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They’re Back: Time Warner Cable Adds Cap ‘n Tier Language to Subscriber Agreements

Phillip Dampier May 28, 2009 Issues 144 Comments

meterHere we go again.  Stop the Cap! reader Oscar noticed a tiny message on his most recent bill from Time Warner Cable stating the company had ‘updated’ their Subscriber Agreement.  Oh yes they did:

6. Special Provisions Regarding HSD Service

(ii) I agree that TWC or ISP may change the Maximum Throughput Rate of any tier by amending the price list or Terms of Use. My continued use of the HSD Service following such a change will constitute my acceptance of any new Maximum Throughput Rate. If the level or tier of HSD Service to which I subscribe has a specified limit on the amount of bytes that I can use in a given billing cycle, I also agree that TWC may use technical means, including but not limited to suspending or reducing the speed of my HSD Service, to ensure compliance with these limits, and that TWC or ISP may move me to a higher tier of HSD Service (which may result in higher monthly charges) or impose other charges and fees if my use exceeds these limits.

(iii) I agree that TWC may use Network Management Tools as it determines appropriate and/or that it may use technical means, including but not limited to suspending or reducing the Throughput Rate of my HSD Service, to ensure compliance with its Terms of Use and to ensure that its service operates efficiently. I further agree that TWC and ISP have the right to monitor my bandwidth usage patterns to facilitate the provision of the HSD Service and to ensure my compliance with the Terms of Use and to efficiently manage their networks and their provision of services. TWC or ISP may take such steps as each may determine appropriate in the event my usage of the HSD Service does not comply with the Terms of Use.  I acknowledge that HSD Service does not include other services managed by TWC and delivered over TWC’s shared infrastructure, including Video Service and Digital Phone Service.

This language, for the first time, creates the foundation for TWC to introduce usage caps, tiered usage rate plans, overlimit fees, disconnecting and/or throttling the speeds of those the company determines exceed their internal limits, and exempts their Digital Phone Service from any usage/metered billing.

The impact of this legalese is profound, because it now also closes the window for new customers to avoid Cap ‘n Tier plans by signing on to a price protection agreement.  Since the terms and conditions have now fundamentally changed, new customers must now agree to these new terms, allowing the company to force you into any metered billing scheme even if your current level of service doesn’t provide for that.  Formerly, price protection contracts would protect you from being forced into such plans until your contract expired.

It compels subscribers to retroactively agree to whatever overlimit fees the company may choose to impose.  It permits the company to suspend or reduce your speed, at their discretion, if you exceed any given cap.  It permits the company to automatically bill you for a higher tier of broadband service at their discretion, and is silent about your right to downgrade back to a lower level.

It specifically exempts their phone service from any metered billing, which now gives the company’s voice-over-IP phone service an automatic competitive advantage, because using one of their competitors may be counted against your usage allowance.

As Stop the Cap! has predicted since TWC temporarily shelved their scheme, they’d be back with more, and here is another piece of evidence to prove that contention.

(image courtesy: B Tal)

[Update: June 7 2009 — The Los Angeles Times’ Business columnist David Lazarus covered the Time Warner Cable cap issue suggesting Stop the Cap!’s reports about their contract language changes represented a “bum rap” for TWC.  Lazarus contends that the “Time Warner tips, tweets and blog posts illustrate how easily bogus information can be passed off as legitimate online — and how quickly the brush fire can spread across the electronic ether.”  He then pointed to several additional reports about the Subscriber Agreement changes and decided: “Problem was, nobody had it right.”  Lazarus then printed TWC’s position, which claims Cap ‘n Tier language has been a part of TWC’s Subscriber Agreement for “several years,” a premise he seems to accept at face value. His piece then moved into how online companies deal with “brush fires” once they get started online by quoting a “leader in corporate crisis management.”

Lazarus ignores the fact it was Time Warner Cable in San Antonio that specifically notified customers that “Your Subscriber Agreement with Time Warner Cable has been amended.  The new version is available at http://help.twcable.com/html/policies.html” Nobody here made this up.

Although he tells readers the story of the premise of our article, namely Stop the Cap! reader Oscar finding the aforementioned notification on the bottom of his May 2009 bill, he never bothers to challenge TWC’s representative about why that notice would appear on customers’ bills, and essentially dismisses the impact and scope of those changes.  If my bill had language like that on it, I’d certainly explore the “amended” Agreement.  Why tell subscribers in at least one city that a “new” Agreement is up and available for consideration they now claim isn’t new at all?

The opinion piece also edited the one line from our original report detailing what this contract language introduces for the first time.  That seems unwarranted, particularly when his piece seeks to dismiss those changes as “bogus.”

His edited version: “…warned that “for the first time” the company had laid the groundwork “to introduce usage caps, tiered usage rate plans, overlimit fees” and other customer-unfriendly moves.”

Our original: “This language, for the first time, creates the foundation for TWC to introduce usage caps, tiered usage rate plans, overlimit fees, disconnecting and/or throttling the speeds of those the company determines exceed their internal limits, and exempts their Digital Phone Service from any usage/metered billing.

Readers can decide for themselves whether or not this kind of language has been part of past Subscriber Agreements for “several years.”  The prior one is still linked at the bottom of the page on the Oceanic division of TWC’s Around Hawaii website.  Another version prior to the transition to the centralized Road Runner website is also available for review in PDF format.

The scope of the changes in the latest TWC Subscriber Agreement is unprecedented.  No earlier Agreement I am aware of addresses all of these important issues: usage caps, tiered usage rate plans and the implications for exceeding them (including their right to move you into a new tier automatically), the specific exemption of their digital phone product from them, and throttling speeds for consumers who exceed the company’s internal limits.

Although he acknowledges our willingness to amend original stories as new information comes to light (several updates in reverse order appear below), the premise of an accompanying poll, entitled, “Is there any way to separate fact from fiction online?” is part of the traditional media’s challenge to the web they rarely impose on themselves.

My view is that honest online sites are prepared to allow updated information, even if it challenges an assertion within a piece, to be included. Nobody here has any fear or second thought about amending the record, adding the findings of others, including Lazarus’ own piece.  We trust readers to be intelligent enough, looking at the entire record, to decide for themselves who has really gotten the “bum rap.”  In our view, none of this changes the fact it will be the consumer that ultimately gets it in the end.

[Update: June 3 2009 — Alex Dudley (a/k/a our old friend, TWCAlex) told Information Week today that the Terms & Conditions on TWC’s website were last changed in “August 2008” and that customers are notified when they are changed.  I don’t recall seeing any notice last summer/fall on my TWC bill.  Another Time Warner Cable spokesperson in the same article said that “that the company’s terms are always changing and they are updated regularly.”  The confusion continues. Also, why are customers in San Antonio being notified they have been amended on a bill for May 2009?  Regardless of all of this, the real issue remains the wording and its implications.]

[Update: June 1 2009 — It’s always the policy of Stop the Cap! to bring you as much information and detail as we can find, as well as issue clarifications, corrections, and any additional details we receive, even if it might call into question one of the facts originally published in an article.  Earlier today, I began to receive word that there was a dispute regarding the exact timing of the introduction of the revised language on TWC’s website.  Time Warner Cable representatives told another reporter that the language we reported on was published earlier than “implied” in this article.  In their eyes, this represented “nothing new.”  Our emphasis has always been about the language itself, and it certainly was new to our readers.  The timing issue, while not unimportant, was not the primary focus of this article.  What was the focus?  More evidence the company is marching full speed ahead to consumption based billing, and have made sure to lay the legal groundwork to implement it.

To help readers understand how this piece was assembled, I am going to walk you through the “process,” as well as bring you the latest information, including TWC’s positions, so you may have a clearer picture and draw your own conclusions.

Stop the Cap! Reader Oscar finds this notification that his Subscriber Agreement had been amended on his latest bill. (Click to enlarge)

Stop the Cap! Reader Oscar finds this notification that his Subscriber Agreement had been amended on his latest bill. (Click to enlarge)

The original idea for this article came from our reader Oscar in San Antonio who was prompted to visit TWC’s website because of a message printed on his May 2009 bill:

Your Subscriber Agreement with Time Warner Cable has been amended.  The new version is available at http://help.twcable.com/html/policies.html

To our readers, the new language which we reprinted above, was hardly a shocking surprise. The old language it replaces is still online. Our position has always been that TWC has a very clear agenda, which they have been public about, to “educate” customers about usage and move back towards a consumption billing system.  It’s something CEO Glenn Britt vocalized just last week in his preference for this kind of billing.

Our focus, therefore, was on the language of the Subscriber Agreement.  Our assumption has never been that this was introduced just a week ago on the website.  The lead time alone for a revision announcement to appear on a bill precludes that.  Our assertion was that TWC changed the Agreement, and Oscar was among the first to notice the changes and report them.

After our report, several other blogs and websites picked up this story.  Some of them emphasized the timing of the changes, not the wording of the changes.  That planted the seeds for a side dispute about the exact date these revisions went online.  It has been a matter of debate apparently within the company as well, because there were three different contentions shared with me today:

  • “the changes were made ‘months ago’ and there is nothing new here”;
  • “the changes were made awhile ago at an undetermined time;”
  • the changes were made and here is why…

When we called TWC about the Subscriber Agreement for our area, we were told what was online was written by the national corporate office and accurate after the termination of the “experiment.”  Earlier today, Chloe Albanesius writing for AppScout got a confirmation the Subscriber Agreement was changed as well, and why:

Time Warner said the update was simply a means of keeping its customers in the loop.

“Time Warner Cable believes that our terms of service should be a document that allows a customer to decide whether or not they’d like to purchase our service based on full disclosure of the techniques we are or may use to manage our network and improve service,” the company said in a statement. “In a dynamic and constantly changing business like high speed internet access, we believe that, while we are not legally obligated to provide such detailed terms before we implement a new technique or product structure, it is the best way to ensure that customers have all of the facts before they purchase the product.”

Do those facts include consumption-based billing in the future? “We have announced no change to our plans surrounding consumption based billing at this time,” the company said.

Bottom line, there is an open question about the exact date the changes were made, but not about the substance of those changes and their implications.  TWC doesn’t time stamp their Subscriber Agreement revisions either.  Although the latest developments today illustrate we have some room for improvement in trying to tie down these side issues with more clarity, we stand by our report regarding the language itself, its implications for metered billing, competition, and net neutrality issues.]

Currently there are 144 comments on this Article:

  1. Lou says:

    Everyone who is surprised by this will now sprout wings and fly to the moon.

    What a lovely world where consumers have to play by the rules and the monopolists and wannabe monopolists get to write those rules.

    Time to start contacting our representatives in the House and Senate….

    • I have notified our friends in Congress this morning about this. I expected the gas gauge before the legalese would come through, and after reading it, it’s worse than their original proposal, because they’ve now given themselves the right to throttle speeds, force you into a higher tier, exempts their phone product, and adds more reasons to allow them to suspend your account.

      I’m sure they got these ideas from their “listening tour” they were promising us. It’s another indication of just how interested they are in listening to customers.

      • preventCAPS says:

        You should get the media involved too as they seemed to have a large impact on the PR disaster that TWC wanted to avoid. If they can show that TWC is renigging on their promise to not impose caps, that could be quite powerful negative PR.

  2. lh says:

    Ah the real reason for the deferment of the ‘trial’. Their legalese was not up to snuff.

  3. Thanks for posting this info Phillip. I missed section (iii) when I first read it… I was too upset when I got to (ii) that I stopped reading… I am glad you contacted the Congressman about this.. Thank You

    • I will be particularly interested to see what Sen. Schumer has to say about this. We’ll be launching coordinated Calls to Action on this issue in the near future.

  4. MMiller says:

    I just tried to call the local TW office in San Antonio. When I told the person on the line (I wouldn’t say customer service rep, I didn’t get any customer service) I wanted to talk about the changes to my Service Agreement, specificly about Section 6, she said “Let me transfer you to the appropriate line.” No follow up questions, she just transferred me right away. After listening to about 5 minutes of commercials, I was transferred to a FAX line. I am so tired of dealing with this company and the lack of any competition here doesn’t leave me many options.

  5. LTS says:

    Government regulation is not the answer, I don’t want my government wasting time on this issue.

    The actions of TWC impact its customers and it is up to its customers to send the message. I would suggest that a campaign targeting local businesses be started. Areas, like Rochester, where variety in service providers is limited will become less attractive to potential job applicants. As more people begin to work from home to save money this becomes an ever increasing issue.

    Depressing an already depressed job market will further deteriorate the area. Perhaps local business can be encouraged to begin aggressive negotiations with TWC over their business class services.

    Consumers should also begin dropping TWC, simple. I’ve heard statements waiting to see what will happen. You are a fool for waiting. Switch now, send the message now. Prevent any inertia on this movement. The longer the TWC brain trust works on this the more they will be able to sell it.

    It’s up to the consumer to send the clear message and negatively impact TWC’s bottom line.

    • Government regulation may have to be an answer for communities that lack sufficient competition. The problem with dropping TWC is that many people have no real alternative. I tried DSL service here in Brighton and was stuck at 3Mbps which was completely unacceptable for what I do online, including keeping track of this website. Just uploading the video content would become a nightmare at those speeds.

      Business class is not metered… yet. But you are effectively stuck paying more for less if you go this route. Business customers are not affected by this, so it’s hard to get them on board unless/until it impacts them.

      If people can find alternatives that work for them, I’m all for that. My issue is that a free market competitive solution only works where competitors offering an equivalent level of service exist. Where they don’t, not allowing de facto monopoly or duopoly control of broadband should be a priority and that involves government.

      No community like Rochester should get stuck in a broadband backwater just because we are stuck with a non-fiber competitor who is unwilling to make the investments necessary to make their service truly competitive with the cable provider. There is simply no white knight competitor just waiting to jump into this community, or others like it.

      If you’ve been a regular reader here, you’ll know we haven’t been exactly sitting around and doing nothing waiting for them to run their propaganda campaign. We’re educating consumers across the entire spectrum of the telecom industry as it exists today, and empowering them with real facts they can use to counter the empty promises and us vs. them game they will play to pit customers against one another.

      I favor competition first, but regulation second — wherever competition simply just doesn’t exist and is likely not to exist in the indefinite future.

      • Adam Thursby says:

        I live in a situation like you describe. The only alternative we have would be 1.5Mb/s Verizon DSL. Unacceptable for what we do online.

        What are the chances that a class action type of anti-trust suit would stop this? There is absolutely no comparable service in this area whatsoever. This is ridiculous. While I’m normally against government regulation, when it comes to cable and telecom, there isn’t much of a choice anymore.

  6. Tim says:

    Way to stay on top of it Phillip. It is sad but I am not at all surprised about it.

  7. Jim says:

    Just because they say their Digital Phone service is excluded doesn’t mean its legal to exclude it. That seems pretty clearly to be a violation of anti-trust laws.

    Don’t stop at complaining to congress/senate and local officials. Contact the Attorney General and the Department of Justice’s anti-trust department. Time Warner is clearly planning to use their monopoly as an internet service provider to prevent competition to their digital phone product.

    • preventCAPS says:

      When discussing this with a TWC rep, I was told that their Digital Phone is not a competetor to Vonage or other VOIP solutions because TWC’s Digital Phone is not a VOIP solution. It is just simply digital and that the modem uses other digital pathways on the physical cable line and is not IP data traffic. How true that is, I do not know as I am not a Digital Phone subscriber, nor have been able to really research how it works.

      [edit] I just found the following on Time Warners Web Page :

      Is Digital Phone a VoIP service?
      While Digital Phone is an IP-based telephony service, unlike most Voice over Internet Protocol (VoIP) providers, it is managed over Time Warner Cable’s private IP network so customers’ calls never touch the public Internet.


      In those reguards, I consider TWC and Vonage on the same playing field, and for one to pass through the meter and the other to not breakse net neutrality principles in my opinion and an very un-happy with this.

      • Here is what TWC Corporate says:

        Is Digital Phone a VoIP service?

        While Digital Phone is an IP-based telephony service, unlike most Voice over Internet Protocol (VoIP) providers, it is managed over Time Warner Cable’s private IP network so customers’ calls never touch the public Internet.

        In other words IT IS VOIP. They just use a private network instead of the public Internet. It’s a non-answer answer to the more fundamental question of fairness, since their competitors don’t own the distribution network to the home and TWC, in this case, does.

        • preventCAPS says:

          Wow, you beat me to it Phil! I am so disgusted that TWC is so disorganized that they cannot give out accurate, let alone consistent information reguarding this “consumer friendly consumption based billing”

      • Jim says:

        Time Warner can claim all they want that they’re not a competitor, but they are. They don’t use the standard phone lines that Verizon’s home phone service uses, but they’re still a competitor. They are in competition with Verizon/AT&T/other home phone services, and all VOIP services. You don’t have to make an identical product to compete.

        Time Warner is (planning on) using their monopoly position as an ISP to prevent competition in digital phone and internet video services. I’m recommending sending complaints to the Attorney General and Department of Justice and let real experienced lawyers and judges decide what is legal and illegal instead of just taking the word of a TWC customer service rep over the phone.

  8. JBSil says:

    Do all current TWC RoadRunner customers retroactively agree to these changes? And if so, is it possible to call and specifically not agree to the changes without having your service disconnected?

    • Michael Chaney says:

      Usually the way you “accept” the changes to a TOS agreement is by your continued use of the service. Doing nothing constitutes acceptance, and t’s an all or nothing agreement….you can’t cherry pick. The only way to not accept the new changes in the TOS is to cancel your service entirely.

      One thing that I want to point out (and that the new TOS agreement points out as well) is that all three services, VoIP, broadband, and CATV, are considered separate businesses beholden to separate TOS. In the City of Austin, one thing that we’re looking into is the fact that our franchise agreement only applies to the CATV “business”, not VoIP or broadband. The franchise agreement allows for the city to force TWC to bill separately for the franchised service, CATV.

      I’m not sure about the language of franchise agreements in other markets, but I would definitely look into them and urge your city leaders to force TWC into separate billing if they insist on punitive changes to their broadband TOS.

  9. Vis says:

    Tomorrow is my last day with Time Warner here in San Antonio. Switching over to UVerse and looking forward to it. To top it off, AT&T will pay me $200 if I keep the service after 30 days, which we will. No guarantee that the future will be without tiers for AT&T (I know they have a test market somewhere) but I’ll take that chance. I’m actually breaking my “price lock” guarantee with Time Warner and it will be worth every penny I pay.

    • How much is it for breaking the contract?

      • MMiller says:

        [email protected], when I talked to a Time Warner rep at the local office, she said the cancellation fee started at $200 and went down so much (don’t remember the exact amount, I want to say $25) every 3 months.

        • Vis says:

          If I recall decreases like $x something every 3 months or so, starting at $200 and going down from there. In my case, the fee is about $70.00

        • Michael Chaney says:

          The first thing you need to do when you call is claim that this changes in the TOS represents a materially adverse change in your contract and therefore you are not liable for an early termination fee. If they try to claim that this change doesn’t necessarily mean they will be increasing your fees, tell them that by accepting this agreement you are agreeing to inevitable changes that haven’t happened yet and so by the same token you should be able to claim a materially adverse change now rather than later.

  10. jr says:

    Time Warner will buy more airtime on local tv and magically brownout reports will be on the newscasts

  11. Smith6612 says:

    It was only a matter of time until this would have shown up, and it turns out that my gut feeling was right again on this case . Let’s see how long it takes until Time Warner starts to whack people with this, but I’m sure this site would stop the capping again 🙂

    • Mazakman says:

      Lets hope that this site can stop the capping again, but it seems as if Time Warner is determined to make this happen. I will stay with Frontier for my one year and take my chances with them I guess.

  12. WROC-TV may be covering this story this evening. I’ll have video up if/when available.

    If anyone finds coverage elsewhere, let me know.

  13. Uncle Ken says:

    One would have to wonder just how relevant Schumer will be. He came to Rochester and told TW that Rochester will not be a test tube and TW agreed so TW held up their part of the bargain. Now no longer a test tube they are just going to do it and skip the test phase. As I recall nothing was ever said about that. The other providers are no doubt starting to think this metering thing just might be a good idea. If they all do it where are you going to run then? I think its even being picked up in other countries least it has them thinking about it. Now that I have your attention what is the one entity that can control and regulate this completely.

  14. Uncle Ken says:

    Mr. Smith: Sure it came back because it never went away in the first place except now nobody has to play with a usage meter. They will roll it out over their entire network and even loose a few people along the way until the rest of the providers catch up and start doing the same things. There is no provider on earth that ever wrote our TOS will never change. They are all in it for the money nothing more.

  15. Jeff says:

    This site is a great start but if you (the reader) plan to do nothing but read the site, we will never stop TWC. Phil is doing a great job but he can’t do it alone.

    This site is a place to organize OUR efforts. There is not one thing preventing each of us from contacting:
    1: Our US Senators

    2: Our US Congressman

    3: Our State Senator

    4: Our State Assemblyman/Congressman

    5: Our County Legislators

    6: FTC (anti-trust)

    7: FCC (VOIP access, Internet neutrality)

    8: State Atty. General (anti-trust)

    9: PSC (OK – maybe you can skip that one in New York – I tried it and they emailed back and said they didn’t regulate the “inter net”. )

    10: US Atty General

    11: County bureau of weights and measures. Yeah, didn’t think of that one did you? It’s a long shot but their purview is pretty broad. If TWC wants to sell by the byte, I would argue that the “byte counting device” has to be approved & tested by the CBW&M, regardless of what the TWC contract says.

    Bluto said it best: “Did we give up when the Germans bombed Pearl Harbor?”
    Get up off your keisters and do some work instead of waiting for Phil to do it all for you.
    I’ll see you at the protest. (hey, when is the next protest anyway? I saved my sign from the last one)

    • MK8 says:

      I’ve already contacted my house rep again (who said nothing in his reply to me before except “all is well, they’ve shelved their plan!”) but I only knew who he was cause FreePress autoforwarded my message to him. If someone who knows how to get the contact info off all these organizations on your list easily, and were to put links or directions on this site, I think it would be much easier for us to take action. The “take action!” link on this site doesn’t have directions to contact important people for those of us who haven’t done this before, so I am sure I speak for many when I say it’s an overwhelming task to figure out how to contact everyone we can. I don’t know where to start except when people give me links! More links! When I do get links I email every single person that has anything to do with this, and write the email myself. I’ve written the house and senate of NC opposing TWC’s bills, and my own state rep, all cause I was provided the links to their addresses.

      If anyone can help us figure out who we need to contact, or even get us to the right site where we can search, I would be very grateful. I like that you put the relevant issues beside each organization. If Phillip or someone could move your post to the take action section and add some links I’m sure it would help a lot of us.

  16. SF100 says:

    So what do we do? What should we be saying when calling politicians?

    • Jeff says:

      Good question: you don’t have to be a computer expert or a lawyer. And try not to use a form letter as I think those are discounted.
      One approach: “how would I explain this ripoff to a friend of mine over a beer?” Keep it polite and brief and you are done.

      • There will be considerable excitement around here later this week on some of this. Don’t want to say too much right now, but you’ll know when and who to call to thank and who to lobby soon enough.

        As to talking points, they are included in most of our Calls to Action.

  17. Wycked Knight says:

    Ok this is sad, as someone who works on repairing computers from home these caps will hurt me. I charge less money to do the repairs as most can not afford to take it to the shops or stores, plus it helps me to earn a little extra income. Correct me if i am wrong but it sounds like this is now a national issue, and so far i have not received a notice from TWC/RR about these caps. I’m in Van Nuys, Ca. it’s in the city of Los Angeles, San Fernando Valley area. These caps are really going to hurt us work at home types. Ywes i also do allot of gaming as well. so these caps are really going to hurt me. in more ways then one. i’ll be emailing Barbara Boxer and Dianne Feinstein to see if they can help to get these bogus capps these clowns at TWC want to impose.

    • MMiller says:

      Check your latest monthly statement, it’s a one sentence notice somewhere in the middle.

      • Wycked Knight says:

        California requires a list of the changes to be supplied with the notice, with atleast a 30 day notice of said changes. i know of a few companies that didn’t do this and were fined.

  18. techzen says:

    I want an alternative to TWC.

  19. It’s ironic that the stock photo used here is of power meters. Amongst all of the grousing about bandwidth caps, where are the people who follow their own logic and grouse about caps provided by their electrical company?

    What about the fact that your electrical company charges you by the kilowatt hour?

    Let’s face it, you don’t have a problem paying usage fees for electrical service because that is what you’re accustomed to. On the other hand, the broadband providers offered HSD as unlimited until they started to realize significantly increased costs associated with the service.

    Imagine if you opened an all-you-can-eat restaurant. You can predict your costs because most humans eat only a certain amount of food, and there’s no technology that is going to significantly increase their consumption. But if your customers started coming in and were eating ten times as much as they did a year ago, would you not react as a business owner? Or would you just say, “Oh, well the customer wants to eat that much food, I guess they can do it, and I’m so very sorry for even pondering raising prices.”


    Are the providers doing a few dickified things? Yes. But to honestly expect that you can demand unlimited data in exponentially growing amounts is not only foolish, it’s morally bankrupt.

    – Mike

    • preventCAPS says:

      Mike, You obviously have not studied the rest of the content on this page. You will see that even as we are consuming more bandwith as individuals, we are still costing TWC less then before because of the significant drops in wholse sale bits and bytes.

      For your all you can eat resteraunt, it would be okay if people ate 10x as much food because your cost of your food dropped 20x!

      • There are plenty of misconceptions out there regarding the cost of service, one of which you pointed out. The cost per byte does decrease, but equipment costs do not. Disregard the supposed gotcha that people have found with regard to the SEC filing (there’s a lot more complexity to that then can be explained here).

        Instead, think logically about equipment costs. The routers and switches used to port data are becoming faster and more capable of handling increased bandwidth. On top of this, TWC is re-engineering their entire network with fiber loops to be able to handle significantly increased bandwidth.

        In fact, if they wanted to, they could carry more then 10x the entire planet’s internet traffic on just one of these fiber loops. The capacity itself is there in some, but not all of the equipment.

        The issues are that there are bottlenecks in numerous places across the network, and TWC has to pay other providers for connecting to the Internet. To ease those bottlenecks TWC has to replace equipment. The relative costs are nearly always the same. Think about how much a computer cost in the late ’90s versus how much they cost today–the price point is nearly the same, yet the capacity is far greater.

        Now, consider the scale of TWC’s network and how much equipment would have to be continuously upgraded to handle the increased demand from users.

        We are at a tipping point where providers are able to basically keep up with user’s demands. But demands will start to exponentially exceed the capacity of the network, and the cost to maintain a network that copes with these demands would be preposterous.

        TWC is rightly preparing for the future. Whether they’re doing it in the right way is debatable, but to argue that the costs are decreasing is to not understand how a geometric progression works.

        – Mike

        • Ron Dafoe says:

          Are you saying that when they claim that the cost of their network has decreased while usage has increased is false?

          Are you claiming that TWC CEO is lying when he talks to shareholders?

          “Think about how much a computer cost in the late ’90s versus how much they cost today–the price point is nearly the same, yet the capacity is far greater.”

          This is false – My computer is far superior to what I had in the 90s and it cost 1/2 the amount of money.

          • I didn’t want to talk about this point, but I guess I might as well. It’s not because I’m scared to discuss it, but rather because this is a very complex topic that has been simplified a bit too much by people, including Glenn Britt. Bear in mind, your referring to a sound byte that Britt made to a non-tech audience.

            So, when someone like Britt says that the cost of their network has decreased, this is slightly more nuanced than just saying, “The cost of broadband is cheaper now, and we can charge more, yay!”

            The cost per byte has decreased, hence the earlier analogy involving computers. Yes, your computer now could cost 1/2 as much as one purchased in the ’90s. BUT, if you think of all available computers on a spectrum of available computing technology, the pricing stabilizes quite a bit.

            For instance, in 1981 you had one PC computer choice: The PC. It cost about $5k and was in the 99th percentile of computing power. In 1990 you could buy something in the 99th percentile and still spend about $5k, or you could purchase something in the 50th percentile and pay about $1500. Now, you can buy something in the 20th percentile and spend about $500 and get as much power as you need. But if you want to get a computer in that 99th percentile it’s still about $5k. Price out the best Alienware computer and you’ll see what I mean.

            This analogy holds true for the TWC network. Over time the tangible assets of the network depreciate and the construction costs are no longer a part of the budget. So, it’s like buying a computer in 1990. The cost of ownership of that computer becomes less and less each year, therefore the cost per byte also becomes lower.

            The problem is that the 1990 computer is also no longer viable. If you need to improve your computing power then you’ll need to buy a newer model–an additional outlay.

            TWC, to my understanding, has elements of a network that can handle an enormous amount of data–far more than it handles now. But other elements will need to be upgraded, and the cost to connect to additional networks will need to be handled. The data isn’t just free.

            So, what he said was true, but a bit misleading.

            Hope that helps.

            • Ron Dafoe says:

              If their costs are are truly increasing, then why are they not increasing the prices of the tiers they already have? TWC are not shy about raising their prices on the cable side.

              Why are they spending MORE money on trying to limit the amount of data people can consume?

              A price hike of $10 a month on each tier, while unpopular, would have only been a blip on the radar and not what we have here.

              Why can other providers do what TWC cannot?

              I understand your costs to a point. The problem being is TWC ARE NOT on the bleeding edge of technology and are therefore NOT paying new technology premiums for the hardware.

              Especially when the TWC CEO says they are not upgrading their network, that it is fine.

              You cannot just dismiss the SEC 10-k filing like you are doing.

              The filings and the CEO talking to their shareholders paints a picture directly opposite of what they are telling their customers. While the numbers may not be all inclusive, they show trends. TWC does not talk about anything BUT data usage increasing as why they need to make these limits.

              We can only argue AGAINST what they are saying and believe them when they say that these are the issues.

              I understand that other costs are there. I not talking about profit. I am talking about the actual numbers where data costs have gone down – despite the fact that usage has increased 40%.

              The real reason is NOT that they cannot handle the future. There are 2 reason as I see it:

              (1) To offset their cable loss instead of changing their cable business model as demand changes.
              (2) There is no competition in these markets, so they thought they could do whatever they wanted.

              • A few points:

                1. I imagine that your evidence that TWC are not on the bleeding edge of technology is that they haven’t rolled out DOCSIS 3.0. While I agree that they should deploy that, it doesn’t mean that TWC doesn’t have any advanced tech. As far as I know, TWC were the first to deploy regional optical rings in all of their divisions. I.e., the state of New York is served by a huge regional ring.

                Also, on the B2B side of things (where I worked), we were deploying fiber to the door long before any of other cable organizations were (as far as I know).

                As with many other things, it’s a mixed bag. And, by the way, customers weren’t the only people frustrated by the lack of DOCSIS 3.0….

                2. I’m not dismissing the 10-K report, but I am pointing out that revenues don’t mean squat. GM posted $22.4B in Q1’09 revenues. By the logic you’re using, GM should be rolling in money.

                Go read the 10-K if you want more details, but here are a few points: Costs have risen in toto by 6% due to various factors. HSD costs did drop, but that is attributed to a decrease in “certain customer care service costs.” My guess? They probably outsourced more customer care to Convergys.

                3. Offsetting loss in other lines of business is fine. I mean, they’d be stupid not to. But…

                4. The key issue here is that they -are- trying to figure out a new model of business and everyone is grousing about it instead of trying to work to figure out a better method. I have no idea if caps or tiering or anything else is the right way to go, but something should be figured out. Which leads to…

                5. Yes, the lack of competition is the absolute A-#1 problem here. When I was at TWC one of the mantras that was always repeated was, “We don’t compete on price, we compete on services.” There’s a lot of subtext in that statement. But what they fear most is having HSD become commoditized. Competition would bring that about, and, personally, I think that’s the only way for the consumer to get the best product at the right price. The problem is lack of choice.

                • Ron Dafoe says:

                  I am not talking about revenue and I am not saying that they don’t have advanced tech. I am sure they do. However, I am also sure that they don’t go around replacing everything anytime the newest stuff comes out at the premium price.

                  I don’t care personally how much they make.

                  Tell me again why a cap system is better than rasing the prices of all the tiers or just the top tier to pay for their upgrades?

                  The fact is, they have done all that you have said, without raising their prices and without arbitrarily limiting data cunsumption. I am glad that you have other services to compete with TW. Some of us have no viable broadband services at all. This is the market they were making the changes in, not your city, not NYC, or any of the other people that have actual choice.

                  Changing busines model does not mean trying to rape the customer for all they are worth ala the record industry with buying the same content over and over and over.

                  Changing the business model means bring new and innovated technology into the house and people wanting to PAY for it. It means changing the way they do business, not arbitrarily limiting someone’s data consumption to make a buck.

                  Here is something they could be announcing:

                  A more powerfull set top box (wich is exactly opposite what they have said – they have said they are looking at less powerful boxes) that brings the internet – through roadrunner – onto people’s TV. Building things like netflix, hulu, youtube, etc INTO their boxes and charging a fair price for those services on your cable bill.

                  Upgrading their network so high bandwidth people pay even more than they are now. No limits, $90 a month for faster speed. Why does TW always leave out that they have tiers now?

                  Intel got out of the memory business and fundamentally changed themselves to a processor company. This is what I am talking about. TW coould do that, and be hailed a hero like they were when RR first came out.

                • The entire reason for building their supercluster in NYS was to enjoy the economies of scale by serving a large geographical area, instead of smaller clusters. I remember the grand buyout of older Cablevision and TCI systems that was going on in the late 80’s and early 90’s. I remember the rebuild that introduced fiber. None of this was done out of the goodness of their heart. They did it to accommodate new services they could charge customers for and save a pile of money on incremental upgrades. Pre-upgrade, the average cable bill was under $30 a month. Today it’s closer to $60 just for video. More video channels crammed in (and billed for), despite a clamor for a-la carte.

                  The exact same thing just was accomplished here in Rochester without the whine and cheese party, when TWC upgraded for Switched Digital Video. There was no pity party, no proposals for 300% rate hikes. No “exafloods.” They simply did what they were supposed to – pony up the money to upgrade the infrastructure and market new services on it and charge for them for customers who wanted that level of service.

                  On the broadband side, it’s an entirely different story. Gnashing of teeth and rubbing of hands… paltry tiers and massive price hikes (in cities where FiOS doesn’t eat them for lunch), BS exaflood nonsense, and occasionally just plain deception. They claim with the flood of extra cash they want to receive, DOCSIS 3.0 is right around the corner… except it isn’t.

                  They could deploy DOCSIS 3.0 just like SDV, and enjoy increased revenues from selling higher speed tiers. This isn’t that. This is a credit card-like pricing scheme designed to get customers paying overlimit fees and penalties and/or artificially limiting consumption out of fear of customers “going over” and paying the outrageous 1000-2000% markup price for doing so.

                  HSD costs dropped for more than just customer care costs. Bandwidth costs also declined. So did their investment in their own network. They also added 11% more customers last year, which adds to the revenue side.

                  The key issue to me is that their exploration of new business models should not come at the expense of captive customers, especially in markets where competition is not available (or doesn’t offer a competitive quality service). There is a reason these experiments didn’t happen in a FiOS city. The experiment would end with a solid number of their customers rushing for the exits. TWC does certain things in non-competitive markets they don’t dare to try in others.

                  I don’t believe for a second TWC is interested in hearing from their customers on what they think. They obviously don’t care one bit. After a month with the Tweeting Twitters TWCAlex, et al., who replaced your own opinion with their own on everything, the writing was on the wall. It’s now been engraved after repeated polls showed 80% of customers want NOTHING to do with consumption based billing, but amazingly, that is the only option TWC is unwilling to provide…. That’s “listening to your customers.”

                  The history of this industry has been cable competes on speed, never price, telcos compete on price because they cannot compete on speed… until recently, in select markets. Everyone was fat and happy in profits. Then the video side of the business started hurting, and the phone line money train slowed down, and investors started demanding their usual return. Someone in corporate got the brilliant idea to gouge broadband customers and call it “fairness” and that is where we are right now. When the trade press applauds TWC for “taking one for the team” as everyone else figures out how much more they can get away with charging people, it’s just another example of what happens in an artificial duopoly/monopoly environment which we have now.

                  The answer is force in more competition, but in the meantime, reregulate them so they don’t enjoy the right to play patty-cake with an increasingly crucial component of modern American life – broadband. This isn’t a case of just pulling the plug on Cinemax if you don’t want to pay their price.

    • Jay Ovittore says:

      The best analogy of what the cable industry wants to do is with a water hose. You pay a flat fee for a hose. That hose delivers water which you pay for from your local water company. The hose company you bought the hose from doesn’t charge you more if you use more water. The water company does.

      The cable industry is providing a service as an ISP, they simply provide the hose. What I get out of the hose I pay for depending on what it is, or I don’t pay anything if it is provided for free, like this site is. If they start charging by how much I consume, one would have to assume that all websites should start getting a cut of the booty they have collected on the backs of others hard work and businesses. I don’t think they want to go there and neither does anyone else, due to the issues of net neutrality.

      • Sorry Jay, but that analogy is pretty far off. I see why you are making the argument that the providers are simply offering you a hose, but the problem is that you have disregarded the dynamics of the environment.

        I’ll try to rework your analogy so that it’s slightly more accurate:

        You aren’t simply buying a garden hose (pipe) from the hardware store and hooking it up to your water supply (content). You are renting the garden hose from a company with a reservoir. In other words, you are getting water from the water company.

        The water company doesn’t -produce- the water, they simply have the plumbing to route it out to your house. When you turn the tap on you get water that has come from everywhere in the world, but it ended up at their reservoir and now it gets piped out to that faucet.

        Now, if some new technology came out that prompted customers to use more water than was predicted, what should the water company do? Well, they’re already using consumption-based billing so that’s a non-issue, but they will also need to increase the size of the pipe.

        The ISP isn’t simply providing the garden hose, as you say. They are providing access to the water and the routing to get the water out to that garden hose. This is a dynamic system, not some static purchase as you’ve described.

        • Jay Ovittore says:

          What you are trying to argue, is that they control the content and they don’t.

          They provide the way the content gets to you and if that is getting clogged then it is up to them to upgrade their systems, which they are not looking at doing for 5 to 10 years according to Glen Britt. DOCSIS 3.0 is the answer to the problem they face, not jacking our bills through the roof for the same service. If they upgrade and offer me faster up/download speeds, we can talk about me paying more. Time Warner made $1.1 billion in the first quarter of this year on High Speed Data alone(from their 10-k SEC reporting). The last 2 years they have made a lot more money, while their cost to bring us the service has decreased.

          I am all for a free market, but that requires the existence of more then one entity in the market. Unless you live in NYC, SF, or another really large city you will be stuck with a monopoly or duopoly that is anything but a free market.

          This is nothing more then a corporate greedy profit-grab and can be looked at as nothing else but.

          • I agree about rolling out DOCSIS 3.0. It’s been on the table for the past 5 years and there’s no good argument I’ve heard against rolling it out. The best argument is that it makes sense for their business customers who are demanding QoS.

            I’ve already discussed the cost, but I do want to point out something in the SEC filing that’s important for people to know. That $1.1B figure you point out is revenue and does not illustrate operating or non-operating expenses.

            Unfortunately, the SEC filing doesn’t break out OIBDA data by service. So, to compare apples to apples, the revenues for Q1’09 are $4.36B, but the OIBDA is $1.46B. That’s a pretty sizeable difference especially considering that OIBDA doesn’t include non-operating expenses.

            Now, to make an argument on your side: HSD is a high margin product. I’m not sure what the margin is, but I have a feeling it’s somewhere on the order of 70%, which is practically unheard of.

            On the other hand, the cost of those revenues are high and are increasing. Though HSD equipment showed a decrease in costs from ’08 to Q1’09, all other costs barring miscellaneous direct operating costs increased. This includes employee expenses–can’t forget those.

            So don’t be mislead by revenue figures. Feel free to gripe about their margins on voice, video, and data. But also try to understand that there are costs involved in delivering the service.

            I mean, I’ve never heard of an employee say, “You know what? This time that my review comes around, can you pay me less and give me more work?”

            • Time Warner Cable’s CEO is so unconcerned about the “exponential growth” issue their Public Relations people are trying to leverage, he’s announced no interest in a widespread DOCSIS 3.0 deployment. In fact, TWC’s own management feels the existing infrastructure is more than adequate to run for at least the next decade without any major rebuilding.

              Do not be suckered into the exaflood nonsense. The “exponential” growth people are being asked to believe in comes from groups with a vested interest to find a justification to panic. Most of the people paying for these studies and yelling the loudest about it are equipment vendors trying to scare up sales, bandwidth providers trying to leverage control over their networks and dispense with any notion of net neutrality, and cable companies (among others) looking for a rate hike payday.

              Are equipment expenses significant? You bet. And with the mountain of profits the broadband divisions earn each quarter, while REDUCING the percentage spent on infrastructure enhancements and upgrades, TWC can well afford to move to DOCSIS 3 and still remain profitable at their current rate structure.

              The entire consumption billing scheme is designed to sucker people into believing bandwidth is like water, electricity or gas, which it is not. The closest comparison is wired telephone service, as the transported data is digital and comparable. By leveraging new technology available at economical prices, telcos have been moving towards flat rate, national calling, on a practically unlimited basis for at least the last five years. Pay one price, talk all you want. Backbone capacity continues to increase, transport schemes to push the data have become more efficient (Hulu, for example, no longer pushes entire video content to your computer, but rather has a small buffer to protect against bandwidth waste from people abandoning a stream), and bandwidth costs are declining.

              When you sit down and listen to the drivers of this consumption billing concept, it’s all about leveraging profit, controlling challenges to the core video business model, and as of late aggregating video content in a way that puts it under the control of the bandwidth provider. It’s -not- about capacity or fears about costs driving these large providers towards unprofitable returns.

              TWC’s PR people think consumers are stupid and that people will simply accept their analogy, their premise, and their billing schemes. The Internet has provided consumers with unprecedented access to the raw data and information people can use to verify their claims, and expose when they attempt to fix the facts around their own arguments.

              That is ultimately what we have going on here. TWC, among other providers, both telco and cable, seek to leverage additional return from customers. Unfortunately, the market testing has gotten abusive in its profit extraction limit testing, and is particularly so in uncompetitive markets. TWC’s is particularly egregious because it is designed to target and profit-grab from every tier of service with steep overlimit fees and penalties.

              I’ve seen this all before on the video side back in the late 1980s, and reregulation was required where competition did not exist. We are definitely heading back in that direction once again.

              TWC’s costs for broadband are very low compared to the video side of their business, which is becoming increasingly challenging for them, especially when broadband allows consumers to bypass cable subscriptions for video content. Marketing costs for their “digital phone” product are MUCH higher than the broadband side. Broadband, as TWC CEO Glenn Britt admitted late last week, is now becoming a core component of the TWC triple play package, one that is becoming essential for many subscribers. Understanding that means you can leverage more cash out of those subscribers’ wallets with reduced fear they’ll cancel, especially if they have few alternatives.

              TWC can lie to subscribers about the reasons for doing these kinds of things. They cannot lie to the SEC in their financial reports.

              • I addressed the 10-K thing earlier. My only advice is to learn a bit more about how this stuff works and to gain a better understanding of the assets and liabilities of talking to shareholders.

                But, as far as DOCSIS 3.0 goes, I’m with you. I have yet to find a compelling argument from TWC’s side for not deploying it. First off, the old DOCSIS standards are hampering the product line. TWC is facing increased competition in their premium products and have to rely on either fiber to the door or… well, not much else. That’s an expensive build out when DOCSIS 3.0 could cover 80% of their premium customers. I.e., few customers are buying fiber at speeds greater than 100MBps.

                If anyone can figure out why it hasn’t been deployed, I’d like to know.

                Here’s a quote from you (Philip):
                When you sit down and listen to the drivers of this consumption billing concept, it’s all about leveraging profit, controlling challenges to the core video business model, and as of late aggregating video content in a way that puts it under the control of the bandwidth provider. It’s -not- about capacity or fears about costs driving these large providers towards unprofitable returns.

                Items of note:
                1. As far as leveraging profit goes, why not? Seriously, why should a business not try to make money off these services? Fundamentally this comes down to something I’ve seen many times: When other people want to make money it’s greed, but when you want to make money it’s okay. Have you ever gone to your boss and asked to be paid less? They aren’t running a charity, so let’s not fault them for doing what any mentally sound person would do.

                2. Dunno if “controlling challenges to the core video business model” is the absolutely correct way of saying it, but yes, the nutshell concept there is correct.

                3. “Aggregating video content…under control of the [service provider].” This is a way more complicated subject than that sentence describes. To an extent this is a very forward way of looking at the future of intellectual property. I’m going to be talking about IP a lot more on my own blog, if anyone’s interested. But, I fear they could try to do some craptacular things.

                Anyhoo, you had more thoughtful points, but I want to respond to your next post before I get burned out.

                • To suggest that because I disagree with your conclusions about the meaning of their 10-K reports and the inherent conservative approach of dealing with shareholders represents some lack of “understanding” on my part is just a tad condescending. I base my views not just on the written reports themselves, but also their conference calls, public statements to the media and on panels, and weighing it against 20 years of covering this industry. The cable industry, in particular, is actually very predictable and easy to follow. The same basic philosophies, particularly in leveraging their unique position as a tolerated de facto monopoly, have been in play since the mid 1980’s.

                  This industry loves the fact it holds a unique place between a free market free-for-all and a regulated “essential” utility. They work very hard to preserve their status as the only wired provider of video in the marketplace, but also laugh off attempts to regulate that near-monopoly status by indicating you can live without cable television, so it’s not a necessity. Back in the early 1990s, they were doing all they could to keep the telephone companies as copper wire phone line providers, and not using telephone revenues (or asking ratepayers) to subsidize the cost of rebuilding their networks to advanced distribution platforms capable of delivering video.

                  Ironic, when you consider that is exactly what they demand today’s cable subscriber do with “take it or leave it” packages.

                  The reason TWC does not see DOCSIS 3.0 as a necessity or even that important is that they don’t see any immediate benefit from it, even if a lot of others including myself consider that short-sighted. DOCSIS 3.0 is a win-win because it cuts down on node splitting, gives additional flexibility to the provider and subscribers, and opens the door for additional tiers of service based on speed. It’s also incredibly cheap. But management philosophy is that there is no compelling immediate need to provide this service. Not until there is a competitor stepping up to claim the high speed ground. DOCSIS 3 gets deployed in one city in TWC’s footprint in 2009 – NYC. Verizon FiOS and Cablevision in the suburbs has something to do with that, of course.

                  Most subscribers don’t care about the 100Mbps speed tiers (and their $100+ monthly cost). But as you probably know, speed isn’t the only reason to deploy DOCSIS. Network management benefits alone make it compelling. But nobody has accused TWC management of being natural geniuses.

                  My belief is that leveraging profit need not come from stomping on the customer base. Create premium speed tiers and charge for them, and a significant percentage of the “heavy, problem users” TWC whines about will upgrade to them voluntarily to enjoy the benefits. Telling someone it’s a good thing that they can have the same service they enjoy today for $50 a month for $150 a month tomorrow is hardly compelling.

                  The thing missing over the last 20 years or so in the free market equation is the regulation component. If a company wants to force 300% rate increases on customers and that’s okay in the free market, than it should also be okay for customers to cancel service AND/OR petition elected officials to impose controls on those bad actors, if only as a deterrent to market abuse. I think we’ve all seen the results of undeterred capitalism in this country in the last 12-24 months. The average consumer should not be compelled to have a complete collection of Ayn Rand material on their shelves to learn the many tricks and traps of Ferengi-like economic principles.

                  Finally, I hope you are not falling into the trap of the “caps are good for the protection of intellectual property” theory I have heard a few posit. No bandwidth provider in their right mind wants to get caught in the middle of a piracy or copyright theft dispute. They worked very hard to get legislative and regulatory protection against being involved in that. “Send me a DMCA notice and I’ll deal with it, but otherwise keep me out of it.” Of course, that some of the providers of bandwidth now also want to be content owners and distributors complicates that incredibly.

                  My belief is that the video component and metering isn’t really about intellectual property as much as monetizing that video stream. That means setting up portals and front-ends to direct traffic through that provider to the video (and possibly exempting those that do from metering that specific content) in order to control it and drive competitors out of the market because they have to face the meter.

                  Cable is upset because the networks and some content owners are “using our network” to make money and now cable wants its piece.

                  • You’ve got some really good points, and there’s a lot to discuss, but I’ll limit it to a few things.

                    Correct me if I’m wrong, but you are basically arguing for speed-based consumption billing. Which, if that’s the case, would be a good thing to trial. When you get down to it, there is a consumption cap based on time available per month and bits available per month.

                    What they could investigate is the average amount of data transfered per user per month and set a commensurate speed to handle that amount of data. Then, assign this to the current pricing standard. Next, add tiers on top of that. As I mentioned earlier, DOCSIS 3.0 is, apparently, going to be rolled out. So yes, the tiering you describe would be available.

                    As far as your argument goes, you need to show them the dollars. Make a compelling case for why your system would make more money for TWC over the long run and they would seriously consider it. Points about customer churn due to pricing increases or dissatisfaction are valid and can be mentioned.

                    But I would also highly recommend avoiding saying things like the management at TWC have never been accused of being “natural geniuses.” While you might argue that I was being condescending, I was not saying that you are a dum-dum. Rather, I argued that your point was misleading/wrong and that there is more information in the reports than you are representing.

                    And I will take offense to the “natural geniuses” comment because some of the people I’ve known at TWC and other telecom industries are very sharp people indeed. What is too often forgotten is that many of these people are passionate about what they do. If you think that’s implausible, I would respond that you too are passionate about what you do.

                    I’m taking this a bit aside, but I think this is an important point: We often forget that people work in these companies. People who care about their work, care about the people with whom they work, and care about the quality of the products they make/services they provide. With that comes the liabilities of being afraid of the future, making mistakes, worrying about what people will think of you, and getting disheartened when something doesn’t go the way you think it should.

                    If you remember that a corporation comprises people just like you then it becomes easier to have a voice in that organization.

                    • TWC’s CEO has already pooh-poohed the notion of speed based tiering, and to be honest, it’s not my job to write up proposals for TWC to consider. It’s fairly obvious that this company is not exactly open to ideas coming externally, unless they carry the threat of legislative blowback. We’ve seen that repeatedly, particularly since April 1st. I am also privy to this company’s response to elected officials who do not stand with them on this issue, and it’s certainly not a “listening mode” on their part. The checks will be written to “the other guy” in the next election.

                      Considering the company officials themselves have admitted they made some major errors when they introduced their “experiments” in April, I think it goes without saying they are not natural geniuses. In fact, for them to still be moving full speed ahead, setting a baseline of what is and is not acceptable based on a limited trial, impacting only new customers, in Beaumont, Texas (hardly a representative sample of an entire company’s customer base), shows the errors are being compounded.

                      I think all of the offense being felt here most deservedly belongs to customers who reside in the communities impacted by these “experiments.” I lived, breathed, and fought this issue personally for several weeks before they backed down and am well acquainted with the range of personalities that work there. I have told TWC employees that there is nothing personal against them here. To just make it about personalities alone wastes time and energy. These decisions were made by a select few on the corporate level and then handed down to the “lucky” cities that were involved in the original experiments. A few local managers and PR people have been thrust onto the hot seat because of this, and we will keep them there whenever anti-consumer behavior like this rears its ugly head. But we will always be focused on the facts.

                      As one of the very first people in Rochester to beta test Road Runner, I’ve been a loyal customer ever since. It was not I that elected to abuse that loyalty and trust. It was Time Warner Cable, with this nutty scheme, that heaped the offense on me.

                      TWC *should* be disheartened and worried about this. Better yet, they should have learned lessons from it and moved on. But the arrogance level of those few in management that are hellbent on this because they personally believe in it for whatever reason means the fight will rage on. As I’ve learned over the years, if it’s really all about the money, than the blowback must threaten to cost them more than the earning potential afforded by the scheme. In this case, that blowback will come from people terminating their accounts (which is truly the best way to make this company understand) followed by a consumer push to change the entire landscape of this industry. For our readers, that means winning successes in stopping anti-consumer protectionist legislation to keep competition away from these companies, it means regulating broadband providers and establishing oversight where competition has failed to provide a solution to abusive practices, and it means municipal networks when private providers refuse to step up and provide an acceptable level of service.

                      It does not mean wasting your time talking to a company that refuses to listen, wasting time negotiating over how big a cap should be, or buying into their arguments, particularly when several of them have already been exposed as less than compelling (especially their clumsy attempt to co-opt the exaflood nonsense).

                      I always appreciate the dialogue with those who hold different positions, because it helps me illustrate the coming debate with the other side’s talking points and arguments, for the benefit of our readers. But it’s also clear you interpret the data one way, and we see it differently.

                    • Brion says:

                      Just a few thoughts:

                      – I’ve also read the 10-K and while the favorite numbers quoted here and elsewhere do indeed only reflect the revenues and costs related only to the HSD side of things, the vast majority of the remaining costs you speak of are video (royalties and other carriage fees), employee costs, and a one-time write-down for the remaining assets acquired from Adelphia.

                      – We don’t blame the workers for the misdirection of leadership. I’ve worked at companies that I did not agree with (though eventually I left choosing principles over paycheck) and I would not imagine to hold the low-level workers directly responsible for coming up with these abusive schemes in captive markets.

                      – I’m all for free market capitalism as well, but Rochester is hardly a free market when it comes to broadband Internet services. While Frontier does offer an access service it is most frequently bundled with phone service whether you want it or not and does not have the speed capabilities that Road Runner does. Earthlink is not a real alternative either because they use TWC’s lines and TWC has stated that Earthlink customers will be subject to caps as well; not to mention Earthlink is speed-limited at a lower top-level than RR in their line leasing agreement with TWC. Verizon won’t come it because Frontier is here but even if they did, it’s unclear if they would roll out FiOS anyway since they would not find enough value in doing so thanks to TWC’s lock on the market.

                • Michael Chaney says:

                  So what about IPv6? TWC will have to upgrade to DOCSIS 3.0 in the near future if for no other reason than running out of IPv4 addresses

                  “leveraging” profits huh……I recall another company that tried to take advantage of a deregulated market to try to “leverage” as much money as they could……just ask Californians and the former Enron employees how well that worked out for them.

                  Profit, in and of itself, is not bad, but when you give a monopoly free reign in in an unregulated market you WILL have abusive practices.

          • I forgot to add, though, that I 100% agree with you regarding the monopoly. That, to me, is the real problem here. Cable companies and telcos enjoy special regional monopoly privileges that block any form of competition.

            Things would be a lot better if I could choose between ComCast, Cox, TWC, etc. Right now my choice is between one cable provider, one phone service, and… that’s it. And I’m in Chicago.

            Those high margins would start to fall if they had to compete against each other.

            Isn’t it odd that these monopolies are derivations of systems created by the Government during the huge anti-trust period of the early 1900s?

            • Of course, the only thing that prevents these overbuilds from occurring are informal agreements between these providers not to encroach on each others’ territories. Local government screams for competitive choice and will gladly offer franchises to those who knock on their doors. But very few do.

              Investors have decided that cable is a license to print money, and have expectations of returns commensurate with that. No CEO is going to announce they are going to rush into Comcast or TWC territory and expect a favorable response from investor groups and analysts like Sanford Bernstein. They’ll get hollered at for the capital investment required for what will likely be a less profitable return as the incumbent provider lowers prices to compete.

              Telcos are the best chance of competition in the near-term, but only if they are willing to spend the money to rebuild their copper wire networks. Verizon is, and the likes of Mr. Bernstein have always been cool to it, suggesting they are spending a lot of money for not enough return. Unfortunately, if you are not served by AT&T or Verizon, you are generally out of luck, because the other players have decided copper wire DSL and satellite reseller deals are “good enough” and don’t want to spend the dollars to remake their networks for the 21st century.

              The other competition is municipal owned networks, and if you have followed our coverage regarding North Carolina, you’ll see telecom companies willing to spend nearly a half million dollars of subscriber money to prevent this kind of competition at all costs.

              More and more, it sounds like “common carrier” status might be an appropriate short-term way of addressing this. Forcing the provider to allow competitors onto their network and keeping the network owner from setting the terms and conditions (we’ve seen how that has worked with Time Warner Cable and Earthlink) might give consumers more choice.

              • There’s a lot to talk about here, but the main point is true: The cable companies do not want to compete with each other. They are very happy having their regions. The only direct competition they have is buying out other regions.

                But if you look at how happily the Adelphia liquidation went, you’ll see that ComCast and TWC are very comfortable saying, “Oh, no, you first. You can have Houma, LA, and, if it’s not a problem, I’d like some more of Los Angeles, please. Oh thank you, you’re such a dear!”

                Focusing on things like the cap is focusing on the results of a bad business practice, and not the practice itself. It’s kind of like the old stale joke, “Doctor, every time I raise my arm, it hurts.” Doctor: “Well, don’t raise your arm.”

                Right now everyone is embracing the telcos because they haven’t threatened caps. But they will someday. Or they’ll do something like it. The telcos have no competition except by the cable companies.

                Two competitors of differing products does not a fierce battle make.

                • Michael Chaney says:

                  “The cable companies do not want to compete with each other.”

                  And this is EXACTLY why we are all so furious over this, and don’t think for a minute we’re not keeping an eye on Verizon and AT&T. TWC “took one for the team” and we need to make sure the message is clear to all…… Caps cross a line that you will be punished for, so don’t even try it.

              • Brion says:

                “we’ve seen how that has worked with Time Warner Cable and Earthlink”

                I’m not sure if this is sarcasm or if it’s a statement that “common carrier” status works, but I would say that’s a poor example of “common carrier” implementation since TWC basically told Earthlink that it must not actually compete in the high-end with Road Runner if it wants to use the lines. Additionally it seems TWC still holds some sway over Earthlink’s prices as CEO Glen Britt has mentioned in the past that Earthlink customers will be capped as well when TWC goes live with their cap system.

    • jaycee says:

      There is another aspect to think about. Some on this forum probably know that all the big broadband providers connect at really large network access points(NAPs). For example I use ATT dsl and when I connect to a site that is running on the Time Warner network at some point the packets move from the ATT network to the Time Warner network. From my experience in networking ATT would want to get my packets onto the Time Warner network as fast as possible using the smallest number of ATT routers. ATT would be thinking why utilize our network when the site is on the Time Warner network. Make Time Warner bandwidth and routers be used more to get the packets. I do not know how much the different broadband providers pay for these large pipes connecting to the various broadband providers. It could be metered or it could be one set price. It would be interesting to see how much of the Time Warner traffic stays on the Time Warner network.

      One thing to consider is if one customer of Time Warner is using a large amount of bandwidth but 90% of it stays on the Time Warner network why would that person have to pay more if an identical person using the same amount of bandwidth but 90% of the later customers traffic is off the Time Warner network.

      • That’s a really astute observation, JayCee (sp?).

        And you are definitely correct that a lot of content is served by TWC servers. As an example, at one point all of HostGator’s content was provided via the TWC network, and they host a buncha sites. (I don’t think this is the case anymore, but I could be wrong.)

        That’s a very intriguing idea, though, doing metering at the handoff. My understanding is that that happens to an extent right now. The ISPs are consumption billed at the handoff to the backbone (e.g., TWC to Level 3). So even though they have, like, the equivalent of an OC-192 at that junction, it doesn’t mean they’re always pushing 10GbE through there.

        Please correct me if I’m wrong, but I think they are charged for data pass through and not just the presence of an OC-192 (or whatever).

        Anyway, yeah, I think there is something to investigate regarding inter- versus intranetwork data transmission.

        – Mike

        • Smith6612 says:

          I’ve noticed the same thing take place with a lot of my non-in network routing with both Verizon and Frontier. Basically, within 4 hops I’d typically would be on another provider’s network such as Level3, where I’ll take that network until I hit the datacenter or the datacenter’s network, or until I need to take another network. I do notice though that with many of the sites I visit, I do in fact remain on my ISP’s network (Alter.net) even though my ISP’s network is verizon-gni.net . With Frontier, typically once the data has gone through Rochester to New Jersey or Chicago, it’s typically on Level3 or who knows what network for the remainder of the trip.

    • There is noting ironic about the picture.. you must work for TWC…

      Electricity is billed by the kilowatt hour ( you said something that makes sense)… and no, I don’t have a problem paying for it that way… not because I am used to it… It costs money to generate electricity… “Let’s face it”.. on the other hand, I have never heard of the TWC bandwidth generating plant… Show me one. TWC pays the same amount whether we all use 400GB a month or 30gb a month… They don’t go around turning off routers and switches because there are less users online…. The only thing broadband providers realized is that they can flip us upside down and take our pocket change…

      You guys at TWC must be hungry all the time.. always thinking about food…. restaurants do increase the price and guess what? I understand the need because they see an increased cost in providing food. TWC once again does not need a bandwidth power plant..

      A few? LMAO… If they data cosumption grew exponentially.. based on last years traffic… I would be hitting 1TB a month every month this year.. and that is at ONLY 2X my last year’s traffic… I generate the same traffic this year as I did last year.. I am not downloading the internet once a month… I would need a data center to create exponential downloads based on last years figures… LMAO… morally bankrupt? I was sad too when TWC announced they lost $$$ in the first quarter of this year.. i wanted to donate but it was a toss-up between them and the Salvation Army… I guess I’ll have to get a new ISP once TWC disappears due to users and their moral bankruptcy… I guess what TWC is doing is not morally bankrupt…..

      • I used to work for TWC, yup. And before that I worked for a large bank. After TWC I worked for an educational firm. And now I’m a partner in a small business and am broke as hell because I’m trying to make this business work. The point of that is that I’ve got a sense of perspective on what TWC does, not just as a former insider, but having been in a number of disparate fields.

        You make a good point that the energy company is producing the energy whereas the cable co’s do not produce the content. Perhaps the water company analogy works a bit better, then, because the water companies (or municipalities) also do not produce the water. (To argue that they make it potable is splitting hairs.)

        You are also correct when you say that TWC makes the same amount if all users in one month use 400 or 4 bits… as long as you are arguing within a static system. If you locked all data down to 1988 standards, then we should all be using 2400bps modems. It wouldn’t matter if I only used 300bps or 2400bps, I’ve paid for my equipment. What are you forgetting about is that this is a dynamic system. That 2400bps modem is no longer tenable today, and 400Gbps will not be tenable in a few years.

        As far as your point that overall user consumption doesn’t increase exponentially since your personal consumption hasn’t increased over the past year, well… Problem 1: I did not realize that geometric progression always checked their calendar to make sure they grew in phase with each year. “I’ve gotta be twice as big by next Christmas!!” Problem 2: Are you honestly going to argue that since your consumption remained consistent that every other human’s did as well? No one else watched a Hulu ad and logged in for the first time?

        Look, TWC and all the cable companies have done some crap things. I think the prices are way too high, the monopoly system is morally bankrupt (yup…), and, personally, ComCast can eat me. But that doesn’t mean one shouldn’t try to have a sense of perspective when discussing these points.

        • Dude… you used to be a trainer at TW.. and here you are trying to “educate” us… I think you are still working for TW since you can’t make any $$ on your business as you stated before…. I have never heard of Kaplan financial.. maybe big in Chicago.. You should write a song about TW and their BS since you have a music degree; then, maybe then I can watch it on YouTube and pay TW extra for doing it…… better yet, make a short film and once again I can pay TW extra for watching it on YouTube… If the caps get implemented, businesses like yours should also be capped just because you bring in revenue and we do not and for every GB over the limit, you pay $2… LMAO, nice shirts dude… I would even buy one but since I know how you feel about TW -vs- the public I won’t…. try selling them on Jinx, people will buy them there.. or shirt.woot.com … hope you get a job soon, not working does suck big time but not as bad as caps…. Yeah, yeah… I just had to find out more about who you really are…

          • Heh!

            I wish I were still working for TW, it was a really nice company to work for. (Honestly.) Kaplan Financial is a part of Washington Post, and they’re a lot more dysfunctional than Time Warner. My little new company has some terrific ideas, but is severely undercapitalized.

            But, yes, I was a trainer at TWC and my job was to train our sales folks on the TWC products. When you get down to it, instructional designers are investigators (and analogy-makers). We try to find the actual breakdowns in knowledge and attempt to supplement them in a way that people can understand.

            So, when something sounds hinky, it’s in my nature to try to figure out how to make it work better. That’s the problem I’m seeing here: The data points and logic are not entirely consistent, nor are they necessarily completely workable.

            Because you guys are on the side of the consumer, I want you to be successful in your intentions of getting a better service. From TW’s perspective, they can attract more business by offering a product that makes sense, provides services people need, and comes with few hassles. (There’s never going to be a silver bullet product.)

            I’ve been on the other side of this as well. Listening to RVPs and the division personnel complaining about what corporate is doing and both having to explain to them why it’s being done while also translating their complaints into something corporate can understand.

            The important thing to note about TWC’s decentralized business structure is that the divisions have a pretty loud voice in the future of the company. So, your arguments at the division level (such as the Rochester thing) do have an impact.

            If you make an attempt to understand and appreciate their side of the business, and then can make a salient argument to the division folks… you might be surprised.

            Ah well, maybe all of this writing is an attempt to get you to pay more for your service….

        • BrionS says:

          One of the biggest problems facing consumption-based billing, despite what people may feel entitled to or the analogies they come up with, is there simply is no way at this point to only pay for what you *intentionally use*.

          Ads, malware, automated attacks from bots, random pinging, and various other forms of involuntary bandwidth consumption erodes away at a user’s paid-for content allocation. This is unfair on its face. To go with the utility analogy the industry loves to toss around, that would be like other people (and automated systems) taking my electric, water, and phone in small but constant amounts while I’m not actively using any/all of them yet charging me for the entire amount consumed.

          While it’s entirely possible for someone to leech your power from your home by tying into the line running to your house, it’s also highly improbably and very dangerous. Water is even less probable since the leecher would need to be inside your house to get access to the water after the meter (in most cases). Phone lines are probably easiest to tap into but most people don’t have metered local access, only long distance so that sort of falls apart as well (plus each call can be traced to a number at a given time and disputes can be raised with the phone company).

          Internet access (particularly with the “commoner’s” wireless configuration) is very easy to compromise by comparison, and since TWC meters from the CO or the modem itself and not somewhere behind your modem (akin to a meter), any and all traffic to the modem is counted against you even if it never makes it into a computer or device within your home network. This is simply unacceptable in terms of metering and counting bits toward a cap.

          If they have a device placed behind the modem that only tracks data that gets past a firewall (most gateway routers have a NAT firewall that does a pretty good job of keeping noise out) then it could be *considered* as traffic.

          However, at that point you still run into the problem of unwanted advertisements and other annoyances on sites you actually WANT to visit. I don’t begrudge a site for having ads to try to help defray costs, but I do disagree with being charged for the bandwidth they take up (especially the really annoying flash video ones). TWC would need to maintain as very up-to-date list of every ad-providing domain and discount traffic from those (such as doubleclick.net). Then again, if I was going to doubleclick intentionally to get my ad in their network that would be “legitimate” traffic to be metered if you will.

          As you can see, this entire concept is so mired in a brier patch of exceptions and false positives that getting an accurate AND FAIR assessment of one’s online data consumption that doesn’t double-dip or charge for others’ abuse of the network that it’s untenable in its current form.

          If they want to cut down on bandwidth usage go after the spammers which constitute 90% or more of all Internet email traffic (now with RTF attachments!), or the top 5% of users that TWC claims use over 50% of their network — those are the heavy hitters they should go after, not the Average Joe who just wants to watch his missed episode of American Idol.

          FWIW, my May bandwidth usage under normal conditions (no exceptionally large download sessions or Linux releases) was 38 GiB. This means at my current level of nominal usage I have to pay for one the highest tiers to avoid excessive overage fees. I am not the top 5%. I’d be surprised if I was the top 20%.

          • Hey Brion,

            “One of the biggest problems facing consumption-based billing, despite what people may feel entitled to or the analogies they come up with, there simply is no way at this point to only pay for what you *intentionally use*.”

            This is absolutely a problem, and something that needs to be factored in. It’s not like that amount of data is going to decrease.

            This, perhaps, should be added to the list of givens.

            As far as spammers and hackers are concerned, it’s certainly a recognized problem. Folks are dealing with that around the clock.

            “As you can see, this entire concept is so mired in a brier patch of exceptions and false positives that getting an accurate AND FAIR assessment of one’s online data consumption that doesn’t double-dip or charge for others’ abuse of the network that it’s untenable in its current form.”

            Any thoughts on that? I honestly don’t know what’s reasonable here. (I don’t think anyone does, which is why they’re doing these trials.)

            • Rick says:

              Discussing the merits and methods for C&T is a total misdirection of the underlying issue. HSD consumption is a hoax. There is nothing being consumed in the delivery of HSD that has any real marginal cost.

              We pay our monthly fees for access to the infrastructure, which includes maintenance, service, support and upgrades to the network.

              The current billing model provides sufficient revenue and margin to pay all the costs of delivering HSD, DOCSIS 3.0 upgrades, maintenance, support and administrative overhead…with plenty of profit left over. We have been over this again and again. There is NO justification for Caps and Tiers other than a money play driven by greed and the desire to extract as much cash as possible out of a captive audience.

              Caps and Tiers will not be accepted by the consumer. Period.

              • “HSD consumption is a hoax.”

                This is what I find frustrating, because there is a combination of illogic and short-sightedness here.

                If HSD consumption is a hoax, why did the cable companies recently upgrade their network? You can say that it’s to handle voice (which is data), but they upgraded it beyond the capacity required to handle voice.

                Why would they say that their network is viable for the next 10 years, but not say, “Our network will be viable forever!! Wee! Thanks, technology… Thechnology.”

                Why aren’t you using the same computer from 10 years ago? I mean, by this reasoning, that computer should be working just fine and dandy.

                One dude mentioned that he uses about 3 gigs a month. How many people even came close to 3 gigs a month five years ago? How many folks have grandmas that are using the computer now? How many people are no longer typing in ALL CAPS?

                Is HSD consumption an issue right now? No. Is it going to be? Yes. This is a dynamic system and defining your business by what’s happening at the moment… well, I’d like you to meet Messrs. GM, Chrsyler, and Ford.

                Highways built in the ’60s seemed more than adequate at the time. (By the way, they had no speed limits.)

                • Rick says:

                  I will try and be very clear about this.


                  Consumption costs are not a material (excuse the pun) factor or prime variable in the equation.

                  Do you not understand that there is no discernible per bit cost to transfer data, because nothing is being consumed, produced or depleted; unlike water, electricity and gas.

                  SUMMARY: Caps & Tiers are simply a money play; they are not required, as demonstrated by the current business model, to maintain an ongoing profitable enterprise.

                  Before you attempt to refute any of this, please provide the amortized cost of implementing a DOCSIS 3.0 upgrade along with a comprehensive business plan that negates my assertions with facts and data.

                  I apologize for yelling. 🙂

                  • Well, okay. Let’s give it a try.

                    DOCSIS 3.0 Rollout Upfront Costs:

                    These are, of course, severely ballparked. But let’s see what happens:

                    CPE costs:
                    Upgrades to existing CPE – $82.25M
                    (Est. 50% will require replacement – 8.6M subscribers, minus 3.9M voice customers, so 2.35M modems will need replacing. Approx. cost is $35/modem.)

                    Truck rolls to deploy new CPE: $47M
                    (@ $10/hr/tech, 2 hours per customer [including driving time, breaks, etc.])

                    Customer support during transition: $4.98M
                    (Assume 20% of customers will experience problems resulting in CSR times of 30 min./customer @ $8/hr [$1.88M], 33% will require truck rolls at same price [$3.102M])

                    Total CPE: $134.23M

                    Network costs:
                    CMTS – Shouldn’t require CMTS upgrades due to the voice rollout, could be wrong
                    CMTS/network programming costs – $79.2M
                    (Various roles and responsibilities, at least 5 employees per division, 33 divisions [that I’m aware of], assume average salary around $80k [including benefits], 8 months total effort)

                    Network security – $3.18M
                    (Various roles and responsibilities, 2 employees per division, 33 divisions [that I’m aware of], assume average salary around $80k [including benefits] {$2.64M}, 6 months total effort, plus corporate planning and deployment, 8 mos., 8 employees @ $90k [$.54M])

                    Network infrastructure – I can’t make a guess at this, because I no longer know what would be involved in changing the network to handle this rollout.

                    Total network: $82.38M

                    Corporate costs (I’m just going to use some estimates based on experience instead of calculating stuff):
                    Deployment training – $80k
                    Marketing – $350k
                    Service offering realignment – $250k
                    Product planning – $100k

                    Total corporate: $.78M

                    Total: $217.39M

                    So, that’s $217.39M for a one time cost. I’m sure there are things I’m leaving out, because that feels low based on quoted costs for similar projects.

                    I don’t feel like amortizing this right now, but it’s at least a start toward answering your question. Maybe later we can take a look at the cost per bit.

                    • Rick says:

                      OK. Let’s take another look at the 2009 10-Q.

                      HSD revenues for 2009 show a quarterly increase of 11% from $0.994B to $1.101B.
                      Based on this trend, projected HSD revenues for 2009 would be $5.19B.

                      So, with the assumption that if TWC implemented DOCSIS 3.0 on a nationwide basis, their revenue growth would be impacted positively. More people would be willing to pay more for more speed.

                      The cost of delivering HSD decreased by 18% in the 1Q09 from $0.040B to $0.030B.
                      That represents an annual reduction of at least $0.040B ($0.12B down from $0.16B)

                      Let’s take your DOCSIS 3.0 rollout cost of $0.22B and amortize the costs over a 10 year period with an interest rate of 8%. The annual cost to pay down the loan would be $0.03234B. This is LESS than the $0.040B annual savings realized from the current reduction in HSD costs.

                      They still maintain massive >70% margins, huge profits and become a world class HSD provider with the potential to significantly grow their client base.

                      OBTW…according to the TWC 1st quarter 2009 10-Q filing, the projected $0.120B annual cost of HSD represents ONLY 2.3% of projected $5.185B HSD revenues. The complete $0.217B cost of the DOCSIS 3.0 upgrade represents a paltry 4.2% of their 2009 revenues. Whether they amortize the cost over 3, 5 or 10 years is academic.

                      I will try and be very clear about this again….


                      We always get back to the same point, Cap & Tier is nothing but a money play.

                      What am I missing?

                    • Michael Chaney says:

                      Here…..I’ll save TWC the $80k for deployment training:

                      1) turn off old cable modem
                      2) unplug cable
                      3) remove old cable modem
                      4) place in new cable modem
                      5) plug in cable
                      6) turn on new cable modem

                      Man….I wish I could have got a cut of that $80k. Oh, and any tech that takes two hours to perform these steps should be fired.

                      Also, what are the cost SAVINGS to TWC by significantly reducing or preventing node splits by upgrading to DOCSIS 3.0?

                    • Huh, we reached the end of being able to reply. Wow.

                      Since it just came in: The 2 hours assumes that the techs don’t teleport to their service calls. The training costs are for training the divisions on new procedures and policies.

                      Okay, so back to Rick:
                      To double-check your figure, I looked at the 10-K. ’08 HSD revenue was $4.16B. That comes out to $4.61B assuming an 11% increase. So, we’re both doing goofy math somewhere, but we can safely say that $4.61B is the bottom end. It’s close enough to the $5.19B you cite, for these rough numbers to stay in play, though.

                      Technical point: I’m not sure that employee costs get amortized. No need to recalculate, just saying that I’m not sure that’s right. (Anyone know for certain?)

                      I’ll go with your amortization schedule–sounds good to me. We do need to remember that there are other HSD costs that we don’t have access to, though.

                      I decided to look up how much the broadband access itself costs.

                      Instead of doing more math, they did some research here: http://bits.blogs.nytimes.com/2009/04/20/the-cost-of-downloading-all-those-videos/

                      Unfortunately, it peters out when they try to get the cost per byte. There’s a response from Dave Burstein, though. His estimate, which I’m inclined to believe, is between $.05 and $.15 per gigabyte which works out to a 700-1500% markup under TWC’s cap plan (at $1/GB). (Zoinks!)

                      Now, the problem is that this is a cost for handling the pipe, and not for transferring the data. I.e., this is one of those static costs vs. dynamic environment issues.

                      Since, as you’ve pointed out, the DOCSIS rollout isn’t really that expensive when amortized, and profits will most likely make up for losses, let’s try this experiment:

                      Average customer pricing is $50/mo. Let’s say it’s pure profit with no associated costs. For TWC to lose money on that customer, they would have to transfer more than 500GB in that month (assuming an average of $.10/GB).

                      Huh. That ended up being a significantly more neutral number than I was expecting. Am I doing this right?? 500GB/mo. is more than most people are transferring now, certainly, but that’s not that big.

                      Some dude here said that he transferred 3GB last month. A number of people have hit Comcast’s 250GB/mo. limit. I’m positive I’ve transferred more than that in a month.

                      Yes, costs will go down, but 500GB/mo is probably already here for 99th percentile users, and probably not that far off for 50th percentile users as data usage expands.

                      I’m not going to argue that 700-1500% profit, or $1/GB isn’t absolutely insane and unjustified, though. But there’s definitely something of interest here–lemme know if these figures make sense.

                    • BrionS says:

                      500 GB/mo it pretty darn high. I understand it’s possible to hit if you try, but barring people leaving their home movie collections on BitTorrent all day, every day that’s a limit that’s unlikely to be hit by the vast majority of users today (and probably for the next year or two depending on the Next Big Thing Online).

                      I’ve been monitoring my bandwidth for almost 2 months now and it works out to somewhere between 32 GB/mo and 40 GB/mo for what I consider “normal” usage. This includes web surfing, some streaming video (not every day and not more than a half-dozen hours a week), software updates, online gaming (including hosting games to play with friends for a few hours a week), and a few music purchases.

                      If I put in a lot of effort I could probably boost my downloads to 100 GB/mo but 500 would be a stretch. Likewise if TWC adopted a flat cap for everyone of 500 GB/mo (much like Comcast) then I doubt I’d have as much of a problem — particularly if they didn’t charge me more for doing it. I’d probably still object on a philosophical ground, but from a pragmatic viewpoint that is a high enough limit for the foreseeable future as not to impact “normal” users. I can still see an argument for “abusers” that they pay for access speed, not amount of data but since individual connections are not shaped (indiscriminately) to the subscription speed limit, heavy users do take a disproportionate amount of bandwidth.

                      I’d prefer to see a guaranteed minimum throughput with a high burstable rate (when utilization is low) than to see data caps, but a data cap that is sufficiently high as to not impact the vast majority of users and which is re-evaluated every year to make sure it stays sufficiently high does not bother me.

                    • You kinda expressed my point, actually, Brion.

                      Although 500GB/mo is pretty high right now, it’s not unimaginably high. Some people are hitting it, but most aren’t. You said you’re around 40GB/mo, which is less than a 10th of this theoretical break-even point.

                      It’s plausible to me that 5 years ago you were probably at 4GB/mo. And 10 years ago at 1GB/mo. (Actually, that sounds optimistic).

                      2 1/2 years to 400GB for you? That doesn’t seem implausible to me at all.

                      Here’s a reasonable case in point: As more content is being developed by the consumer they’re going to be exchanging more uncompressed data with each other during production. Let’s say my buddy Gorf and I are working together on a YouTube video. The source files for a video I recently made (Plug! http://www.youtube.com/watch?v=VixSDfgm0dc) came out to 68GB while I was working on it. There are few reasons why those 68GB would need to be transferred a few times. And this video is only 6:12 long.

                      As is always the case, increased speed will create increased bandwidth demand. (I’d’ve never transferred those files online 5 years ago, but I’d consider doing it now.)

                    • BrionS says:

                      Not to be nit-picky but speed = bandwidth. Increased speed will allow for increased content demand and content will require greater speeds (bandwidth) to access in a reasonable time frame because of its size.

                      Put another way, you can download you 68 GB over a 10 Mpbs connection but you wouldn’t want to — it would take a very long time. You’d prefer to download it over a 50 or 100 Mbps connection to reduce the wait.

                      Streaming HD, video game downloads from Steam, and collaborative projects with large files are a few examples of extremely large content that begs for large amounts of bandwidth to be practical but with the exception of streaming HD (and still perhaps with a large buffer) one can get by with today’s 10 – 15 Mbps.

                      TWC (and others) still think of “Internet use” as email, simple static web page browsing, and instant messaging which is simply an outdated and unrealistic view of the Internet and how it’s used today.

  20. ralfvin says:

    We pay TWC to provide the pipe, not the content. TWC does not create, manage or modify the content that is delivered via their pipe. The money we pay TWC is used to maintain the pipe, which includes system management and upgrades (i.e. DOCSIS 3.0). TWCs client base and revenue continue to grow year after year, as do their profits.

    Cap and Tier is simply a money grab. TWC will rue the day they institute caps, because their client base is well informed and will drop service like a hot rock. All the “re-education” plans, spin-meisters and dis-information campaigns will ultimately backfire and create a very negative us vs. them conflict between a monopoly or oligopoly and it’s victims.

    Information is power and Stop the Cap does an excellent job empowering the community. BTW, Mr. Hightower all of your arguments fall flat when confronted with knowledge and logic. You can put lipstick on a pig, but it will still be a pig; you can paint Cap & Tier any way you like, but in the end it will always be nothing but a money grab.

    • Actually, if you’ve noticed, I haven’t painted cap and tier in any particular way. Rather, I’ve argued against some of the points that are used against cap and tier. You say that my arguments fall flat when confronted with knowledge and logic. Is this the same knowledge and logic that uses revenue as a talking point? Or perhaps the same knowledge and logic that implies pulling one bit through the pipe is inherently the same cost as pulling one Gb through the pipe?

      If that’s the case, I’m very pleased to be on the side of ignorance and irrationality….

      By the way, please find actual numbers to back up your point that profits are increasing year over year–at least, to the great extent that is implied. Take a look at page 22 of the 10-K for Q1’09 (watch out, facts ahead!). The only significant growth was in voice subscriptions at 23%. Video and HSD stayed basically level (2% and .7% respectively).

      Overall, net income growth was negative going from $242M to $164M.

      That, of course, could be meaningless due to the general downturn in the economy. But this isn’t the picture of a company that’s raping its customers as is certainly implied.

      But I love this dilemma: Who’s greed is going to win? The customer’s or the businesses? Ooo, it’s a great match.

      • Rick says:

        Absolutely amazing! You are a true spinmeister. I’m completely fascinated by the abject arrogance of TWC and its minions to assume the public requires “re-education” and is incapable of disputing the plethora of mis-information continually spewed to justify its money play. FACTS? OK..lets do it!

        Actually it is not a 10-K for Q1′09 it is a 10-Q, which is a quarterly filing. 10-K’s are filed annually at the end of the year. Regardless, let’s dig in. Time Warner’s 10-Q is was filed on 04/29/09 for the Period Ending 03/31/09.

        My reference is to year on year increase in revenue and profits for broadband services; not video on demand, VoIP or other losing market strategies. I’m not concerned about diminishing cable or VoD revenues and don’t intend to subsidize TWC’s attempts to revive lost markets.

        FACTS (1Q09 results):

        High-speed data subscriptions: 11% REVENUE INCREASE OF $137M from $994M to $1.101B
        (PAGE 6 OF TWC 2009 1ST QUARTER 10-Q http://files.shareholder.com/downloads/TWC/652566315×0xS950144%2D09%2D3639/1377013/filing.pdf)

        PAGE 7 QUOTE: “High-speed data revenues increased primarily due to growth in residential high-speed data subscribers and an increase in average revenues per commercial subscriber. Commercial high-speed data revenues were $140 million and $120 million for the three months ended March 31, 2009 and 2008, respectively.”

        COST OF HIGH SPEED DATE REVENUES listed on page 8.
        DOWN 18%. $40M in 2008 reduced to $33M in 2009.

        BOTTOM LINE: Broadband is VERY profitable even in tough economic times. Don’t tell me I need to subsidize their divisions that are losing money. I’m paying for broadband access, not video on demand or VoIP losses…and most certainly not the obscene salaries paid to upper management.

        My facts were and are accurate! I suggest you take a reality pill and turn off the spin machine.
        Have a nice day.

        • First, to be a spinmeister one needs to have a vested interest in the thing in which they are spinning. Barring the well-being of some friends who work for TWC, I honestly don’t care what happens to the company. If everyone canceled their service because of this… I’d hope my friends could get other work.

          But, mistakes were made: Yes, it was a 10-Q, not a 10-K. Sorry about that, had 10-K on my mind since that kept being thrown around.

          Revenue increase: Whoops, 11% not .7% as I said. I mistyped “1001” and not “1101” when I did my own calculation. Still, 11% is not a huge increase. If you take out commercial growth, it is less than 11% for residential.

          The problem that we will both run into is that the data is not provided to truly examine the profitability of HSD. Take a look at pg. 17, and you’ll see an increase in the cost of infrastructure. Does that go to HSD or video? We don’t know.

          Also, you can’t flatly dismiss the other costs that are listed except for video programming. Employee costs are a factor. It’s not like the HSD side works on pure wishes and hopes. But again, what percentage of employee costs are related to HSD? Dunno.

          Here’s what I can tell you: They’re running a high margin. Estimates are around 70%. If your argument is that they are bringing in $1.1B and only paying $33M for it is correct, well, I don’t even want to try to calculate that margin.

          But that’s not the case. If the 70% margin is a good indicator, real costs for HSD are probably on the order of $647M.

          I imagine you’ll argue it’s time for me to get back on my merry-go-round.

          • Rick says:

            No need to get back on…it can be dizzying. I completely agree that a 10-Q does not provide sufficient data to accurately assess the magnitude of margin or profit associated with HSD revenues. Suffice to say that the current HSD business model without Caps & Tiers, produces financials that are very positive and would easily support a sustainable standalone business. The need or desire to subsidize failing business units is understood, but will not be tolerated nor paid for by a money play on HSD.

            TWC needs to recognize that the world is changing and that cash cows die and markets change. Video on Demand over cable has lost its market potential and is being replaced by new delivery mechanisms. The high margins for cable television will continue to be eroded by content over HSD. As they say stuff happens. Kodak film sales is a good analogy…once very profitable, now totally displaced by digital imaging. TWC needs to find new paths to revenue, but not at the expense of their customer base. TWC’s HSD customers will not tolerate paying for TWC’s other losing business propositions. Any attempt by TWC to prop up losing business propositions by extorting monies from HSD customers with C&T will back fire and end up killing their golden goose (HSD customer base).

            • preventCAPS says:

              And the people say “amen”

            • Phew, because I was getting barfy on the merry-go-round….

              Regardless, you said, “Any attempt by TWC to prop up losing business propositions by extorting monies from HSD customers with C&T will back fire and end up killing their golden goose (HSD customer base).” Which got an amen, and I’ll partially second that.

              So there’s an opportunity here to try to puzzle over something. I’m going to give a set of givens and let’s see if we can find an answer. They might not listen, but it’s better to try to come up with a solution for their business than to just gripe:

              Givens (these are as basic as possible):

              1. Today’s technology will be inadequate for tomorrow’s content
              2. Online content will increasingly become the predominant medium
              3. New methods of content delivery will evolve
              4. Individuals will become increasingly important in the creation of new content (e.g. YouTube)

              And here are some debatable givens (I think they’re valid, but you might disagree):

              1. Customers don’t care about services (e.g., speed) as long as they get the level of service they are expected (e.g., no blackouts, no massive slowdowns)
              2. As content moves online, the advantage of a single bill such as with bundled services becomes less significant.
              3. As a result of #2, customers will be more willing to drop their current provider
              4. The wireless phone companies will continue to upgrade their networks to the point that streaming media via wireless/cell is a viable competitor

              Feel free to add or change these, if you like.

              With these thoughts, which I’m sure they’ve had at TWC, how does a company prepare for a future like this? They know they can’t hold on to video forever, but they also need to be prepared to pay for the infrastructure of the future. And they need to be prepared to pay for it. All of the budgets we’re talking about now don’t explain what they’re going to do in 10 years when the marketplace might be very different.

              • Rick says:

                My responses are imbeded…

                Givens (these are as basic as possible):

                1. Today’s technology will be inadequate for tomorrow’s content
                >>RICK: If history predicts the future, this is hard to argue with.
                2. Online content will increasingly become the predominant medium
                >>RICK: Online is but one method, whether it predominates in the future is yet to be seen.
                3. New methods of content delivery will evolve
                >>RICK: If history predicts the future, this is hard to argue with.
                4. Individuals will become increasingly important in the creation of new content (e.g. YouTube)
                >>RICK: Safe bet from my perspective

                And here are some debatable givens (I think they’re valid, but you might disagree):

                1. Customers don’t care about services (e.g., speed) as long as they get the level of service they are expected (e.g., no blackouts, no massive slowdowns)
                >>RICK: I agree. Speed is a metric. People care about quality of service meeting expectations.
                2. As content moves online, the advantage of a single bill such as with bundled services becomes less significant.
                >>RICK: I would argue that bundled services are already not significant.
                3. As a result of #2, customers will be more willing to drop their current provider
                >>RICK: Its not about bundled services; its about quality of service.
                4. The wireless phone companies will continue to upgrade their networks to the point that streaming media via wireless/cell is a viable competitor
                >>RICK: Nope. Not gonna happen anytime soon. Given a choice between wired and wireless, wired ALWAYS wins on performance. There just is not enough radio spectrum available to compete with copper and fiber. WiMAX and LTE can only do a couple of Mbps, which in no way is competitive with wired solutions to the home. Short range high-speed wireless solutions work in the home, but won’t support a municipal deployment.

                Feel free to add or change these, if you like.

                With these thoughts, which I’m sure they’ve had at TWC, how does a company prepare for a future like this? They know they can’t hold on to video forever, but they also need to be prepared to pay for the infrastructure of the future. And they need to be prepared to pay for it. All of the budgets we’re talking about now don’t explain what they’re going to do in 10 years when the marketplace might be very different.

                >>RICK: That is why Glenn gets $300K/week…to figure this out. The obvious answer is to protect and nurture HSD services by spinning it off as a highly profitable standalone division that can use its profits to build and enhance its infrastructure to ensure its longevity in a competitive marketplace. TWC could easily support the cost of implementing DOCSIS 3.0 with HSD revenues if it wasn’t saddled with the overhead of its losing business propositions. Perhaps the answer is to divest itself of the businesses that are losing money. shrinking or becoming obsolete.

              • Michael Chaney says:

                1. Customers don’t care about services (e.g., speed) as long as they get the level of service they are expected (e.g., no blackouts, no massive slowdowns)……. at a reasonable price!

          • The investor conference calls answered your question about the cost of infrastructure. The big hits were for two components:

            1) Deployment of switched digital video (SDV) to handle increased demand for HD channels.
            2) Set top box purchases (Britt continues to lament the expense for these as late as of last week).

            Infrastructure expenses for broadband have been on the decline for several quarters, and that came straight from the conference calls. Their existing network is not at capacity and bandwidth costs are declining rapidly. With no plan for widespread DOCSIS 3 deployment, there is no major expense of any kind for them on the horizon.

      • Some of the answers you are looking for came in investor conference calls. The voice component is still adding customers, but actually it’s costing them plenty in marketing to acquire them because the low hanging fruit has already been picked.

        Video growth has been compelling because a lot of it is coming from the DTV transition as people decide the picture they are getting in a post-analog over the air world isn’t worth it and they are signing up for cable. Downgrades in premiums are significant because of the economy, but more importantly from the significant rate increases most TWC systems imposed on premiums starting in January (locally they increased by $2 apiece — it was what compelled me personally to dump two of them). PPV is also down.

        The broadband component is still doing fine and they are very happy with those numbers. Their only concern was the “Lite” tier which is not priced with as high of a return. But that was neutralized by the “Turbo” add-on, which is almost free money for them. There is very little evidence economic conditions caused any significant downgrading on the broadband side. Only competition from Verizon and AT&T have been noticed.

        Video remains the profit drag as costs continue to spiral upwards and consumer resistance and competition take their toll.

  21. Uncle Ken says:

    “Cap and Tier is simply a money grab. TWC will rue the day they institute caps, because their client base is well informed and will drop service like a hot rock.”

    And run to where?

  22. Uncle Ken says:

    Naturally I think and comment in small sections. The minute I hit the submit button I think of something else I wanted to say. STC tried DSL and did not like what they saw. Huge cost, slow speed, and a couple of years of agreements and no guarantee on data amounts allowed. We have no place to run and it is looking like we will never have a place to run to until we get the politicians out of bed and out of our pockets. Mostly only 4 states/ cities/ areas are showcased here but in reality it is going to spread through an entire country if the genie gets out of the bottle.

  23. Rick says:

    Anywhere but TWC.

  24. Uncle Ken says:

    Rick: That is easy to do if we had other options to go to. We do not. This morning the first comment I read was from Mr. Hightower. Im seldom lacking for words but I was stunned did not know what to think or say and thought about it all day. The newer comments made for an interesting day of reading. Peaceful arguments made back and forth on the subject from people way over my league. Most everybody here saw this coming. Streaming video is the killer followed by gaming and audio the least offensive. You’re in and out in a minute with audio. Those coax wires were never made to handle everybody using streaming TV…. Yes cable TV is streaming but adding streaming video internet to the same wire at the same time is pushing it yet there still seems to be much extra capacity because cable TV is filled with so much junk filler programming you would think they could balance the load a little better. For you very young site users you do not remember how they justified charging people each month for cable TV when it was new. The promise was cable TV with no ads. They said the monthly fee would cover the lack of ads. That did not last long. Mr. Hightower said he was from Chicago and am surprised he has so limited choices. I would think a city that large would have many choices. I guess I was wrong. So here we are and I would ask is this assumed shortage of data moving ability for real or shareholder made? I would hope people chime in on that. Another question is why we hear from NC and Texas but we never hear much comment from the rest of the country? A few others do comment from other areas but not in the same density. Are they on easy street with choices or just never heard of this site? I do not know.

    • Rick says:

      Hi Ken: I agree we need other options. If TWC goes the Cap & Tier route I will go to Frontier, dial-up or satellite to send a message. I will also cancel all of my other TWC services, which total >$125/mo. Money was the original issue, but since TWC has demonstrated such arrogance and total disregard for its customer base, it is now about principle. I for one, will not be be manipulated, used and abused by monopolistic practices. I know I am only one voice, but I am beginning to hear a very loud din from the community. We will be heard. BTW…it is not too late for TWC to do the right thing and implement DOCSIS 3.0 and abolish all plans to Cap & Tier. Dreaming is still free.

      • Well, Rick… I’ve got a secret for you as well.

        Actually, this is quite genuinely a secret. I heard from a little mouse back at your favorite company:

        DOCSIS 3.0 is being rolled out.

        I don’t have more information than that, but I do have something that might upset you:

        It’s being rolled out to handle the more advanced data functionality.

        This is good and bad. That means QoS (yay!). That could also mean packet prioritization (yay! and boo!). It also makes capping a lot easier (boo.).

        No idea on a deployment schedule or anything like that. Also, no idea what divisions would be getting it first. I’d just wait and see, and if I hear anything of note that won’t get folks in trouble, I’ll letcha know.

        • We already know. DOCSIS 3 is being deployed in exactly one market in 2009: New York City.

          The company continues to stick to its line that future deployments will be on a market-by-market basis as competitive conditions and requirements dictate. The company has no national deployment strategy at this time.

          What is also known is that the upgrades originally planned for the “test cities” were yanked away the second consumers rejected the Cap ‘n Tier nonsense they wanted to dump on us. And I’ve heard nobody tell me they’d prefer to have Cap ‘n Tier if it meant DOCSIS 3 was coming. Instead, people tell me, “don’t bother.”

          The ONLY proposed tier I heard ANYTHING close to a positive reaction was a proposed $99 50/5 tier. That’s because when it was proposed, there was no sign of a cap on it. Then “TWCAlex” over on Twitter mentioned it would be capped, most likely at 150GB a month. That skunk at the garden party drove every guest away like a shot.

    • Nice thoughts, Uncle Ken. And also very astute bringing up the bogus “hey, no ads on cable!” nonsense they pulled. I whole-heartedly support being suspect… just so long as we also stay reasonable and remember that businesses are not inherently evil. (In general, I think stupidity happens way more often than wrong-doing.)

      As far as there being concerns from the cable industry about the amount of data usage: They are concerned, and reasonably so. But, the consumers get mixed messages as evidenced on this board. Britt says to the shareholders, “Hey, nothing’s wrong!” And then says to the customers, “Dude, cut it out!”

      I’ll letcha in on a secret: CEOs are, to a large extent, glorified cheerleaders. Okay, that’s a bit dishonest to say. But when someone like Glenn Britt is talking to the shareholders he’s going to paint as rosy a picture as possible. “No no no, our network is great and we can handle any competition!” If he ends up being wrong, well… who cares. By that point a stock split or two will have happened.

      While I’m at it, want another little secret?

      TWC is a bizarro company. It is one of the most decentralized organizations I’ve ever seen. When I worked there I was in corporate. We had a heckuva time dealing with the divisions. It wasn’t even until a few years ago that they all shared the same brand name (seriously!). And as far as the guys who run this blog are concerned: I kinda feel your pain. I’ve dealt with the Greensboro division. Without any details, they were not my favorite. By far.

      The point of this is that what happens in Beaumont, Greensboro, or Rochester does not necessarily represent the future plans of TWC as a whole. (If any TWC folks are reading this, yes, I know there’s a lot more nuance to this.)

      Notice how LA and the Ohios have been curiously absent from all of this stuff.

      • Michael Chaney says:

        Well here’s how I see it as a consumer……if you call all your “divisions” by the name “Time Warner Cable”, then ANY action taken by ANY one of them is seen by the consumer as the unified voice of TWC.

      • Brion says:

        “Notice how LA and the Ohios have been curiously absent from all of this stuff.”

        Perhaps it has something to do with competition? A quick search for “broadband access Los Angeles” (and Ohio) turned up Comcast and TWC in LA and Verizon and TWC in (parts of) Ohio. Ohio’s a big state, so that’s sort of like saying TWC competes with Verizon and Cablevision in NY, but we all know that’s only NYC – not Rochester.

        • The cable companies don’t compete with each other, though. The only way to choose your service provider is to choose where you live.

          As an example, here in Chicago we’ve got Comcast and RCN. I can’t get RCN where I live, but when I first moved here I had RCN and couldn’t get Comcast.

          • BrionS says:

            There is some competition, most notably in NYC. Even in San Antonio consumers can (generally) choose between AT&T’s U-Verse and TWC’s RoadRunner. However it is most common that cable companies don’t “overbuild” leaving effective monopolies everywhere.

  25. Uncle Ken says:

    Hi Rick: I understand your feelings. Im the same way I will not be pushed around. I have and interesting situation. I live in a single house with two people. One has cable TV and no computer I have a computer and no desire for cable TV so I just tap into the line. I pay my 39.95 a month and am happy as a clam at the moment. Downstairs is paying something like $150 a month for the TV I do not use. I have a TV tuner card but seldom use it besides it really is less then basic cable. I like to watch my NASA streaming TV, the video clips of news channels, and youtube. If you have to go to Frontier I hope you get speeds better then Phil and at least for me I could not afford satellite not to mention the trees in this yard (very large old trees) I could not get a straight shot anywhere but straight up off the roof. No shot anywhere south in this yard. I don’t even see other houses. So you have a fine night and hope things will turn around. Ken

  26. Wycked Knight says:

    Uncle Ken, I’m in the Los Angeles area the San Fernando valley to be more accurate. Some buildings here do not allow for dishes, so that leaves 2 options for t.v. Uverse which is not widely available here or TWC. As for internet Dsl or Cable through TWC/RR. That’s it. When TWC bought out adelphia here they never upgraded a damn thing, and claimed they did. Charter a few years ago in my old area of Burbank, whent and ran fiber from the pole to the back my my old apartment building. This while they were losing money do to the old bosses there. AFAIK TWC doesn’t even have fiber yet in my area, it’s still coaxil i’f i’m not mistaken. will we ever see DOCSIS 2.0 here highly doubtful. DOCSIS 3.0 is a joke for us out here. L.A. is to wide of a city for them to even worry about us.

    • Uncle Ken says:

      @ Mr. Knight. I can see the problems of not allowing dishes on buildings I assume you mean rental or commercial buildings. I am so surprised LA is not considered a city of importance to the internet market. It may be wide but it has lots of population and should make for a huge potential customer base. I also understand California is going through some rough times economically right now but that holds true for the entire country. Personally I would go with the densely populated areas first. There is a lot of money in LA even at times when it does not appear to be seen that way. Im glad to hear a comment from your state as we will both suffer the same fate you in LA me in Rochester if this metering concept goes through.

      • Wycked Knight says:

        Yes i did mean residential. with only AT$T and TWC those are the only options here. L.A. has been ignored for about 10 years now maybe longer. There is no compation as people in my building have told me they can barely get 1Mb on the downloads speeds with AT$T there is some of the other providers for DSL but you still need to get the phone line through AT$T and there is not much of a saving if you go that way. for faster speeds above the 1Mb mark your only choice is TWC/RR. only good realiable DSL out here in southern Cali is through Verizon, But that’s not a city wide option.

  27. sometimes insighful says:

    the problem as i see with people who argue for tiered pricing is that they dont understand the network as a whole. as i was reading all the posts here, mike hightowers stick out as a perfect example. He has alot of pretty numbers but skirts the most basic facts. yes new hardware costs money, but trying to rationalize that expense as a reason to goto a tierd pricing system is idiotic at best. a 1 time cost to improve their business as a whole is not a reason to penalize the consumers. the cost difference between max usage of their network and 0 usage is statistically insignificant.

    effectivly what i hear from twc and others who defend them is:

    twc: “5% of our customers actually use the service we advertise AS ADVERTISED, and its costing us money, what can we do about it?”

    twc : “well lets just bill them more, and tell them if they dont accept it that there will be service brownouts and blackouts because of these ‘bandwidth hogs'”

    customers: “but that makes no sense, you can just reinvest the profits you make after paying all your responcibilities off to upgrade and improve your network and therefor service.”

    twc: “yes but if we did that our top 5 people in the company might make like 1-10% less for a year or two and also something about share/bond holders…who the hell are the customers anyway and why are they complaining?”

    customers: “so you’re saying its your way or the highway, and since you own both your way and the highway we just have to deal with w/e it is you do?”

    twc: “no, well yes, but really no…its complicated and you wouldnt understand, there are big numbers and technical jargon being thrown around, its better if you just let us the “experts” handle this”

    its amazing how stupid these companies think we as consumers are, whats even more amazing is that someone with an obvious grasp of the situation can utterly fail to understand the socalled “complexities” of it. nothing is ever as complex as it sounds, especially if the person telling you its complex has a vested interest in you thinking its complex and therefor ignoring what they are really doing.

    • Uncle Ken says:

      @ insightful
      “its amazing how stupid these companies think we as consumers are”
      I would not call them stupid but TW is playing on the backs of people that are unaware, do not understand, or do not care. They will when there bill doubles. I can not put a percentage on the number of people that go out and buy a fully loaded Dell or Gateway and have no clue what is going on inside or outside…. They just expect it to work. They are unaware of the issues being played out as we speak and the results of those issues. People here are both computer and issue aware. STC does it best to also provide a single point where new people can learn of the issues at hand but they have to find the site first. The issues really have not made national TV. A few local stations at best.

  28. Brendon VA says:

    Its time we started an organized protest. I’m in Rochester and I would be more than happy to march out front of Time Warner’s offices with signs educating people.

    We need to strike when it comes down to it. We are passively complaining and doing nothing, expect maybe calling up and saying, “this is icky and i dont like it.” I myself have called and complained but they are not going to get the message.

    We need to have a mass cancellation as protest to show them that we, the consumers, are serious. You know they will be shaking in their boots if in one day they get thousands of cancellations.

    Specifically, a cancellation DAY should be set up as well. They are going to start testing in Sept as the gentleman i spoke with on the phone told me, so we should do it very soon. Anyone wish to weigh in?

    Lastly, I started a group on facebook. Anyone on there, feel free to join to keep in additional touch with us TWC haters:

    • Hey Brendon, you might want to edit the text on your Facebook page: Starting soon, Time Warner Cable will start to place bandwidth usage caps on their service. In today’s online media, games, music, and especially VIDEO gobble up the majority of bandwidth usage.

      You’re kinda arguing their point. Just FYI.

      (Also, “In today’s online media…” is confusingly worded. Perhaps just, “Today’s online media…”)

      • Brendon VA says:

        haha oops. I can’t say I ever even realized that. Thanks for posting that.

        Anyways, what does everyone think of making a national “Drop Time Warner” day? I think its a great idea…

  29. Diane says:

    I received no message on my bill and even went backwards looking for one. There has been nothing. I just went to Time Warner’s website,

    Sure enough under section 6..there it is. I don’t know when that happened but I am assuming because I have already paid my bills, I have unknowingly agreed to this Bull!

    • The only division we know of at the moment that published a notice of the change of terms was San Antonio. Nothing from Rochester, Austin, or the Triad, which are all regular visitors here.

      This is hardly a document people bookmark, so I’m not surprised it was exposed only when one of our readers found their way there.

      • BrionS says:

        When I called TW they “didn’t know” about the change. I explained it to them and the rep made a note on my account as to the reason I was downgrading from Turbo to Standard.

  30. Diane says:

    If it is already on Rochester’s webpage under user agreements…does that mean I have already “agreed” to their ridiculous Terms????

    Section 1 says TWC will notify me of any significant change(s) in this Agreement, the Terms of Use, the Subscriber Privacy Notice or any applicable Tariff(s).

    Who determines what “Significant” is?

    • Your continued use of the service constitutes your agreement to the terms and conditions. I agree the company should be notifying every subscriber anytime the Subscriber Agreement is updated, and should include the entire agreement in the bill when it does change.

      This is hardly something people bookmark and check regularly.

  31. Uncle Ken says:

    Diane: That is easy TW decides what “Significant” is. To them this is just a drop in the bucket and suppored by past TOS’s that said we can change anything we want to anytime we want to. I dont even know why they bothered to tell anybody because most people have two choices caps or no internet. A use meter nice way to smell better to the public. Unless something big happens they will stick everybody with 5 gig and you will pay more for more. Im not paying $20 a gig to anybody for a basic month.

    • Did TWC ever quote $20/GB/mo.?

      If so, that’s absolutely insane. If my calculations are in the right neighborhood (http://bit.ly/tWVUZ) then that would be a totally bonkers 20,000% markup!!

      Wait a second, if they’re implying 5GB/mo., and you’re saying $20/GB, is your broadband bill $100/mo. for HSD?

      • Uncle Ken says:

        Mr. Hightower: I was thinking more in theory. Some say they are thinking of $150 per month for a limitless connection I was thinking a more a conservative line where 5 gig basic would be $100. It is crazy but I see it coming. There is no end to what they may be thinking. Reminds me of a restaurant that is about to go out of business and decides the free pickles have to go like it would save them. I pay $40 right now but an extra $60 is not out of the realm of possibility given the options most of us have. Right now we really do not know what they are thinking. To them an extra $60 a month is chump change, to us a killer. I can not afford nor would I want to spend $100+ a month for an internet connection and even with Dosis3 (sp) what would I do with it? It would cost me $100+ to go nowhere real fast. After a few years you fetch out what you want to see and do on the net. Streaming TV over net is not in my future because I have no desire for it given what it would most likely be limited to and contain. Im happy paying $40 for what I do and I do not see me doing much more but I see the basic package shrinking and the price at least doubling. OK $80 vs. $100 not a big not a big deal but $40 to $80 of $100 is a game breaker at least for me and I would think most of the country given they cant print money fast enough and we never see a dime. Thanks for asking, I do look forward to your comments on subjects as I do everyone’s because I learn something new everyday. Ken

        I to alway try to look at issues from both ends. Guess it is my way.

      • I believe we have all of the tiers and pricing for the original experiment published here in one of the back articles from 4/1-4/15. You might want to go browsing. The company had two proposals, one mirroring the experiment market test in Beaumont, Texas, the other a “revised” proposal which increased the usage allowances, but all of them were outrageously overpriced.

        Anything above 10c a GB is overpriced IMHO.

        • Uncle Ken says:

          Phill says “Anything above 10c a GB is overpriced IMHO.”
          OK a line is now drawn in the sand. Others will draw lines as well. Maybe 8 cents or 5 cents.
          People ARE looking for new ideas all the time. Getting TW to agree to any of them is another story.

  32. Uncle Ken says:

    And Mr. Hightower I do not think there is anything wrong with you math. Some may disagree with how you use it but that is the beauty of this site. Everybody has an equal say and their own ideas, nothing wrong with that. I read everybody’s comments so that I can be informed. Most of you people are way over me so I depend on you all. Im getting older now so technology not only sneaks by me it jumps over me.

  33. Uncle Ken says:

    proposals are like wet cement…. until it drys it can be moved around and I think they add alot of water. What they said last month and what they do a month from now are not going to be the same. You can count on that. They have no reason to lock themselfs into anything in these cities.

  34. Bob F says:

    I think its time we have municipal fiber to the home.

    You only have 1 water company to hook your house up to.
    You only have 1 sewer company to hook your house up to.
    You only have 1 electric power line to hook your house up to.

    Why not have 1 fiber optic communications line to hook your house up to?

    Then companies can provide ISP service over those lines.

    How it should all exactly work? Who owns/manages the switches? I don’t know.

    But it is dumb, redundant, expensive, and wasteful to have multiple companies running lines on the poles when one fiber optic connection per house would do fine.

    10Mb, 100Mb, 1Gb, 10Gb, the fiber optic lines work with all of those standards.

    It would dramatically lower the barrier for entry of new ISPs and would help spur competition.

    Too bad our govt already blew an assload of money on BS like propping up a dead car company or funneling billions into banks that should have been left to go bankrupt.

    • Uncle Ken says:

      Bob I think you would love fiber. I know I would. With fiber you could run your house from the moon. Trouble is copper was there first but it is beat up and showing its age. Then somebody came along and spent a bundle to run coax line and is also showing its age. Case in point the last time they ran a new line to the house here last year it was so brittle the insulation just cracked away from the shield braid. Now another company will have to run fiber. The big mystery is why a 2 horse one stop light town can have it and we can’t.

  35. Since this has turned into a mega-comment thread, it’s the first time we’ve uncovered the fact that a “conversation thread” filled with replies to replies to replies maxes out at 10 levels. If you notice the Reply icon missing, it means that conversation chain has reached 10 levels. You will have to start a new Reply chain in the reply box at the bottom of the comments.

    I know following conversations in a comment thread can be difficult, when trying to locate new replies within a stream of stuff that was posted days ago. You may find the e-mail notification system more useful to follow conversations.

    I appreciate all of the number crunching as well. TWC is a major broadband provider in this country. The upgrade numbers for equipment costs might appear large at first, until you consider their profits are even greater.

    TWC has already had some experience with DOCSIS 3 deployments in NYC. They are following the lead of other cable operators to keep upgrade costs as low as possible. They will be avoiding truck runs to customer homes for modem swaps as much as possible. Customers with older modems will be notified by e-mail to bring their old equipment to the cable store nearest them to swap them. Self-installs are incredibly easy to perform. Postcard follow-ups in mail come next, and some operators have mailed modems to homes with a prepaid mailer to return the old equipment.

    The swapping of a cable modem is actually less cumbersome and difficult than a set top box swap, so arguments about labor/truck roll costs should be tempered with the historical reality of what other companies have already done.

    Cablevision and Charter have told the trade press that DOCSIS 3 actually defrayed some of their other expenses — especially neighborhood node splitting to deal with node saturation. DOCSIS 3 allows channel bonding to increase the pipeline and reduce the need to sub-divide it. And, as we’ve seen, the new product lines it allowed to be introduced have increased revenues from customers upgrading to higher speed tiers.

    I have been debating some of the most ardent pushers of the “exaflood” theory of bandwidth management and the “compelling” need to jack people’s bills up to pay for it for months now. They never have an answer for why one cable company can insist that caps and consumption tiers are bad for business, they don’t need them, and they are still highly profitable (Cablevision, Verizon, among others), while others like TWC sloppily attempt to attach their need for an unprecedented paltry and expensive tiered billing approach to “Internet brownout” and “exaflood” theories that they absolutely insist are non-issues to their investors.

    In the end, when you contemplate the ridiculous variety of consumption limits and tiers in place across different corporate entities (and those without), it’s really obvious the only need here is to test to see how much more money can be extracted from customer’s wallets. This isn’t about their costs or their network capacities. It’s about satisfying investor demands for the same kinds of returns cable used to deliver them quarter after quarter. Those days are over on the video side, so now they’re looking for more profit from the broadband side.

    Their assumption remains that broadband represents a luxury that should carry whatever fees they want to charge for accessing it, all while attempting to stop competition. I think several elected officials agree with our contention that broadband is rapidly becoming closer to a utility, just like a telephone line. Screwing around with people’s ability to obtain affordable service while the company earns incredibly high returns at existing pricing is something that needs to be stopped before it gets started. Comcast’s 250GB monthly cap is something we don’t like because it will increasingly become more limiting as time passes, but it’s not an outrageous Money Party like TWC tried to pull with tiers that originally limited someone who didn’t want to see their broadband bill increase to just 20GB of consumption a month.

    If competition was plentiful, consistent, and easy to obtain, then let them battle it out with one another. But when there is only a single provider in a market capable of delivering a consistent broadband service to my home at speeds greater than 3Mbps, that’s a broadband monopoly. And as long as they compel third party providers that hop on board their network to follow their lead when it comes to usage caps, that’s no competition at all.

    • Uncle Ken says:

      Ok then. I thought Docsis 3 required some sort of outside work perhaps from the pole to the house. I was wrong. Shows you how much I still have to learn about those modems. Even I can switch out a modem 2 cables and a power line. Everybody here knows how to switch a modem and if you neighbor has a problem it’s about time to hop over there and help them over a cold one. Naturally the price is going to be the main factor but if it helps their distribution system one would hope the price stays the same. If I understand Docsis 3 at all it seems to do some magical things on the existing coax to negate the need for the overall system upgrades TW is always talking about. If they want to charge me $30 for a new modem I would probably go along with that to help defray the costs but with that comes rock solid agreements to pricing on their part. I get a cool new modem and they get a better system. I can live with that. Mr. Hightower on several occasions has said the cost of people working there is growing. That is not true. Today’s companies are very good at removing pensions, lowering salaries by 20 percent, and good old out sourcing. They can control labor cost anytime they want to so that is no longer a factor in overall pricing models.
      It is nice to have a mega thread. The forum topic seems to have hit a nerve and has peoples attention.

  36. Our good friend TWCAlex is back. He says the latest terms and conditions were published last August and that we were notified of the changes. That’s news to me. At the same time, another TWC rep in the same article, now referenced in an addendum to the original story, said the terms were “changing all the time.”

    San Antonio customers seeing an amendment notice on their May 2009 bill would be right to investigate, and regardless of the date question, the term changes were news to us, particularly the importance and implication of their wording.

    • preventCAPS says:

      The significance of the language being there shadows the importace of when it was put in place.

      I hope TWCAlex being back in play dosn’t mean another undesireable announcement is on the way, especially if it’s to the tune of “We cancled the small divisional trials to allow our focus to shift on saving our entire consumer base money by allowing them to pay for what they use instead of subsidizing a small percentage of heave users.”

  37. Uncle Ken says:

    So what Bagdad bob is back after an extended vacation in Japan. I said today’s terms are not tomorrows. Conventional warfare is not going to work…. It is going to have to get messy as no one is going to back down unless regulation takes over. I think they should get remote starters.

  38. Uncle Ken says:

    Prevent: There are not that many heavy users. They just want more money from everybody and this is getting boring. The lobby bucket is filling up faster then subscribers.

  39. Folks, you may want to drop by and help educate our friends in Syracuse who need more actual facts about this issue than some of the company line absorbed and repeated by a few readers in their comment threads.


  40. Al says:

    Get the media involved?

    Just who the heck do you think Time Warner is?

    Here’s a hint. The Media is not on your side, The Media IS the other side…

    Privacy is dead. Get over it. You live in a Socialist Republic. Don’t blame me, you voted for him.

  41. JM says:

    Such an outrage, obviously a prelude to going through with what they said they had shelved … this is the behavior of a monopolist.

    Still catching up on the latest. 🙁

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