usage limits or usage-based billing for customers who often have no other choice for 25Mbps service, the lowest speed that now qualifies as broadband.

But tricking customers into accepting industry arguments about “fair pricing” must be handled carefully, because making a mistake with customers could cost your executives their summer bonuses if the pocket-picking policies cause a revolt.

Multichannel News reminds its cable industry readers Time Warner Cable failed to start their usage cap experiment in 2009 due to a “furor” by customers (often led by us). Instead of filling their coffers with the proceeds of overlimit fees, “the cable giant [was forced] to rethink its pricing strategy, keeping prices the same for heavy users of bandwidth but offering discounts to customers whose usage was lighter.”

Image: schvdenfreude

Image: schvdenfreude

Unable to get its definition of “fairness” across to customers, Time Warner Cable never had to look back, raking in greater and greater unlimited broadband profits quarter after quarter, even as their costs to deliver service continued to drop.

Faced with the prospect of a newly empowered FCC to keep cable industry abuses in check, Multichannel News tells cable executives the money party may be over before it begins if they wait too long:

Title II regulations, which reclassify broadband as a common- carrier service, are about to take effect June 12, and the Federal Communications Commission has said it would look closely at any usage-based pricing plans to determine if they discriminate against online video providers. That could force some Internet service providers to move to implement their version of usage-based pricing before the deadline.

To “soften the blow,” the trade journal reported Cox significantly increased usage caps and are setting the overlimit fee at $10 for each 50GB of excessive usage, much lower than wireless plan overlimit fees. Multichannel News suggests this will help customers “get accustomed to overage charges.”

But Cox customers in the Cleveland area may be able to turn the table on Cox.

“Let them get accustomed to the fact I am dumping them for WOW! the moment I receive official notification about the caps,” said Stop the Cap! reader Dave, who has a choice between Cox, AT&T, and WOW! — a competing cable operator without usage caps. “AT&T isn’t enforcing its cap around here either, so I am definitely canceling my service and have two other choices. People have to be willing to send a clear message usage caps are an absolute deal-breaker.”

Although usage caps are not affected by Net Neutrality regulations, the fact the cable industry faces added regulator scrutiny under Title II allows the FCC to put an end to practices it considers to be anti-competitive. Introducing usage caps for customers trying to find an alternative to Cox’s cable television package by watching online video instead may qualify.

Cox Cracking Down on Internet Customers With Hard Usage Caps and Overlimit Fees: Let the Gouging Begin!

cox say noCox Communications will begin testing overlimit fees this summer starting in its Cleveland, Ohio service area with plans to introduce hard usage allowances and excess usage violation charges nationwide if customers tolerate the market test in Cleveland.

DSL Reports learned that Cox will formally notify customers beginning May 19 it has increased broadband usage allowances and will introduce an overlimit fee of $10 for each 50GB allotment a customer exceeds their limit starting this fall.

Cox’s marketing machine is attempting to justify its usage based pricing scheme with a pre-written script to appease anticipated customer complaints:

A draft customer support script obtained exclusively by DSLReports states that this lead-in period will “give customers the opportunity to familiarize themselves with their typical data usage and take action, such as secure their WiFi network or change service plans, if they exceed their limit.”

The script also notes that customers will be notified via e-mail and a browser popup when they’ve reached 85% and 100% of their monthly data allotments. Cox services like Cox TV Connect, Cox Digital Telephone and Cox Home Security will not count toward the usage cap, a Cox insider claims.

To make the idea of potential bill shock more palatable to their customer base, Cox generously increased usage allowances last week:

  • Starter: 150 GB/month
  • Essential 250 GB/month
  • Preferred 350 GB/month (the most popular plan)
  • Premier 700 GB/month
  • Ultimate 2 TB/month

Exceed those limits and the company will slap penalty fees on your bill as a matter of “fairness.” Customers will get a preview of any specific overlimit fees they would incur starting in June, but the company will not begin to actually charge them until October.

price-gouging-cake“Data usage plans promote fairness by asking the high-capacity Internet users to pay a greater share of network costs,” argues Cox. “Some critics of data usage plans push a flat fee pricing model, meaning that users would pay a flat fee whether they simply use the Internet to surf the web and check email or if they are a ‘super user’ and consume copious amounts of bandwidth. Data usage plans are a far more fair approach, giving consumers a choice based on their personal needs rather than forcing all customers to absorb the network costs incurred by the 5% of customers who exceed their allowance.”

Stop the Cap! would point out we’ve heard those same talking points since 2009 and they were not credible then and are even less so today.

First, we’d note Cox is attacking the business plans of some of the most successful broadband providers in the United States. Time Warner Cable, Cablevision, Google, and a myriad of other phone and cable operators not only deliver on their commitment to offer unlimited use Internet, they actually market it as a good reason to buy Internet access from them.

Cox’s concerns for fairness might be a bit less hypocritical had Cox not sold customers unlimited use plans for years. Were they being unfair to their customers then, now, or both?

Second, the company’s claimed noble intentions for keeping the cost of broadband down might be more believable if it didn’t charge its base customers a whopping $34.99 a month for “up to 5Mbps” Internet that it now wants to limit. Five years ago it charged customers just $21.99 a month for that service. By 2015, it had raised the price more than 59%.

In comparison, Time Warner Cable charges less than half that for unlimited “$14.99 Everyday Low Price Internet” – a tier that has not increased in price since its introduction. Time Warner has also offered its light users an optional plan to win a discount if they keep their usage down. As a reflection of customer interest in plans that place limits (even optional) on broadband service, out of some 11 million Time Warner Cable customers, only a few thousand have shown any interest in plans that introduce a usage allowance component.

coxThird, Cox’s excuses are very similar to those given by Time Warner Cable when it tried (and failed spectacularly) to impose usage allowances on its broadband customers in 2009. Time Warner officials promised it would represent greater fairness and would help pay for network improvements, while only a small percentage of customers would face higher charges. In fact, none of those claims were true. Customers seeking to keep unlimited access faced a tripling of the cost of broadband, Time Warner Cable only committed to network improvements in their most-populous service areas (which were excluded from the usage cap market trials and had significant competition), and at the usage caps Time Warner proposed in 2009 – 5, 10, 20, and 40GB, more than half of today’s Time Warner customers would be subject to overlimit fees. At the time, Time Warner claimed their proposed usage allowances were generous and fewer than 5% of customers would exceed them. That is eerily familiar to the “5% of customers” Cox refers to today.

The real money is to be made selling broadband, already amazingly profitable.

The real money is to be made selling broadband, already amazingly profitable.

Cox’s need for strict usage allowances comes at a time when other Internet Service Providers in competitive markets are either abandoning or not strictly enforcing them. Alienating customers has proven bad for business, and there is still plenty of money to be made selling unlimited access. Both broadband and telephone service is declining in cost for the operator to offer, particularly when examining bandwidth expenses.

Cox Communications is a privately held company and does not disclose specific financial data to the public, but similarly sized Charter Communications is publicly held and revealed in 2014 it had revenue of $9.1 billion and Adjusted EBITDA of $3.2 billion – each rising 8.2% on a pro forma basis, year over year. In plain English, broadband is already a real moneymaker for the cable industry, with revenue boosts recorded across the board. In comparison, cable television expenses have taken a toll on the profitability of offering television service. Charter is making so much money on broadband it dropped its usage caps recently.

Because the cable industry relies almost exclusively on existing hybrid fiber-coax networks to deliver products and services, the capital costs of providing Internet access have continued to drop for years. The industry’s decision to invest in and adopt DOCSIS 3 was considered a “no brainer” because it did not need major upgrades to network infrastructure and could recoup its cost by allowing companies to market higher-profit, higher-speed tiers.

In contrast, new entrants like Google Fiber are constructing new all-fiber network infrastructure at an enormous cost, but remain comfortable marketing broadband service with no usage allowances. So do many community-owned providers, including EPB in Chattanooga, GreenLight and Fibrant in North Carolina, among many dozens of others. Even Comcast has committed to not imposing usage caps for its premium 2Gbps fiber service, on which residential customers will be capable of racking up enormous amounts of usage.

In short, Cox’s usage cap regime is completely unjustifiable under current marketplace conditions and represents little more than an effort to raise prices and block online video competition, which Cox customers may decide will eat too much into their usage allowance.

Time Warner Cable goes out of its way to advertise "No Data Caps."

Time Warner Cable goes out of its way to advertise “No Data Caps.”

There are a number of questions Cox customers should ask:

  1. Why did nobody ask us whether we thought usage allowances and overlimit fees were fair?
  2. Why not offer optional discounts for low-usage customers and see how many actually enroll in such a program?
  3. Why has Cox removed the option of an unlimited use tier for customers that want unlimited service?
  4. Why won’t Cox commit to a price freeze on its broadband service if usage caps are really about controlling costs?
  5. How is it fair to offer a more generous allowance to a customer sold a higher speed tier that can easily chew through more data than customers on lower speed tiers?
  6. Why do low-speed customers get a smaller usage allowance when they cannot effectively use the highest bandwidth web applications?
  7. Why can’t customers roll unused portions of their usage allowance over to future months?
  8. How many customers, if any, actually asked for this type of pricing?
  9. Why can Google, Time Warner and other operators provide unlimited access for the same or less than Cox charges and your company can’t?

Comcast Announces Its New Gigabit Home Gateway for Coax DOCSIS 3.1 Customers, Arriving in 2016

xfinitylogoThe Cable Show (now known as INTX) is often used by the cable industry to announce and preview new products and services, and at this year’s convention in Chicago, Comcast CEO Brian Roberts used the occasion to introduce the company’s new DOCSIS 3.1 multi-purpose Home Gateway capable of delivering gigabit speeds over its existing hybrid fiber-coax network.

Apart from Comcast’s intentions to deliver 2Gbps broadband over a new fiber to the home network the company is planning for customers in near its local fiber backbone, the new Gigabit Home Gateway was designed by Comcast engineers in Philadelphia and vendors in Silicon Valley to work on Comcast’s existing coaxial cable network.

Comcast will first need to deploy the next generation standard for delivering broadband over cable networks – DOCSIS 3.1, which can combine several “channels” devoted to broadband service to create a super high-speed online experience. Comcast has spent the past several years moving analog TV channels to digital service, freeing up bandwidth it can devote to faster Internet speeds.

Although Comcast’s 2Gbps fiber service will be a limited offering, its 1Gbps cable broadband service should be available “to virtually all Xfinity customers once the DOCSIS 3.1 networking standard is deployed nationally,” according to Tony Werner, Comcast’s chief technology officer.

In addition to supporting gigabit Internet, the new gateway will support gigabit Wi-Fi, IP video, and integrate Comcast’s existing home security and automation services.

The device will go into production this year with plans to introduce it to consumers sometime in 2016. No pricing details were available.

While Your Cable TV Bill Rises Due to “Increased Programming Costs,” So Are Advertising Loads

cablebill-web

Cablevision’s broadcast TV surcharge increased in January to $5.98 a month, which amounts to $71.76 a year, on top of your usual cable TV bill.

No it isn’t your imagination. While a growing number of cable television subscribers now face a “broadcast programming surcharge” on their cable bill to compensate television stations and networks for cable carriage, those same channels are larding up their programming with ever-increasing advertising. One quarter of every hour of network television is now littered with commercials — an all-time high for broadcast networks seeking to maximize advertising revenue.

Show openings have been cut to seconds, credits roll by at fast-forward speed – usually compressed into illegibility, and some cable networks have returned to the practice of chopping bits of shows and compressing playback of others to accommodate more commercials. That does not include product placement or “in-program” compensated advertising, which appears when a character picks up a can of Pepsi, walks by a Subway outlet, or reaches for a Pop-Tart for breakfast.

As early as 2009, TNS Media Intelligence found at least 36% of today’s network primetime shows were advertising-oriented. That included 7:59 of in-show brand appearances and 13:52 of commercial advertisements, for a combined total of 21:51 of marketing content.

Reality shows, as well as being cheap to produce, are product placement gold. America’s Toughest Jobs contained 44:50 per hour of advertising messages and product placement, The Biggest Loser ran up 40:37. Before the reality show craze, game shows were program-length commercials in disguise. Game show producers received an endless supply of prizes to give away in return for viewers enduring relentless 10-15 second pitches for Rice-a-Roni, crock pots, living room furniture sets, and current model cars and trucks. Viewers did not escape traditional advertisements along the way either.

Through much of the 1970s and early 1980s, an average hour of network television was between 48-52 minutes of programming, 8-12 minutes of network and local commercials. Short news breaks and public service announcements were often included during those breaks. Shows targeting children usually contained less advertising.

In 1984, the Reagan Administration deregulated broadcasters, claiming the free market was best equipped to contain any abusive practices as consumers theoretically could tune out stations and networks that allowed things to get out-of-hand.

In reality, what one network decided, the others usually followed. Outside of watching commercial-free PBS (although those sponsorship messages increasingly began to resemble traditional advertising over the years), viewers didn’t have much choice. For the last 31 years since deregulation, advertising has increased while show length has decreased. In the 1970s and 80s, pieces of rerun television shows created when ad loads were shorter were often cut from shows to make room for an extra ad or two. What was left after a trip to the cutting room was often played slightly sped-up, which made room for even more advertising. By the 1990s, producers created their shows with increasing advertising loads in mind. Short sacrificial 60-90 second end scenes, deemed non-essential to the show’s integrity, were often chopped when a show entered syndication.

In the 2000s, network executives started demanding producers drastically cut the length of show opening and closing themes. If producers didn’t, studios did it for them when a show was resold to a cable network. A rerun of Law & Order now features a 24-second opening, a big difference from the original 1:45 second opening the show had when it originally aired on NBC. End credits were usually squished on-screen to allow a 15-second network promotion to run at the top. Some networks even began their next show in one window while showing end credits of the last program in another.

But nothing affected commercial loads more than the 2008 Great Recession. Advertising revenue tumbled, along with the economy, and advertisers balked at paying traditional ad rates when online advertising was available for much less. The answer? Sell more ads… at a lower price. Once again, program lengths had to be cut to make room for the increasing number of commercials. By 2009, average network ad loads were up to 13:25 per hour. Just four years later in 2013, that number spiked to 14:15. It’s now 15 minutes and up at some networks, depending on the type of program.

As commercials neared comprising 25% of every hour of television, sponsors finally began to rebel. They were reacting to the pervasive growth of the DVR, which allowed consumers to record their favorite shows, if only to fast forward past the dense thicket of commercials. They sought a ceiling on ad loads and more creative ways to reach ad-skipping audiences numbed by relentless advertising. That meant even more product placement.

Although sponsors of expensive NBC, CBS, ABC, and FOX shows may have rebelled at the 15-minute mark, the same isn’t true with cable networks where ad loads are as high as 24 minutes per hour. In 2009, the average cable network aired 14:27 of advertisements an hour. This year, it’s up to 15:18 and still rising. Among the worst offenders:

ad load

To keep the money flowing from every direction, both over-the-air and cable networks, including those noted above, continue to seek additional compensation from your provider in the form of retransmission consent and carriage agreements. Whether you watch a channel or not, you are paying for it. Some of these compensation agreements are experiencing rate increases approaching 10% annually.

To the surprise of many industry analysts, some of the worst offenders are networks with declining ratings who risk further alienating viewers with even more advertising just to keep revenue numbers up. While traditional ads actually declined by 2% on most over the air networks this year, FOX more than made up for that with a 15% increase in advertising time. The cable networks with the highest ad increases this year were Viacom-owned channels (Comedy Central, Spike, MTV, Nickelodeon) jumping 13%, A+E Networks (A&E, Crime & Investigation, Lifetime, History) increasing 10%, and 9% at Discovery Networks. Which networks increased ads the least? Those owned by Disney, independent cable networks, and Time Warner (Entertainment).

“Generally speaking, the ratings winners (Disney, 21st Century Fox, Scripps Networks) are increasing investment in original content (and not abusively increasing ad loads), whereas the losers (A+E Networks, Viacom, NBCUniversal) and the neutrals (Discovery, AMC Networks) are decelerating investment in original content and stuffing more ad spots into their shows,” said analyst Todd Juenger of Sanford C. Bernstein.

Michael Nathanson of MoffetNathanson Research worries television is repeating the mistakes commercial radio made post-deregulation, when massive increases in advertising accompanied by decelerating investment in programming repelled many listeners, perhaps for good. Some have permanently abandoned commercial over the air radio in favor of commercial free music services, satellite radio, and streaming services.

“Networks can offset ratings challenges and pricing weakness with more inventory, however, we worry that it is a dangerous long-term game that ultimately devalues the consumer experience and reduces ad efficacy,” Nathanson said. “As we saw with radio, once the increased commercial load genie is out of the bottle, it is nearly impossible to put it back in.”

When Stephen Cox was watching The Wizard of Oz on TBS last November, something didn’t sound quite right to him about the Munchkins, who are near and dear to his heart. He wasn’t imagining things. Time Warner-owned TBS used compression technology to speed up the movie. The purpose: stuffing in more TV commercials.

“Their voices were raised a notch,” Cox, the author of several pop-culture books including one about the classic 1939 film, told the Wall Street Journal. “It was astounding to me.”

The Colbert Report hilariously depicts the next generation of product placement: the retroactive ad technology of Mirriad, which can insert products into shows years after they were made. (4:04)

Cablevision to Loyal Customers: Thanks for Paying Higher Prices for Cable Service When You Didn’t Have To

take the moneyIf you are a long time Optimum customer, the CEO, management, and shareholders of Cablevision would like to thank you for driving average monthly cable revenue per customer 4.8% higher from a year ago to $155.34 a month.

A few years ago, Cablevision developed a Stalinist approach to repeat customer promotions and retentions: nyet.

Despite mounting competition from Verizon FiOS, AT&T U-verse, Comcast and Time Warner Cable, Cablevision has held the line on repeatedly discounting its service for customers who complain their rates are too high.

“Our disciplined approach to pricing, promotional eligibility and customer credit policies has not wavered,” Kristin Dolan, chief operating officer, told investors on a morning conference call.

As a result, the average customer staying with Cablevision paid almost five percent more for service than they did a year earlier — more than $155 a month.

optimum“The main drivers of our increased revenue per customer came from a combination of rate increases, but also lower proportion of subscribers on promotion,” said Brian G. Sweeney, chief financial officer. “We had a number of fixed rate increases January 1 of this year related to cable box fees, an increase in our sports and broadcast TV surcharge, as well as the pass-through of PEG fees to certain customers.”

Cablevision elected to stop competing on price in 2013, telling customers they are entitled to one customer retention deal and that is all. As a result, Cablevision has been losing customers even as it gains revenue. Although it managed to pick up 7,000 net new broadband customers during the quarter, Cablevison lost 6,000 customer relationships, 28,000 video customers — double the number from a year ago, and 14,000 voice customers. That represents 11 consecutive quarters of video subscriber losses.

The customers that remain are meeting Cablevision’s earnings expectations as others leave for better deals elsewhere.

Kristin and James Dolan

Kristin and James Dolan

Cablevision admits many of its subscriber losses come from customers willing to shop around for a better deal. They usually find one. Although Verizon has tightened customer retention deals itself in response to Cablevision’s retention policies, Frontier U-verse in Connecticut continues to compete for new business on price, at least initially as part of new customer promotions.

Kristen Dolan argues Cablevision’s quality of service keeps customers loyal and brings many ex-customers back.

“We do a significant amount of [customer] win-backs every year and we really focus on why people are coming back and it’s not just about price,” Dolan said.

But some customers believe it is more about the price than Cablevision might think.

“The only reason I left Cablevision was because they wouldn’t negotiate and match a better deal Verizon offered me,” said Rob Hastings of Syosset, N.Y., who canceled service in 2013. “When Cablevision wouldn’t cut their price I left.”

Many of the customers coming back to Cablevision this year are, in fact, their old customers dealing with a rate reset from Verizon as promotions expire.

“When my Verizon FiOS rate shot up, I went back to Cablevision as a ‘new customer’ on a promotion,” said Hastings. “When that expires, I’ll bounce back to Verizon. Whoever gives me the best price gets my business as I am sure not going to pay extra to stay a loyal customer.”

cablevision service areaTo further combat promotion-bouncing, Cablevision is embracing its broadband product line and marketing new cord-cutting packages to customers that offer reduced-size cable television packages and free over the air antennas for local stations. The cable company also recently announced it would offer cable customers Hulu subscriptions. Jim Dolan, Cablevision CEO, believes broadband is where the money is and customers are willing to pay higher prices to get Internet access even when video package pricing has its limits.

“You’re seeing the video product begin to lose margin and not just among the little operators like us, but even some of the big operators,” said Dolan. “Our philosophy is we think of video as akin to the eggs and the milk in a convenience store. You have to have it, but you don’t make a lot of money on it. Now connectivity is a whole other basket. It’s more like the soda and chips aisle, and if you provide great connectivity, because it provides great value to the consumer, you can differentiate yourself and you can charge more and the margins are good on it.”

Dolan doesn’t think much of his competitor’s slimmed down cable packages either.

“Verizon’s known to embellish [and] use misleading messaging in their marketing to get the phones to ring,” said Dolan. “I think that’s partially how we view these packages. I can tell you that the packages that we’re offering provide a lot more flexibility.”

To further differentiate it from its competitors, Cablevision continues to emphasize its Wi-Fi network of hotspots across metro New York City. The company also recently became the first major U.S. cable operator to launch a mobile phone service that uses its network of Wi-Fi hot spots. Although not willing to divulge customer numbers, Kristin Dolan did say unique weekly visits increased 16% on average to Cablevision’s website, presumably to explore the Freewheel Wi-Fi calling product.

Cablevision’s highlights for the first three months of 2015:

  • Fiber to the Press Release: Cablevision was the first cable company to introduce 1-gigabyte residential service in the tri-state area. The service launched to a single new multi-tenant building in Weehawken, N.J. No further expansion is planned at this time;
  • Discounted Internet for the Cord Cutter on a Budget: Cablevision expanded the availability of $34.90/mo Internet Basics (5/1Mbps) across its entire service area. It includes an over-the-air antenna.
  • Third Party Set-Top Boxes: Cablevision is interested in providing a less expensive, open standard, set-top box platform in the future to customers that don’t want to pay for a large cable box.

Time Warner Cable’s Post-Merger Conference Call: Improved Subscriber Numbers But ‘We’ll Let Others Take the Lead’

road runner

Time Warner Cable held its first post-merger-flop conference call with investors this morning and reported surprisingly good subscriber numbers for the first quarter of 2015.

Despite disappointing investors for not meeting projected profit and revenue numbers for the first three months of the year, Time Warner managed to add 30,000 net video customers for the first time since 2009. High-speed data customers grew by 315,000, compared with 269,000 a year ago, while voice customers increased by 320,000, compared with 107,000 in the prior-year period. The company also reported $26 million in wasted merger-related costs.

8999

Time Warner’s latest triple play promotion has fewer gotchas in the fine print than usual, but the modem fee is still there so buy your own.

A renewed love for Time Warner Cable was not the reason the cable company added customers. Aggressive pricing with fewer fine print “gotchas” and Time Warner Cable Maxx upgrades helped the company pick up new subscribers. Last October, Time Warner added a $90 triple play offer valid across much of its service area, offering unlimited calling phone, Preferred TV, and 30Mbps broadband with one set-top box for $89.99 a month for one year, an offer Artie Minson, chief financial officer of Time Warner Cable called “clean.”

For the last two years, Time Warner Cable executives decided to de-emphasize promotional pricing on phone service, preferring to draw more attention to its double-play television and broadband offers. This year, that thinking is long gone as the cable company re-emphasizes its triple-play packages and offers current customers the chance to add phone service for as little as $10 a month. The strong growth in new phone customers during the quarter reflects the success of those promotions.

Minson was less impressed with the sales of “skinny bundles” of bare basic cable television, HBO, and broadband service, noting it had little impact on Time Warner’s subscriber growth. The allure of its $14.99 everyday low price, low speed Internet offer has also waned.

“There’s a lot of attraction in the press about skinny packages,” echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale.”

Marcus used the conference call to re-emphasize the company has not been distracted by 14 months of merger talks with Comcast and has executed on its pre-merger business plan all along.

twc maxx

Coming in 2017 (If We Live That Long)

Network upgrades under the TWC Maxx program are continuing on schedule.

“New York City, LA and Austin are complete, Dallas, San Antonio and Kansas City are underway and Charlotte, Raleigh and Hawaii on the docket for later in the year,” said Marcus. “We also plan to begin the Maxx process in San Diego this year and finish up in early 2016. It’s still early days, but Maxx certainly appears to be making a difference. Customer feedback has been great and churn among Maxx customers with new DOCSIS 3.0 modems is dramatically lower.”

But it will take another two years to complete the entire Time Warner footprint, of which 40-50% will be upgraded by the end of this year.

“The exact pace at which we continue that process in 2016 and 2017 depends on the experience we have in 2015. We’re feeling better about our ability to roll out all-digital this year than we did last year, which was really the first year of the program,” said Marcus. “And we’ll evaluate, as we go into 2016, how quickly we think we can ramp the next batch of systems.”

In a recurring theme throughout the conference call, executives emphasized Time Warner does not want to pioneer tinkering with the traditional cable package.

For example, Marcus acknowledged Cablevision’s experiment with Wi-Fi calling as a cellular replacement strategy, but said Time Warner Cable will take a wait and see approach.

“I’m inclined to watch and see how that evolves and then we’ll see how best to develop our own strategy on that front,” Marcus said.

Marcus

Marcus

“There’s a lot of talk and a lot of work going on out there from other guys,” said Jain, referring to slimmed down cable packages and unbundling. “And if any of their things work, we’ll just be fast followers on that stuff because I think there are some segments of our customer base where that is going to have appeal.”

Marcus also complained there was far too much attention being paid on Millennials as an excuse to break up the traditional cable experience.

“There tends to be, in my opinion, an obsessive interest in Millennials, maybe at the expense of the broader customer base,” Marcus said. “For the vast majority of our customers, the way we currently deliver the video product is pretty darn attractive. That said, sure, there’s a group of customers who might very well like to access video via other means. So it is definitely the case that over time, I can see a world where more and more customers consume our offering without needing to lease a set-top box from us. But that doesn’t mean we’re going to abandon the largest portion of our customers who actually do like the current model.”

On other subjects, the implementation of Net Neutrality under Title II regulations will have no impact on Time Warner’s future plans or investments, according to Marcus.

“We’ve said in the past that our normal business practices comply entirely with the notion of the open Internet, no blocking, no discrimination, no throttling, and transparency are fundamental parts of the way we do business. So to the extent that that’s the full scope of what’s getting incremented under Title II, I think you won’t see a change in the way we do business.”

But he warned if the FCC intends to more broadly regulate Internet access, that could have an impact on pricing and future investment.

Marcus also re-emphasized his intention not to change the way Time Warner sells broadband. That means no compulsory usage caps or usage-based pricing.

“We’re very focused on delivering compelling products to customers at a price that delivers real value,” said Marcus. “We can’t think in terms of taking gross margin dollars that are lost because we lose a video customer and somehow embedding those into high-speed data [with usage pricing] and not seeing an impact on high-speed data.”

American Broadband Ripoff: Compare Your Prices With Eight Competing Providers in Bratislava, Slovakia

bratislvaThe largest telecom companies in the United States, their trade associations, and Ajit Pai, one of two Republican commissioners serving at the Federal Communications Commission routinely claim America has the best broadband in the world. From the perspective of providers running to their respective banks to deposit your monthly payment, they might be right. But on virtually every other metric, the United States has some of the most expensive broadband in the world at speeds that would be a gouging embarrassment in other countries.

Slovakia – A Long, Tough History, But Better Broadband than the United States

Bratislava, the capital city of Slovakia, has existed since the year 907. From the 10th century until just after the end of World War 1, the city (then commonly known by its German name of Pressburg) was part of Hungary and the Austro-Hungarian empire. After the “War to End All Wars,” ethnic Czechs and Slovaks jointly formed a democratic Czechoslovak Republic in 1918 which existed peacefully until the Germans arrived in 1938 and renamed part of Czechoslovakia… Germany.

Unfortunately for the Czechs and Slovaks, life didn’t get much easier after the end of World War II. As Stalin sought to create a buffer zone between Germany (and western Europe) and the Soviet Union, Czechoslovakia, along with most of Eastern Europe, faded behind the Iron Curtain into the Soviet sphere of influence.

The city center of Bratislava

The city center of Bratislava

After decades of deterioration under autocratic rule, the Czechoslovak Velvet Revolution of 1989 restored multi-party democracy and Communism was was on its way to being fully extirpated across Europe.

By the time the June 1992 election results were announced, it was clear the country’s constituent Czechs and Slovaks had irreconcilable differences and were headed to national divorce court. On one side, the Czech-oriented Civic Democratic Party, headed by Václav Klaus. On the other, Vladimír Mečiar’s Movement for a Democratic Slovakia, whose aims were obvious based on its party name alone. With the writing on the wall, Klaus and Mečiar managed to work out an agreement on how to divide the country and on Jan. 1, 1993 the Czech Republic and the Slovak Republic were born.

Since the separation, Slovakia has prospered, and is now recognized to have a high-income advanced economy with one of the fastest growth rates in both the European Union and the OECD. It joined the EU in 2004 and adopted the Euro as its currency in 2009. Slovakia had to bring its economy up to date after fifty years of Communism. The country had a functioning telecommunications infrastructure, albeit one highly dependent on dilapidated equipment produced in the German Democratic Republic (the former East Germany) and the Soviet Union.

After the Slovak Republic was born, Slovenské Telekomunikácie maintained a monopoly on Slovak telephone lines and telex circuits under the close watch of the Ministry of Transport, Posts and Telecommunications. It took until the year 2000 for economic reforms to allow for the privatization of telecommunications. As was the case in many other central and eastern European countries, Germany’s Deutsche Telekom (T-Mobile) won a majority ownership in the company, which is today still known as Slovak Telecom.

The Slovak Broadband Marketplace Today

Slovak-TelekomThe Slovak government insisted that telecommunications networks in the country be competitive and it maintains oversight to make sure monopolies do not develop. It rejected claims that total deregulation and competition alone would spur investment. Slovakia welcomes outside investment, but also makes certain monopoly pricing power cannot develop. As a result, most residents of Bratislava have a choice of up to eight different broadband providers — a mix of cable, telephone, wireless, and satellite providers that all fiercely compete in the consumer and business markets.

Many providers are foreign-owned entities. UPC, Slovakia’s cable operator, is owned by John Malone’s Liberty Global. Slovak Telecom is owned by Germany’s T-Mobile/Deutsche Telekom. Tooway is a French company.

300Prices are considerably lower than what American providers charge, although speeds remain somewhat lower than broadband services in Bulgaria, Romania, and the Baltic States. At one address on Kláštorská, a street of modest single family homes (some in disrepair), these companies were ready to install service:

  • RadioLAN offers 18/1.5Mbps unlimited wireless service for $21.85 a month;
  • UPC offers 300/20Mbps unlimited cable broadband for $30.63 a month;
  • Slovanet offers 10/1Mbps DSL with a 240GB usage cap for $18.56 a month;
  • Swan offers 10.2Mbps/512kbps unlimited DSL for $24.70 a month;
  • Slovak Telecom offers 10/1Mbps DSL with a 240GB usage cap for $21.96 a month;
  • Benestra offers 10/1Mbps DSL with a 4GB per day usage cap for $24.24 a month;
  • Satro offers 9Mbps/768kbps unlimited wireless service for $29.32 a month;
  • Tooway offers 22/6Mbps satellite Internet with a 25GB usage cap for $54.79 a month.

In other parts of the country, two providers are installing competing fiber broadband services. Slovak Telecom is slowly discarding its old copper wire infrastructure in favor of fiber optics, and is already providing 300Mbps service to some residents to better compete with UPC Cable. Some areas can get straight fiber service, others get VDSL, an advanced form of DSL offering higher speeds than traditional DSL. Orange, a provider not available in the immediate area of our sampled home, has already installed its own fiber service to over 100,000 fiber customers and is growing.

In comparison, Comcast sells 105Mbps service in Nashville, Tenn. for $114.95/mo (not including modem fee) with a 300GB monthly usage cap. That is one-third the speed of UPC Cable at nearly four times the cost… if you stay within your allowance. Prices only get higher after that.

Comcast’s Fictional “Price-Lock” Agreement Lets Cable Company Raise Equipment Fees, Surcharges at Will

Phillip Dampier April 27, 2015 Comcast/Xfinity, Consumer News 1 Comment
Comcast changed the name of this customer to "Super Bitch Bauer" in their billing records.

Comcast changed the name of this customer to “Super Bitch Bauer” in their billing records after she complained about poor service.

Getting a firm deal from Comcast on a promotion or retention package has become increasingly difficult as the company points to terms and conditions in its contract that allow it to adjust pricing of equipment, service fees and surcharges at will.

One Broadband Reports reader signed up for a Comcast Double Play promotion that appeared to be a great deal until it turned into a major headache.

What Comcast promised:

  • 105Mbps Extreme Internet plus Preferred 220 digital-channel TV package with free HBO price-locked for 24 months – $99.99
  • First cable box free for 24 months
  • HD X1 DVR Box – $7.99/mo for 24 months
  • HD Service Fee – Free for 24 months
  • Starz – $1/mo for 24 months
  • Showtime – $1/mo for 24 months

The total price-locked contract price: $109.98/mo plus estimated taxes of $7.50 per month + free installation

After accepting Comcast’s offer, “Ngiovas” received an email confirmation that was radically different from what was originally offered. Instead of 105Mbps broadband, Comcast now offered 50Mbps, the first cable box was free for only one year, the X1 DVR deal was also only good for a year, the HD service fee was free for only six months, and a $60 installation fee now applied.

When Ngiovas complained about the discrepancy, Comcast explained their systems would not allow discounted fee promotions for longer than 12 months and the customer could call back and have a deal extended for an extra year. The installation fee was waived and the Internet speed was supposed to be corrected to reflect 105Mbps. Only it turned out it wasn’t.

A follow-up phone call with a “Customer Loyalty” agent revealed Comcast’s promotions are considerably less generous than one might think.

Comcast only commits to price-locking its service package — the $99.95 broadband and television bundle. Everything else is open to price changes at the whim of the cable company. The discounts and fees can and will change over the next two years and customers have no recourse to cancel their contract, unless they are willing to pay an early termination fee.

Getting Comcast to deliver what it originally promised required hand to hand negotiating combat.

bait and switchThe 105Mbps Extreme bundle was priced $20 higher than Ngiovas was originally quoted and the representative insisted there was no way to get the Extreme package for $99.95. When Ngiovas told the representative about Comcast’s “zero dollar” no-cost Extreme upgrade, the representative paused and then admitted yes, the free upgrade was suddenly available. But Ngiovas would have to switch to a different package that would be “price adjusted” to match the original offer, and the customer would also have to commit to stay with that package for a full two years.

No matter what Ngiovas argued, the commitment to provide 24 months of equipment discounts was not going to happen. The HD discount would end after six months, resulting in an additional $10 a month later this year. The DVR discount also ends after one year.

Because Comcast’s prices for Internet-only service is so high, the out-the-door price to add television service amounted to just $27 a month more, which makes Ngiovas’ $109 DirecTV service a poor deal.

Other Comcast customers who have been down this road predict Ngiovas is being set up for a Comcast billing nightmare.

“Hold on for the ride and check all your bills with a fine tooth comb,” offered one. Another suggested that Comcast sales representatives occasionally sell promotional packages they are not authorized to offer and Comcast’s order verification system catches and rescinds or modifies the offer.

“I would be wary and look at other options in case retentions can’t make the deal happen,” offered another.

Comcast’s own customer service forum is filled with thousands of complaints about billing errors and bait and switch promotions, including one customer promised a $10/mo Internet speed upgrade that ended up costing more than $60.

Comcast Hints At the Price of Its New 2Gbps ‘Not for Your Average Joe’ Fiber Internet: Around $400 a Month

As Florida wakes up to news that Comcast will deliver its 2Gbps broadband service in the cities of Jacksonville, Miami, Ft. Lauderdale, and West Palm Beach, the rest of the country is learning the estimated price of the service, targeted to the “techno-elite.”Comcast-Logo

Cindy Arco, spokeswoman for Comcast in Jacksonville told the Florida Times Union final pricing hasn’t been established yet for 2 Gigabit Pro for Florida, but it likely will be in the range of the highest residential broadband tier, which amounts to $400 a month for 505Mbps.

“It’s the type of thing for early adopters — those people who want to have the latest, newest tech gadget and the latest everything related to tech,” Arco said.

In Florida, the residential customers will need to live within a third of the mile of the fiber optic service lines offered by Comcast.

Arco downplayed the relevance of the arrival of 2Gbps service from Comcast.

“It’s exciting, but it’s not for your average Joe,” Arco said.

Verizon Wireless to Customers Looking for a Better Deal: Goodbye and Good Luck With Competitors’ Inferior Service

Verizon Wireless: The Neiman Marcus of mobile providers

Verizon Wireless: The Neiman Marcus of mobile providers

A customer retention call with Verizon Wireless is short and to the point: enjoy the coverage you get from us now at the prices we charge or cancel and live with inferior cell phone service from one of our competitors.

Verizon chief financial officer Fran Shammo waved goodbye to 138,000 Verizon Wireless customers in the last three months and he could care less.

“If the customer who is just price-sensitive and does not care about the quality of the network—or is sufficient with just paying a lower price—that’s probably the customer we’re not going to be able to keep,” he said in the company’s quarterly earnings call today.

The wireless industry’s price war has not yet inflicted much damage on Verizon, which considers itself above the fray.

Average revenue per customer has started to significantly decline for the first time in wireless industry history, despite efforts to bolster earnings with expensive data plans and bundling services, including unlimited voice calling most cell phone users no longer care about. Both T-Mobile and Sprint are resorting to slashing prices and reducing the fine print to pick up business, with T-Mobile being the more successful of the two pulling it off. But the combined market share of Sprint and T-Mobile remains a fraction of what AT&T and Verizon Wireless have captured.

verizon greedVerizon believes it has a premium product and expects to be paid for it. Like a Neiman Marcus of the wireless industry, customers can expect a superior level of service, if they can afford to pay for it.

To keep customers dazzled, this summer Verizon Wireless is planning a new wireless video service featuring content from the NFL and likely more. Verizon hopes customers without unlimited data plans will be willing to pay several dollars extra for the new streaming service. But perhaps not too many extra dollars. Verizon executives have discovered a loophole in the FCC’s new Net Neutrality regulations allowing video content to be sponsored by Verizon or its advertising partners and exempt from usage allowances or caps.

Known as “zero-rating,” the practice is much more common overseas, where content providers pay for customer’s usage of their applications. Critics call the practice an end run around Net Neutrality. The FCC has continued to avoid the issue of broadband usage caps and usage-based billing, which ISPs have interpreted to mean a green light on the practice. In fact, some earlier comments from the FCC suggest the agency believes subsidized Internet traffic might be beneficial to consumers. Verizon pockets the money in either case.

Tim Berners-Lee, who created of the World Wide Web, called zero-rating “positive discrimination,” giving too much power to Internet providers.

“Zero-rated mobile traffic is blunt anti-competitive price discrimination designed to favor telcos’ own or their partners’ apps while placing competing apps at a disadvantage,” added Antonios Drossos, managing partner of Rewheel. “A zero-rated app is an offer consumers can’t refuse.”

Verizon Wireless has not yet priced its forthcoming video offering, but it could be marketed as a monthly add-on feature or as a pay-per-view option.

http://www.phillipdampier.com/video/Bloomberg Verizon Bids Good Riddance to Customers Leaving for a Cheaper Deal 4-21-15.flv

Bloomberg reporters talk about Verizon’s disinterest in competing with other carriers in the ongoing price war, and is fine with letting price-sensitive customers leave. It won’t be cutting prices anytime soon. (2:01)

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  • Susan: After diligently watching my credit score for over a year and how negative as well as positive postings affect it, I have a hard time believing that o...
  • David Therchik: An intense investigation needs to put into this! As soon as one starts I bet they'll stop charging/cheating people from over usage. Before they bought...
  • Charles Bingham: I did but customer no service was no help - said it did no good to have pass word with symbols, cap and small letters and #'s. IF only I had an alte...
  • Phillip Dampier: That assumes this customer had access to a working usage meter and notification messages and ignored them. Evidently it was big enough of a problem fo...
  • Are you kidding me...: "Over the years" people are using the internet differently. If your bill went up, you have usage. Responsible would be calling and talking to them ab...
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