It’s time to take a look inside Time Warner Cable’s latest quarterly financial report and pick out some interesting developments that will impact customers during the first quarter of 2013.

Time Warner Cable managed 9 percent revenue growth in 2012, primarily from its broadband service, its strongest product. The company added another 500,000 broadband customers over the last year, primarily poached from telephone company DSL service. This growth in subscribers continues despite rate increases and the introduction of a $3.95 monthly modem rental fee introduced last fall.

CEO Glenn Britt noted that Time Warner Cable customers use and love their broadband service.

“The average customer used roughly 40% more capacity last year,” Britt noted.

But Time Warner Cable has plenty of capacity to handle that traffic growth.

Britt plans to leave as CEO of Time Warner Cable by the end of this year.

Irene Esteves, Time Warner’s chief financial officer noted Time Warner Cable continues to decrease its capital spending. Overall, Time Warner spent $3.1 billion on capital expenditures in 2012, or just 14.5% of its revenue. That represents a 40-basis point decrease from 2011. The bulk of that spending was on business services, primarily from the costs of wiring business office parks and buildings for cable. Less than 12% of Time Warner Cable’s spending targeted residential services.

“Overall, we expect capital intensity will continue to decline modestly, with full year capital spending around $3.2 billion in 2013,” Esteves told investors.

Time Warner’s new modem fee is earning the company a major boost in Average Revenue Per User (ARPU). The average Time Warner customer now spends $103.79 a month for service, an increase of 6.3%. Three-quarters of that increase is attributable to the modem fee alone.

Customers are clamoring for higher broadband speeds. At the end of 2012, Turbo, Extreme and Ultimate subscribers comprised over 23% of the company’s residential broadband customer base, up from 19% a year ago and 11% three years ago.

Britt, expected to retire by the end of this year, noted the company’s biggest challenge during his tenure continues to be programming costs. But the company is contributing to that problem itself, spending $110 million in 2012 on its new regional sports networks in southern California, which feature the Los Angeles Lakers and the Los Angeles Dodgers.

“Our programming costs per subscriber has grown 32% in the last four years,” Britt complained. “Over that same period, the Consumer Price Index has risen by 9%. So the math is pretty simple, programming costs have been rising at more than three times the rate of inflation. Our residential video ARPU increased 16% over that same period, so we’ve effectively raised pricing a little faster than inflation but only half as fast as programming costs have risen.”

The rising price of cable service has caused Time Warner to lose a larger number of customers, particularly when promotional pricing deals expire. The company has retrained its retention agents to avoid losing customers to the competition as new customer promotions expire. Time Warner noted some of its strongest competition is coming from AT&T U-verse promotional pricing for double-play offers in Texas and the midwest. In Kansas City, Time Warner continues to dismiss competition from Google Fiber as largely irrelevant, although the company has boosted its maximum broadband speeds to 100Mbps in that city.

Time Warner’s TV Everywhere app.

Other highlights:

♦ TWC completed its DOCSIS 3.0 broadband enhancement rollout in 2012 and began a process of reclaiming bandwidth previously dedicated to the delivery of analog video. These steps will allow the company to continue to devote more network resources to enhancing broadband service, including handling more traffic and selling faster service.

♦ Optional usage-based tiers are available from most Time Warner Cable regions. The offer of a $5 monthly discount for customers keeping their usage under 5GB each month has received almost no interest from subscribers. Sources inside Time Warner tell Stop the Cap! the company never expected much customer interest, but the offer allowed Time Warner to introduce the concept of usage-based pricing without alienating current customers.

♦ Time Warner Cable’s “TV Everywhere” platform continues to expand. Various TWC TV apps now offer as many as 300 streamed video channels on both smartphones and streaming set-top boxes. In December the company expanded its offering to include video on demand, and last week those on-demand programs became available on the desktop. Time Warner expects to grow its on-demand library and introduce local television channels to its streaming apps in 2013.

♦ Time Warner is trying to improve the standing of its residential telephone service with the introduction of a Global Penny plan, which offers international calling to over 40 countries for one cent per minute. This helps the company market its phone service to subscribers choosing its various ethnic and foreign language television packages.

♦ One-hour service windows are now available in most Time Warner Cable areas. In New York City, a 30-minute window is available for the first appointment of the day. The company is also expanding its self-install packages, letting customers do simple equipment installations themselves. The equipment is delivered free of charge by package delivery services and can be returned by mail as well.

♦ Although Time Warner is earning more from its broadband customers, the introduction of a modem rental fee did cause a significant number of customers to disconnect service, presumably in favor of a competitor. But the extra money in the cable company’s pockets more than makes up for the loss.

♦ Time Warner Cable’s forthcoming “hosted navigation product” represents a major change for the company’s set-top boxes. The “gateway” device will include 1TB of storage, can record up to six shows at once, and will automatically transcode video for an IP platform, letting customers view recorded and live programming on set-top boxes or wireless devices like smartphones and tablets inside the home. Expect to see the new device arrive in the second half of this year in many Time Warner cities.

Other stories of interest:

1. Analyzing Time Warner Cable’s Latest Quarterly Results: Broadband, Broadband, Broadband
2. Digging Deeper Into Time Warner Cable’s 2011 Results and What Is Coming in 2012
3. Digging Deeper Into Time Warner Cable’s Latest Quarterly Report: They Aren’t Hurting for Money
4. Time Warner Cable Loses 15% of Their Analog Cable Customers; News on Broadband Caps, Pricing
5. Time Warner Cable’s CEO Still Obsessed With Internet Overcharging: ‘It’s Inevitable’

Another ISP Limbo Dance. How low can they go?

Telus, western Canada’s largest phone company, has announced it is slashing usage allowances as much as half and raising prices up to $8 a month on broadband packages, eight months after last summer’s $3 rate hike.

A sample:

• Internet 6 was $37, now $45. Usage cap reduced to 100GB, was 150GB.
• Internet 15 was $42, now $50. Usage cap reduced to 150GB, was 250GB.
• Internet 25 was $52 now $60. Usage cap reduced to 250GB, was 500GB.
• Internet 50 was $75 now $80.

A Telus spokesperson explained the reasons for the rate increases and allowance slashing:

It is only fair for customers to pay for the amount of bandwidth they use and be on a plan that realistically reflects their usage patterns; otherwise, moderate users end up subsidizing heavy users. Even with the change TELUS has some of the most generous usage caps in comparison to many other ISP’s. Most customers use only a fraction of the allotted threshold. Usage limits are put into place so that the small percentage of high usage customers to not impact the internet experience for other users on the network. We currently do not charge for over usage, but the thresholds allow us to ensure that customers are on an appropriate plan for them.

The rate increase is in response to rising costs in providing and maintaining the network. Since 2000, TELUS has invested more than $30 billion in infrastructure across Canada to provide our customers with some of the best communications technology anywhere in the world. These increases affect all clients, from TELUS employees to brand new sign-ups. All the pricing has been adjusted to the higher rate. In terms of price and quality TELUS Internet is very competitive versus our competitors. In most cases, TELUS services will still be less expensive than similar offerings from our competitors.

Most existing clients have already had the benefit of a promotion on sign-up. As with all promotions, including the current new client promotions, they run for a limited time and the discounts they offer expire. We do have loyalty programs in place for existing loyal clients and we do offer existing clients the new promotions in cases where they may not have received anything when they signed up.

Customers are outraged about the changes, particularly because Telus has been raising prices twice a year since 2011. The new rate plans are now comparable to Telus’ largest competitor, Shaw Cable.

Telus has not traditionally enforced usage cap violations on their network, nor have they imposed overlimit fees. But a customer service representative said “Telus can suspend allowance violators for 30 days for repeated violations.”

In North America, virtually every major ISP has watched bandwidth costs decline as connectivity continues to get cheaper. But that does not stop some providers from raising prices and slashing usage limits on a service most Canadians find they cannot live without.

Other stories of interest:

1. Telus Raises Usage Allowances and Speeds; Anti-Usage Billing Movement Scores Victory
2. Canada’s Usage Based Billing Raises Prices for Consumer Broadband to New Highs
3. Western Canada’s Internet Overcharging Two-Step: Shaw and Telus Plan to Gouge You
4. Comcast Raising Prices… Again, But Their Usage Cap Remains Firmly In Place; 3.5 Percent Increase For Many
5. Silver and Gold: Wringing Customers Dry With Bell Holiday Rate Hikes & Higher Penalties

Zombie bill.

Time Warner Cable has pulled back on their winter promotions for new customers, bundling slower broadband and significant equipment fees into the bottom line price that may cost as much as $20 or more than the cable operator’s advertising suggests.

Several readers contacted Stop the Cap! over the last few weeks about the disparity between Time Warner’s advertised new customer pricing and the out the door price that arrives on the first month’s bill.

Diane, a Stop the Cap! reader in Brockport, N.Y., was attracted to an $89.99 triple play promotion for TV, Internet, and phone service until she learned what did not come with the deal.

“By the time I got off the phone, that $89.99 offer turned into more than $130 a month once adding a DVR, faster broadband service, and a second cable box,” Diane complains. “You really have to read the fine print. They only give you 3Mbps broadband speed on most of their offers now and DVR service is rarely included. In fact, all the equipment turned out to cost extra.”

Stop the Cap! checked out the offer Diane was interested in, and it turns out the $89.99 advertised price only tells half the story.

The wall of text. Time Warner’s rebate offer has hoops customers will consider an Olympic event.

First, Time Warner requires customers on this promotion to pay for at least one cable box, at $8.99 a month. A CableCARD is also available for $2.50 a month for televisions equipped to support that. Most consumers stick with traditional boxes. Diane wanted one DVR box and a second box for a bedroom. DVR Service from Time Warner, which does not include the box itself, has dramatically increased in price over the years. In 2013, the combined rate for the “box” and the “service” is $21.94 a month in western New York. A second cable box for Diane’s bedroom ran another $8.49 a month. The new Internet modem rental fee is also not included, so that adds an additional $3.95 a month.

Diane is also correct about broadband speeds. Time Warner bundles only 3Mbps service in most of its promotional packages. Increasing to Standard speed (15/1Mbps) generally costs an additional $10 per month. Now Diane’s monthly bill is well over $130 a month.

In fact, Diane should have selected a more deluxe package from Time Warner at the outset. Their $104.99 promotion bundles Turbo (20/2Mbps) Internet, free Showtime, and at least covers DVR service (although Diane still has to pay $9 a month for the DVR box). Her out the door price for that package is less than $127 a month.

Customers served by AT&T U-verse or Verizon FiOS stand to come out better if they plan to dump the phone company in favor of Time Warner. The cable operator is throwing in a debit card worth up to a $200, but only for customers switching away from a competitor. Diane just had Frontier phone service, so no $200 reward card for her. Time Warner requires customers to switch from services comparable to those selected from Time Warner to qualify for the maximum rebate.

For those that do quality, the rebate hoop-jumping begins:

• Customers qualifying for the reward card have to write down a promotion code and register their rebate request online within 30 days of starting service.
• Customers must remain active, in good standing and must maintain all services for a minimum of 90 days after installation.
• Customers are required to upload a scanned copy of their last provider’s bill, showing active service within the last 90 days. Card should arrive 4-6 weeks after a 90 day waiting period.
• Comparable services do not include wireless telephone service or online-only video subscriptions.
• Offer is not available to customers with past due balances with Time Warner Cable during the program period or customers who have been disconnected for non-payment during the twelve months preceding this offer.
• The customer’s name and address on file with Time Warner must exactly match the name and address on your former provider’s bill.
• Customers better spend the money quickly. After six months, the issuing bank deducts a $2.50 monthly “service fee” from the debit card until empty, except where prohibited by law.
• If the card is lost or stolen, there is a $5.95 Re-Issuance Fee. If you need to dispute a charge on the card, you are out of luck. The issuing bank will not intervene on your behalf.
• Customers cannot apply the rebate to their Time Warner Cable bill.

Other stories of interest:

1. Time Warner Launches Free Slingbox Rebate Offer: NYC Customers Only
2. Time Warner Cable to Hand Out Free Slingboxes to Their Best Broadband Customers
3. Big Cable Running Scared: Comcast/Time Warner Cable Promotions Can Save Customers A Fortune
4. Dear Valued Time Warner Cable Customer: Pay Us More… Or Not — Here’s How
5. How to Renew a Broadband Promotion With Bright House/Time Warner Cable

Grab this bargain: Frontier’s website accidentally placed two different DSL packages on our order despite only requesting one. We didn’t ask for the phone line or satellite TV either, but there they are.

Frontier Communications is in the process of redesigning their website — a project long overdue in an age where customers can pre-qualify themselves for service and schedule installation from most cable operators without ever picking up the phone.

But judging from some e-mail from Frontier employees working on the project, the forthcoming “upgrade” is about to make a bad situation much worse.

Frontier is the sixth largest phone company in the country with customers in 27 states, but they have never run a modern, well-functioning website. Frontier’s service pre-qualification tool has never worked properly in Rochester, N.Y., the largest city where Frontier provides service, and placing an order for service is fraught with confusion for customers who don’t speak telecom jargon.

Based on a reader tip, we tested the website this afternoon here at Stop the Cap! HQ.

Placing an order for DSL service is currently based on your street address, but the order process gives no indication if the company can actually provision service at the speeds requested.

As a customer journeys through a cumbersome 10-step order process, it becomes easy to be sidetracked with endless promotional tricks and traps in numbers I haven’t seen since last ordering a domain name from GoDaddy. The shopping cart also erroneously added two different broadband service packages on our order, despite only selecting one.

Step 1 offers murky promotions such as the impenetrable “Shop Promo VISA CD 100 2Y Challenger.” Promotions do not clearly disclose their terms up front. This one only discloses the two year service agreement with a steep early termination fee with the designation: “2Y.” Avoiding promotions still did wonders for our monthly bill, especially considering we were just looking for broadband service. We found Frontier quietly added a “digital unlimited phone” we could care less about for $30.99 a month, America’s Top 120 (presumably satellite TV we did not request) for $44.99 a month, Broadband Max (the slower DSL service we did not want) for $34.99 and Simply Broadband Ultimate (the service we did) for an extra $59.99. Our out the door price for what was supposed to be broadband-only service? A low, low $170 a month minus a $5 service loyalty credit for taking two services.

Step 2 piled on another $5 fee for satellite-delivered local channels for the satellite package we never asked for, but the duplicate broadband service was gone. Now we were stuck with the slower Broadband Max. Step 3 forced us to wade through more than a dozen phone feature packages for the phone line we don’t need. Step 4 sticker-shocked us with installation fees ranging from $50 for a self-install kit to $175 for a home installation of DSL and Wi-Fi. Those fees can be waived with a perpetually-renewing two year service contract (up to a $135 credit). At that point we had enough and bailed on the order.

This represents Frontier’s online shopping experience today. A Frontier employee who wishes to remain anonymous warns Stop the Cap! things could get much worse.

Our source tells us Frontier has outsourced much of the work on its forthcoming redesigned website to third party contractors who are now reportedly in over their heads, unaware that Frontier operates with a range of very different products and services depending on the service area. For them, one-size-fits-all seemed good enough:

[These contractors] don’t understand products or how those products interact with each other, yet they have been put in charge of creating the ability for customers to order them based on where they live.  The company has current issues with their website in that they can’t figure out how to get the right products to display for a customer in Rochester, N.Y. vs. a customer in Fort Wayne, Ind. Instead, Frontier has products configured by region, then broken down by zip code, and then by the customer’s phone exchange.

Unfortunately, new customers don’t know what phone number they will be assigned and that leaves them unable to determine what products are actually available to them. The products offered should be based on the customer’s actual service address, but these contractors don’t appear to have the expertise to make that adjustment.

The shopping cart application has also proved a problem, according to our source. Internal testing of the new site’s functionality has proved distressing because components of the site are still being developed. Recent tests found customers could not correctly select products available in their area or the site could not properly apply them to the shopping cart (a problem we found ourselves using the live site available now).

Our source tells us Frontier’s project manager is hell-bent on bringing the site up by Feb. 9, ready or not.

“We have brought up the fact that there are HUGE navigation issues that are completely not friendly to the customer,” says the employee. ” They are not concerned with any of those issues at the moment, just getting the product to launch. We have been told to manipulate the processes we are to use in order to be able to get any testing done.”

The whistleblower informs us customers are likely to have a range of problems using the new site if it launches in its current state:

• Customers will be able to place orders for products they can’t get;
• Customers will receive inaccurate information about the products and pricing;
• Customers will not be able to get any promotions that they can currently get on the existing Frontier.com application;
• Customers may not be correctly informed about installation charges or taxes, deposit requirements, credit validations, etc.

Frontier needs to take a lesson from some of their competitors that have greatly simplified the ordering process for consumers that can get quickly confused. Frontier should de-emphasize the tricks and traps from the many add-ons and service commitment agreements thrown at customers. Efforts to repeatedly up-sell customers on products and services should be managed separately, perhaps in a follow-up verification phone call where a customer service agent can handle any order changes required. With customers getting a choice between a cable, satellite, or a telco provider, those overwhelmed by one company’s website will simply find another provider.

In the meantime, those with questions or concerns about Frontier might do better just calling them directly at 1-800-921-8101.

Other stories of interest:

1. We Told You First: Frontier FiOS TV Installation Fee Heading to $500
2. Frontier Confirms Stop the Cap! Report That Company Is Considering AT&T U-verse Deployment
3. Frontier Promises to Keep Their Customer Service Inside the USA
4. Frontier Communications Is Getting Into the Green Energy Business
5. Customers Flee Frontier FiOS: Company Loses A Stunning 10,000 Customers in 3rd Quarter

Susan Crawford’s new book, “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age,” is on the receiving end of a lot of heat from industry lobbyists and those working for shadowy think tanks and “consumer groups.”

Most of the critics have not disclosed their industry connections. Stop the Cap! will.

Crawford’s premise that Americans are suffering the impact of an anti-competitive marketplace for broadband just doesn’t “add up,” according to Zack Christenson and Steve Pociask, both with the American Consumer Institute Center for Citizen Research.

Christenson and Pociask’s rebuttal of Crawford’s conclusions about broadband penetration, price, and its monopoly/duopoly status relies on industry-supplied statistics and outdated government research. For instance, the source material on wireless pricing predates the introduction of bundled “Share Everything” plans from AT&T and Verizon Wireless that raised prices for many customers.

Their proposed solutions for the problems of broadband access, pricing, and competition come straight from AT&T’s lobbying priority checklist:

• Free up more wireless spectrum, which is likely to be acquired by existing providers, not new ones that enter the market to compete;
• Allow AT&T and other phone companies to abandon current copper-based networks, which would also allow them to escape legacy regulations that require them to provide service to consumers in rural areas.

One pertinent detail missing from the piece published in the Daily Caller is the disclosure Pociask is a a telecom consultant and former chief economist for Bell Atlantic (today Verizon). The “American Consumer Institute” itself is suspected of being backed by corporate interests from the telecommunications industry. ACI has closely mirrored the legislative agendas of AT&T and Verizon, opposing Net Neutrality, supporting cable franchise reform that allowed U-verse and FiOS to receive statewide video franchises in several states, and generally opposes government regulation of telecommunications.

Critics for hire.

The so-called consumer group’s website links primarily to corporate-backed astroturf and political interest groups that routinely defend corporate interests at the expense of consumers. Groups like the CATO Institute, the Competitive Enterprise Institute, the Koch Brother-backed Heartland Institute, and the highly free-market, deregulation-oriented James Madison Institute are all offered to readers.

The Wall Street Journal trotted out Nick Schulz to handle its book review. Schulz is a fellow at the American Enterprise Institute, which is funded by corporate contributions to advocate a pro-business agenda.

Schulz attempts to school Crawford on the definition of “monopoly,” eventually suggesting “oligopoly” might be a more precise way to state it.

“Washington’s fights over telecommunications—and just about every other industrial sector—could use a lot less militancy and self-righteousness and a lot more sound economics,” concludes Schulz, while ignoring the fact interpretation of what constitutes “sound economics” is in the eye of the beholder. All too often those making that determination are backed by self-interested corporate entities with a stake in the outcome.

Hance Haney from the Discovery Institute claims Crawford’s conclusions are “misplaced nostalgia for utility regulation.” Haney cites AT&T’s breakup as the spark for competition in the telecommunications sector and proof that monopolies cannot stand when voice, video, and data service from traditional providers can be bypassed. That assumes you can obtain those services without the broadband service sold by the phone or cable company (that also likely owns your wireless service provider and controls access to cable television programming).

Haney also ignores the divorce of Ma Bell has been amicably resolved. AT&T and Verizon have managed to pick up most of their former constituent pieces (the Baby Bells) and today only “compete” with one another in the wireless sector, where each charges identically-high prices for service.

Crawford’s critics often share a connection with the industry she criticizes in her new book.

Haney places the blame for these problems on the government. He argues exclusive cable franchise agreements instigated the lack of cable competition and allowed “hidden cross-subsidies” to flourish, causing the marketplace to stagnate. Haney’s argument ignores history. In the 1970s, before the days of USA, TNT and ESPN, the two largest cable operators TelePrompTer and TCI nearly went bankrupt due to excessive debt leverage. With a very low initial return on investment, exclusive cable franchise agreements were adopted by cities to attract cable providers to wire their communities. Wall Street argues to this day that there is no room for a high level of competition for cable because of infrastructure costs and the unprofitable chase for subscribers that will be asked to cover those expenses. Government was also not responsible for the industry drumbeat for consolidation, not competition, to protect turfs and profits.

The cable industry repeated that argument with cable broadband service, claiming oversight and regulations would stifle innovation and investment. The industry even won the right to exclude competitors from guaranteed access to those networks, claiming it would make broadband less attractive for future investment and expansion.

Haney never discloses the Discovery Institute was founded, in part, to support the elimination of government regulation of telecommunications networks. Broadband Reports also notes the Discovery Institute is subsidized by telecom carriers to make the case for deregulation at all costs.

The Discovery Institute is essentially a PR firm that will present farmed science and manipulated statistics for any donating constituents looking to make a political point.

Broadband for America, perhaps the largest industry-backed astroturf telecom group in the country and itself cited as a source by the American Consumer Institute, seized on the criticism of Crawford’s book for its own attack piece. But every book critic mentioned has a connection to the telecom industry or has ties to groups that receive substantial telecom industry contributions.

NetCompetition chairman Scott Cleland, who accused Crawford of cherry picking information, does not bother to mention NetCompetition is directly funded by the same telecom industry Crawford’s book criticizes. Cleland in fact works to represent the interests of his clients: large phone and cable operators.

Randolph May’s criticism of Crawford’s book is unsurprising when one considers he is president of the Free State Foundation, a special interest group friendly to large telecom companies. FSF also supports the work of the American Legislative Exchange Council (ALEC), a group with strong ties to AT&T.

Richard Bennett, who once denied to Stop the Cap! he worked for a K Street lobbyist (he does), attacked the book on behalf of his benefactors at the Information Technology and Innovation Foundation, a group Reuters notes  receives financial support from telecommunications companies. He also received a $20,000 stipend from Time Warner Cable.

In fact, Broadband for America could not cite a single source criticizing Crawford’s book that does not have ties to the industry Crawford criticizes.

Other stories of interest:

1. Our Big Fat Telecom Monopoly: “Competition is So ’90s”; Michael Copps vs. Big Telecom
2. Susan Crawford Explains America’s Captive Audience: The Telecom Industry and Monopoly Power
3. Panic 911: Big Telecom Front Group’s Silly Defense of Internet Overcharging
4. Astroturf and Industry-Backed, Dollar-a-Holler Friends Support Telco’s USF Reform Plan
5. Inside ALEC: How Corporations Ghost-Write Anti-Consumer State Telecom Legislation

Follow the money to the real root of this argument.

After conclusive evidence that cable broadband upgrades have eliminated any congestion problems, the cable industry has finally admitted usage caps are not about “congestion relief,” but are, in their view, “about fairness.”

Reports of the Internet data exaflood, tsunami, brownouts, or even blackouts are highly exaggerated and always have been. But we knew that from the first day Stop the Cap! got started.

In the summer of 2008, Frontier Communications attempted to define a top limit on their residential DSL accounts at a staggeringly small 5GB per month. Time Warner Cable initially thought 40-60GB a month was more than fair when it tried to ram its own Internet Overcharging scheme down the throats of customers in New York, North Carolina, and Texas in April 2009. Comcast said using more than 250GB a month could create congestion problems on their network and be unfair to other customers. To this day, AT&T, one of the nation’s largest telecommunications companies, claims that anything more than 150GB on their DSL service or 250GB on U-verse could bring their entire network to its knees.

The Holy Grail of Wall Street economics for broadband is to monetize its usage, creating an endless money party for what is today a utility service. Millions have been spent lobbying anyone who will listen that usage caps and consumption billing were essential to promote investment, upgrades, and to expand broadband service into rural America. Since those arguments have been made, broadband rates have increased, investment has decreased on a per customer and often real basis, and the government is now trying to chip in public taxpayer dollars to get providers to wire areas that will never pass demanding return on investment formulas.

The second prong of selling this meme is the creation of an Internet boogeyman — the “data hog,” a largely fictional creature that supposedly cares only about consuming every possible bit of bandwidth and slowing your web browsing to a crawl. Shouldn’t he pay more, you are asked, at the same time these same companies continue to raise your rates and now attempt to limit your use of a service that should cost less.

This week, Michael Powell, former FCC chairman turned head of the nation’s largest cable lobby — the National Cable & Telecommunications Association, capitulated on the “congestion” myth to an audience at the Minority Media and Telecommunications Association.

Asked by MMTC president David Honig to weigh in on data caps, Powell said that while a lot of people had tried to label the cable industry’s interest in the issue as about congestion management. “That’s wrong,” he said. “Our principal purpose is how to fairly monetize a high fixed cost.”

He said bandwidth management was part of it, though a more serious issue with wireless.

But he pointed out that the cable industry had to spend a bunch of money on its network before the first customer was signed. So, for a business that requires “enormously high” fixed costs — digging up the streets, put the wires in — and operational expense, “it is a completely rational and acceptable process to figure out how to fairly allocate those costs among your consumers who are choosing the service and will pay you to recover those costs.”

When will Washington regulators and lawmakers stop drinking the Kool-Aid handed them by high-paid lobbyists?

But our readers know Powell’s arguments are based on nothing more than the same empty rhetoric that declared the Internet exaflood was at hand.

Cable broadband was introduced as an ancillary service in the late 1990s utilizing cable television infrastructure that was constructed and paid off years earlier. Introducing broadband required only incremental investment and that remains true to this day. Cable operators more than cover their costs with sky high prices for service delivering some operators as high as 95% gross margin on broadband. Capital investments have broadly declined for years as have the costs to deliver the service on a per customer basis.

Suddenlink president and CEO Jerry Kent admitted the days of expensive system upgrades were over and it was now time to rake in profits.

“I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity,” Kent said. “Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

Powell’s arguments ironically may apply partly to Verizon’s FiOS fiber network, which requires the retirement of copper wire infrastructure around since Alexander Graham Bell, but even Verizon covered much of its costs winning permission to raise rates years earlier to cover fiber upgrades. Much of that money was diverted to their wireless business instead. Today, Verizon FiOS manages just fine with no usage limits at all.

In fact, the only argument about fairness that should be open for debate regards the current cost of broadband service in the United States when compared against operators’ enormous profit margins. The lack of competition has allowed providers to increase prices and introduce “creative pricing” that always guarantees protection for the incredibly high average revenue per customer already earned.

Too often, Washington regulators and lawmakers drink the Kool-Aid handed them by an industry with an incentive to distort the truth. That incentive is the billions at stake in this fight.

Powell has even shelved the notion of the Cheetos-eating data hog burning up the Internet in his parent’s basement and has elected to try class warfare instead, claiming the most capacity is used “by a high end elite subsidized by the rest.” The real high-end elite are the telecom company executives cleaning up overcharging customers for a service that has become a necessity. Arguing for usage caps as a way to offer “lower prices” for those who cannot afford the ridiculously high prices the industry charges today only creates a new digital divide – the have’s and the have only so much.

Either way, providers laugh all the way to the bank.

Other stories of interest:

1. Building a Broadband Superhighway 5 Miles Long: How Usage Caps Ruin Faster Speeds
2. Oregon Senator Introduces Bill Requiring ISPs to Justify Congestion-Related Usage Caps
3. More Nonsense: Industry-Funded Group Claims They Have ‘Proof’ Caps Save $$$
4. New Report Slams Data Caps: An Internet Overcharging Climate of False Internet Scarcity
5. UsageCapMan Takes Exciting Trip Through D.C.’s Revolving Door; Now FCC’s Chief Economist

Time Warner Cable has soft-launched a new Ultimate speed tier offering 75/5Mbps service in the Dallas metro area, first to Signature Home customers promised free upgrades to the new speed.

That is 25Mbps faster than the company’s usual top speed, for $10 more than Ultimate 50 customers pay.

Dallas customers report Time Warner is offering some promotional pricing on speed upgrades, charging $79.99 for 50/5Mbps service, $89.99 for 75/5Mbps, and 30/5Mbps for $59.99. These prices are good for one year. Existing customers who cajole customer service about committing to a speed upgrade in return for a better price are achieving some success.

“We do have a 75Mbps tier in Dallas and a 100Mbps tier in Kansas City, both of which are part of our larger announcement on speed increases,” Time Warner Cable’s Alex Dudley tells Broadband Reports. “As far as those two tiers are concerned, we don’t have anything else to announce, though I think it is fair to say that we have been making an effort to increase speeds and will continue to do so in the future.”

In other words, expect a gradual rollout of speeds greater than 50Mbps in other cities across Time Warner’s footprint, particularly in areas where competitors cut into Time Warner’s market share.

Upstream speeds continue to be no greater than 5Mbps across all of Time Warner’s DOCSIS 3 speed tiers.

AT&T provides limited U-verse competition in the region, but their speeds are not competitive with Time Warner’s latest speed upgrades.

Time Warner Cable’s speed tiers and priced differently in various regions of the country. This shows pricing and speeds in upstate N.Y.

Other stories of interest:

1. 50/5 Mbps ‘Wideband’ Service Arrives in Dallas for Time Warner Cable Customers Later This Month
2. Time Warner Cable Officially Unveils 15Mbps Speed Increase; Some Markets Just Getting DOCSIS 3
3. More Speed Increases from Time Warner Cable: 100Mbps Coming to Kansas City
4. Time Warner Cable Lowers Promotional Price on 50/5Mbps “Ultimate Tier” to $79.95
5. Time Warner Cable Officially Unveils DOCSIS 3 Upgrades in San Antonio; Hill Country Residents Yawn

A one-way street or Avoidant personality disorder?

Back in July we noticed Time Warner Cable’s Conversations website, engaged in two-way conversations with customers, began a “dialogue” on the issue of its new 5GB usage-capped “Internet Essentials” plan first unveiled in several Texas cities.

The company provided its view that broadband innovation required pricing flexibility with new usage-based broadband plans to offer customers “more choice” and a $5 discount on service if they agreed to limit monthly usage to 5GB or less.

Despite sharing our two cents (and several of our readers tried to add their own as well), we noted none of these views ever appeared online.

This week we checked back and discovered the dialogue had decidedly turned one-way: namely from Time Warner Cable to you. The company deleted the few views that were published on cable television programming costs and removed its comment section altogether.

Our reader Kevin even tried to be generous in his comments to the company last summer, but to no avail.

“I basically told them if usage meter billing is inevitable, then give us no less than 300 GB a month, at a rate of $40 a month,” he wrote. “Seeing how 1 GB of bandwidth and data costs you less than $1 to generate to me, this is more than fair. Doubt they will even read it since it isn’t a ‘wow this is awesome, OMG i luv you so much for this new plan TWC’-message.”

They might have read it, but elected to avoid the uncomfortable notion of sharing the actual costs to provide broadband service to customers. It is not the first time, either.

Other stories of interest:

1. Time Warner Cable’s One-Sided Conversation About Usage Caps Continues
2. Breaking News: Time Warner Cable Relaunching Usage Based Billing
3. Time Warner Cable Reintroduces Usage Caps in Austin; Tell Them ‘No Thanks!’
4. Is Time Warner Cable Really Listening? TWC’s One Way Conversation
5. Let’s Dialogue: Coping With Peer-2-Peer & Video Usage On Broadband Networks

Cable subscribers in Natchez, Miss. are scratching their heads wondering why AT&T will neither confirm nor deny whether its fiber to the neighborhood U-verse service is coming to a neighborhood near them.

AT&T says if it told customers where the service was coming, it would give away vital information to its competition — the cable and satellite companies.

AT&T spokeswoman Sue Sperry says her competitors will stop at nothing to hang onto current customers, even if it means using predatory below-market-rate pricing.

“We’ve learned from experience that if they know what our footprint is, they go in and do retention offers and pretty much give their service away for next to nothing and then we can’t compete,” Sperry told the Natchez Democrat.

But considering its biggest competitor is locally-hated Cable One, a lot of customers would still be ready to switch even if AT&T sent the cable company its detailed business plans in advance.

“Unless you spend your weekends at the Bondage Bordello, there is nothing enjoyable about dealing with Cable One in Mississippi,” says Stop the Cap! reader DeWayne. “Last summer when their system went up and died on the folks over in Columbus, even the guy running it couldn’t tell when it was coming back.”

Top secret.

DeWayne started reading Stop the Cap! when we covered Cable One’s massive failure in August 2012 that brought all of its services in Columbus down while the company incredibly waited for express delivery of a replacement part. When customers could not get answers from Cable One over the phone, they lined up outside the local cable office only to learn from company general manager David Lusby he had no idea how many customers were affected by the outage or when the cable system would be back up and running.

“I hate AT&T but I hate Cable One more,” DeWayne said. “It is annoying that they won’t tell us when U-verse is coming to our neighborhood.”

Sperry claims AT&T U-verse is more robust than cable or satellite because it is powered by phone lines.

“That was one of the things during the hurricane, U-verse didn’t go out,” she told the newspaper. “It’s delivered through a phone line, and the phones are the last to go out.”

But unfortunately for customers, AT&T says it only rolls out U-verse in “a measured and slow way,” forcing customers to continually visit att.com and manually check availability using their home address.

But Sperry told the newspaper once customers get the service, they remain loyal to it. That may be especially true in smaller communities in Mississippi that cope with second rate cable operators not known for offering robust or affordable service.

Other stories of interest:

1. AT&T Forces Texas Customers With DSL to Take “Free U-verse” Upgrade That Costs $337
2. AT&T Brings U-verse to Springfield, Mo. — Mediacom Will Face Competition… Eventually
3. Exclusive: Frontier Communications Has Plans for AT&T U-verse for Landline Customers
4. Wall Street Gives Thumbs Down to AT&T U-verse, Broadband Upgrades: Too Expensive
5. AT&T U-verse Voice Suffers Nationwide Failure This Morning, A Few Customers Still Out

Image: schvdenfreude

Chattanooga Comcast and AT&T U-verse customers will need to open their wallets a bit more in 2013 as both the cable and phone company have announced new rate hikes that are now taking effect. But not everyone will pay more. Customers of EPB Fiber, which offers up to 1,000/1,000Mbps broadband and is a service of the publicly-owned electric utility is keeping prices stable until further notice.

Comcast customers face new increases averaging 4% in 2013 — $5 a month for Triple Play customers, several dollars more for broadband, and around $1 for basic cable service. Customers on promotions are unaffected until the temporary pricing expires.

AT&T U-verse customers will see price increases as much as $9 a month for television and broadband service.

Chattanoogans who ditched both private providers for the public option are sitting pretty with absolutely no rate increases to pay at this time. Although negotiations with programmers are ongoing, and costs are rising, EPB says it won’t raise any rates unless it becomes absolutely necessary. The utility takes rate increases very seriously, bringing them directly to its board of directors for approval.

Comcast and AT&T said the introduction of new services and increased programming costs contributed to their need to increase rates. Comcast says it has kept rates for its Xfinity service stable since 2010, a claim that doesn’t explain away its 4% rate hike in January 2012. AT&T said its supplier and labor costs also contributed to price increases, which also includes a broadband television surcharge.

If this seems like déjà vu, it could be because both AT&T and Comcast raised rates exactly one year ago this month. AT&T was the worst offender last year, boosting TV prices between $2-5 a month, equipment fees by $4-7 a month for broadband, and a $3 rate hike for its unlimited calling landline service. In comparison, EPB said it had no immediate plans to raise TV, broadband, or phone prices last year either.

EPB Fiber is the only Chattanooga telecom provider not raising its prices.

Customers facing rate increases can find an easy way to avoid them: threaten to take your business somewhere else. Retention agents are on the lookout for customers considering moving to another provider, and will usually slash rates to keep your business. Don’t want to argue your way to a lower rate or just want to say goodbye to Comcast and AT&T? Stop the Cap! highly recommends EPB Fiber, the most technologically advanced option in Tennessee, priced fairly with a proven track record of reliability.

A lot of Chattanooga area residents have already considered their options:

“Comcast is complete garbage,” writes one former customer. “Horrible product, even worse customer service. My Internet went out daily. I switched to EPB as fast as I could and have never been happier. I wouldn’t have Comcast again if it was free for the rest of my life.”

Another former cable customer reminds Comcast competition makes all the difference. He switched to EPB as well:

“Keep your Xfinity Comcast, you treated me like dirt when there was no other choice for cable. Now that I have that choice, I’ll never consider you again.”

Other stories of interest:

1. Time Warner Cable’s Rate Hikes Reach the Carolinas: Still $58/mo for Standalone Broadband
2. AT&T’s U-verse a Flop in Chattanooga — Only 821 Signed Up; EPB Wins Comcast Customers
3. Comcast Raising Prices… Again, But Their Usage Cap Remains Firmly In Place; 3.5 Percent Increase For Many
4. Chattanooga’s Can-Do Broadband: Faster Speeds, Lower Prices While Others Hike Rates
5. Chattanooga Gets America’s Fastest Residential Broadband from Publicly Owned EPB: 1Gbps for $350