Sinclair Broadcasting is threatening to pull 33 television stations in 21 cities from Time Warner Cable customers on January 1st if the cable company doesn’t agree to demands to pay around 20-25 cents per month per subscriber for each of the stations, primarily Fox and MyNetworkTV affiliates.

It’s just the latest in a series of retransmission rights battles underway between broadcasters and cable companies over cable carriage agreements.

Sinclair is a major group owner of television stations, and the impact on viewers in places like western New York, Dayton, Ohio, Greensboro, N.C., San Antonio, Tex., and Pittsburgh, Pa., won’t be missed because these markets have multiple Sinclair-owned or programmed stations involved in the dispute.

As always, the dispute is about money.  This week, viewers of affected stations, including our readers Lance and Andrew, started being annoyed with repeated warnings scrolled at the bottom of screens about the potential loss of their “favorite stations.”  In the case of WUHF, viewers might have thought a serious weather warning was being issued as text crawled against a distinctive red background.

So far, the dispute has not infected Sinclair’s local newscasts, which have often been used as a sounding board for the company’s past retransmission consent fights.  But then, many Sinclair stations have abandoned producing local news themselves over the past few years as a cost-savings measure.  However, many of the stations involved have put the dispute high on their home pages, as a too-cute-by-half link: “Learn About Time Warner Cable’s Plans to Drop Carriage Of This Station.”  Sinclair leaves no doubt about who they blame for the debacle.

Stations Impacted

• AL  Birmingham — WTTO (CW)
• AL  Birmingham — WABM (MyNetworkTV)
• FL  Pensacola — WEAR (ABC)
• FL  Tallahassee — WTWC (NBC)
• FL  Tampa — WTTA (MyNetworkTV)
• KY  Lexington — WDKY (Fox)
• ME  Portland — WGME (CBS)
• MO  Girardeau — KBSI (Fox)
• NC  Greensboro — WXLV (ABC)
• NC  Greensboro — WMYV (MyNetworkTV)
• NC  Raleigh — WLFL (CW)
• NC  Raleigh — WRDC (MyNetworkTV)
• NY  Buffalo — WUTV (Fox)
• NY  Buffalo — WNYO (MyNetworkTV)
• NY  Rochester — WUHF (Fox)
• NY  Syracuse — WSYT (Fox)
• NY  Syracuse — WNYS (MyNetworkTV)
• OH  Cincinnati — WSTR (MyNetworkTV)
• OH  Columbus — WSYX (ABC)
• OH  Columbus — WTTE (Fox)
• OH  Dayton — WKEF (ABC)
• OH  Dayton — WRGT (Fox)
• SC  Charleston — WTAT (Fox)
• SC  Charleston — WMMP (MyNetworkTV)
• PA  Pittsburgh — WPGH (Fox)
• PA  Pittsburgh — WPMY (MyNetworkTV)
• TX  San Antonio  —  KABB (Fox)
• TX  San Antonio — KMYS (MyNetworkTV)
• VA  Norfolk — WTVZ (MyNetworkTV)
• WI  Milwaukee — WVTV (CW)
• WI  Milwaukee — WCGV (MyNetworkTV)
• WV  Charleston — WCHS (ABC)
• WV  Charleston — WVAH (Fox)

Sinclair’s website warns viewers negotiations with Time Warner Cable are not promising:

Sinclair (or in some cases the licensees of the television stations not owned by Sinclair) and Time Warner are in the process of negotiating a renewal of the current agreement between Sinclair and Time Warner Cable which is scheduled to expire on December 31, 2010. Without a renewal, Time Warner Cable will no longer have the right to carry the broadcast of the television stations covered by this expiring agreement. Unfortunately, based on the status of the negotiations Sinclair does not believe we are going to be able to reach agreement on an extension of the deal. As a result, Time Warner would no longer be carrying the stations covered by the agreement with Sinclair beginning on January 1, 2011. Although some might try and characterize this as a dispute, in the end it represents nothing more than the failure of two companies to reach a business agreement, something that happens in the business world thousands of times a day.

Taking a cue from News Corp., Sinclair claims Time Warner Cable is stalling, hoping the Obama Administration will intervene and prohibit signal blackouts while negotiations are still underway.  Despite the claim the cable company is the one with the plan to drop stations, Sinclair informs viewers it is giving them early warning to help them make arrangements with alternative providers like Verizon FiOS, AT&T U-verse, or satellite companies to “avoid interruptions” in programming.

Time Warner Cable recognized the seriousness of the Sinclair dispute and has given it top billing on their Roll Over or Get Tough website.  So far, the cable company has rolled over in every dispute, eventually caving to programmer demands.  But the cable company would claim it has at least reduced the rates being demanded, or won concessions that allow subscribers to catch shows on-demand as part of its TV Everywhere project.

Because the cable industry has so far been dealt the weaker hand in these disputes, they are spending an increasing amount on lobbying the issue in Washington, right down to creating a front group that claims to represent viewers.  The s0-called “American Television Alliance,” has a mission statement that, on the surface, doesn’t wade too deep into actual solutions:

The ATVA’s mission is a simple one – to give consumers a voice and ask lawmakers to protect consumers by reforming outdated rules that do not reflect today’s marketplace.  We are united in our determination to achieve our goal: ensure the best viewing experience at an affordable price, without fear of television signals being cut off or public threats of blackouts intended to scare and confuse viewers.

The overwhelming majority of the interests represented by the ATVA are giant cable and phone companies (and two groups willing to play along when sharing common interests: Public Knowledge and the New America Foundation.)

The group filed comments petitioning the Federal Communications Commission to modify retransmission consent policy to give cable and phone companies additional tools to battle with intransigent broadcasters.  The most important, and one we agree with, is an end to the ban on importing distant network signals from nearby cities to replace those from local stations who simply dump “take it or leave it” offers on operators who then raise rates to cover ever-inflating programming costs.

As it stands now, cable systems cannot grab network stations from other cities to at least restore network programming, because FCC rules prohibit it, even if the nearby station doesn’t mind.  While that might not help Time Warner viewers in cities like Rochester, where the nearby Fox affiliates in both Buffalo and Syracuse are also owned by Sinclair, the cable operator’s extended reach made possible serving all three major upstate cities might still deliver relief by grabbing further distant Fox stations like WYDC in Corning, WFXV in Utica, or WFXP in Erie, Pa and distributing them across all three affected cities.

Unfortunately, the Fox TV network has also made it clear stations could risk their affiliation deals with the network if they were to grant retransmission consent to providers that effectively undercut other Fox affiliates.

The ATVA also wants providers to retain the right to continue carrying disputed signals so long as good faith negotiations are ongoing, and has also suggested binding arbitration as another alternative reform.  Broadcasters have rejected both.

Some of the ATVA’s proposals are worthy of merit to benefit consumer interests, but consumer groups might do better creating their own group to fight this issue, if only to keep broadcasters from dismissing the group as heavily stacked with cable and phone companies with a biased, vested interest in the outcome.

Just reviewing the FCC petition left a bad taste when they quoted everyone’s favorite “dollar-a-holler” group — the League of United Latin American Citizens, which continues to amaze with its omnipresent Zelig-performance in just about every telecommunications policy debate involving LULAC’s benefactors.

More than a few politicians are likely to accept broadcaster arguments, which would ultimately weaken the effectiveness of any reform effort.

Stop the Cap! comments: After today’s confirmation of the story below, it turns out that not only will Charter enforce its usage caps, it is also implementing a throttling scheme that will turn down speeds for “heavy users” when Charter’s overburdened broadband network is congested.  We’ve seen how that works in Europe.  Network management techniques like throttling and usage caps allow providers to turn up the speed and usage controls and turn down the level of investment to grow their broadband networks to meet growing customer demand.

Wall Street will certainly encourage this kind of behavior so long as Charter customers have few alternative choices.  This is bad news for Charter customers who may find the phone company’s unthrottled and typically unlimited broadband a much better alternative, even if it does run slower.

Two separate e-mails arrived in our mailbox this evening from individuals claiming to work for Charter’s call center informing us customer service agents are required to attend a meeting Thursday to explain Charter Cable’s new hard-usage cap Internet Overcharging policy.

It’s too late for us to touch base with company officials for verification, but both our sources shared nearly-identical details of the forthcoming hard usage cap program:

“Effective Nov. 16th, Charter will begin enforcing their Usage Cap policy strictly:

• Base Service: 100GB per month
• Plus & Max: 250GB per month
• Ultra: 500GB per month

Violators will receive two warnings and then face service suspension for up to six months unless they switch to a Business Class broadband product.”

Our other source tells us CSR’s are being trained to deal with irate customers who are deemed violators, all because Charter is in no financial position to keep up with network demands.

Until we receive absolute verification, this should be considered unconfirmed information.

Charter Cable has maintained soft usage caps for some time, rarely enforced on a system-by-system basis with phone calls.  The details are buried on Charter’s website.  They have generally left most customers alone.  But if Charter intends to enforce a formal Internet Overcharging scheme, customers will have just one more reason to despise the company, which already rates as the worst cable broadband provider in the United States according to Consumer Reports (only Wildblue and HughesNet — both satellite fraudband providers scored worse for broadband).

Updated 3:04pm ET:  Here is a statement we received from Charter regarding this matter:

Charter is introducing some new programs designed to improve our high-speed Internet service.  We had planned to send information your way when we start to inform our customers directly; however, in the spirit of flexibility here is a quick summary for you today.

As I know that you know, Charter has long offered graduated tiers of Internet service, ranging from lower speed “Lite” (1 Mbps) versions to “Ultra60” (60 Mbps) and each service level has a monthly usage threshold within which customers are supposed to limit their usage.  Until this point, we haven’t taken action to enforce our thresholds; however, in order to continue providing the highest quality Internet service, we do plan to begin enforcing our “No Excessive Use of Bandwidth” policy documented in our Acceptable Use Policy (AUP). The thresholds are substantially above typical use for approximately 98% of our customers.

In December, we will begin reaching out to a select group of customers whose use is excessive to make them aware of their usage patterns, to help identify possible causes (e.g., unsecured wireless routers or viruses) and review security options with these customers to reduce the risk of unauthorized Internet use. We are currently working on a way to present data usage to customers so they can self-monitor their bandwidth usage.  Until we make that tool available directly, customers who are notified of excessive use will be provided a contact at Charter who can check the customer’s usage throughout the month to help them better manage their Internet usage. If the excessive usage continues repeatedly, their Internet service could be suspended. Our intent is to prevent the very small number of users who are consuming excessive amounts of bandwidth from negatively impacting the experience for the majority of our customers.

In tandem with enforcing our “Excessive Use of Bandwidth” policy, we will also introduce a congestion management policy to improve the Internet experience for all of our customers.  Congestion Management will become part of our standard Network Management practices, and the policy will be protocol agnostic, which doesn’t distinguish among the online activities, protocols or applications a customer uses. It applies only during periods of congestion (which we find to be relatively rare).  It affects only the heaviest users (less than 1%) in small time increments, who will have their bandwidth limited during times of congestion, however, no Internet activities will be blocked.  We based this system on the “fair share” model described to the FCC in September of 2008.

We certainly wanted you to know about these initiatives and believe these steps will help us deliver the best possible Internet experience for our residential users.

Anita Lamont

[Updated 12:14pm ET:  We reached out to Charter Cable’s social media reps and media relations in e-mail this morning and are still waiting for a confirmation/denial/comment on this story.  If/when we get one, it will appear here as an update.]

A Facebook group has been established to oppose Clear's Internet Overcharging schemes

The clock may be running out on Clearwire, America’s “4G-WiMax” wireless broadband provider controlled by Sprint, with close investment ties to Comcast and Time Warner Cable, who both resell Clear wireless broadband under their own brands.

At issue is money — the lack of it, and the wireless company’s cash on hand has grown so perilously low, Clearwire was forced to admit to its investors it may not survive beyond the first half of next year:

Based on our current projections, we do not expect our available cash and short-term investments as of September 30, 2010 to be sufficient to cover our estimated liquidity needs for the next 12 months. We also do not expect our operations to generate positive cash flows during the next 12 months. Without additional financing sources, we forecast that our cash and short-term investments would be depleted as early as the middle of 2011.

The Securities and Exchange Commission rules governing public companies represent a public relations nightmare for anyone trying to put a positive spin on bad news, and Sprint chief Dan Hesse desperately tried to make lemonade out of the financial lemon Clearwire increasingly represents for the wireless company.

“If you get to the point where you don’t have 12 months of cash in the till, even if you’ve got negotiations going on, or what have you, you have to, from an accounting perspective, say you have a going-concern issue,” Hesse said. “That doesn’t mean that Sprint and other partners won’t continue to fund Clearwire.”

With Sprint’s 54 percent stake in Clearwire defining the entity as a subsidiary of Sprint, its demise could risk Sprint’s own financial well-being, something Sprint plans to address in 2011, potentially ending its majority stake in the company.

For Hesse and his cable partners, Clearwire’s financial problems are being spun as a result of the venture’s success.  The company says it cannot afford the rapid expansion it has undertaken to expand its WiMax network into additional cities across the country, and faces serious financial challenges from the subsidies consumers demand when buying smartphones.

Hesse particularly complains about the latest whiz-bang smartphones consumers demand, many costing upwards of $600.  Consumers in the United States don’t pay full retail price.  In return for two year contracts carrying steep cancellation penalties, carriers cut the price of most high end phones to $200 or less.

“Subsidies are going through the roof in our industry,” Hesse said. Nearly 40 percent of Sprint customers use the company’s 4G network, and that number is rising.

Revenues are up 114 percent from a year earlier to US$147 million. But Clearwire’s losses for the last quarter alone amounted to $139 million, or $0.58 per share.

As a result, Clearwire slashed 15 percent of its staff, laying off nearly 600 employees and has indefinitely suspended its expansion plans to bring the network to additional cities.  Clearwire will also shutter many of its planned retail outlets — some already built — and delay the introduction of its own branded smartphone.

But even that may not be enough.

Although Clearwire’s growth has been double the level anticipated, achieving a net gain of 1.23 million subscribers in the third quarter — reaching 2.84 million total subscribers, not all of those customers are sticking around once they begin using the service.

Complaints about the company’s poorly disclosed speed throttling continue to be a regular topic on Clear’s support forums.  At least 1,000 complaints have been logged on Clear’s own support forums and elsewhere online about the speed traps.  A Facebook group opposing the schemes has also been established.

Stop the Cap! filed a formal complaint with the New York Attorney General’s office accusing the company of false and misleading advertising and fraud for claiming customers would enjoy “blazing fast speeds” with no limits or speed throttling, despite the fact company officials later admitted they were throttling customers deemed to be “using the service excessively.”  Dozens of additional complaints from Clearwire customers have been filed with state Attorneys General across the country, as well as with the Federal Trade Commission in Washington.

Just how much is too much has never been made clear by the company, but many users report the speed throttle reduces speeds to 250kbps, often for hours at a time.

Clearwire told Electronista:

Throtting is based on the current utilization for each cell tower, and many low-use towers do not throttle speeds at all. For high-use towers, throttling occurs during peak-use times.

A customer’s maximum speed is based on the number of gigabytes of data transferred in the past seven days and the download speeds for the past 15 minutes. Speeds are recalculated every 15 minutes, at which point a throttled customer will be bumped up to a higher speed. Rather than implementing one speed for throttling, the calculations will move customers between 48 different speed brackets.

The worst offenders using peer-to-peer software on Clearwire’s network may face repeated throttling.

Clearwire advertises a faster Internet experience for their 4G service, but many report they receive speeds far slower, even if they have engaged in very little usage.

Many consumers are also unknowingly finding themselves back on Clear’s network even though they signed up with a third party provider.  Clear resells access to its network under a variety of different brands not limited to Sprint, Road Runner Mobile, Comcast Internet2Go, and Best Buy Mobile/Wireless.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Clear Speed Woes 11-10-10.flv[/flv]

This Clearwire customer visits a Clear hotspot location and discovers even on a Wi-Fi network, Clear’s speeds don’t match their advertising claims.  Then, he discovers just how sneaky Clearwire gets in disclosing important information about the company’s wireless speeds customers might want to know before signing up.  (5 minutes)

Chase Carey (courtesy: Forbes)

Chase Carey, President, Chief Operating Officer of Rupert Murdoch’s News Corp., has blamed the federal government and politicians for giving aid and comfort to Cablevision, the cable system serving most of suburban New York City, forcing Fox to cut off the World Series for millions of subscribers in the recent contract dispute between the two providers.

Carey told Bloomberg News that the standoff with Cablevision would have been resolved much more quickly if lawmakers hadn’t threatened to weigh in, leading the cable provider to hold out in hopes of getting better terms.

“This process would have been resolved more easily, more quickly,” Carey said. “I would actually contend we wouldn’t have gone off the air at all.”

Carey said Fox needs the feeds that it collects from cable companies because even with advertising revenue, the broadcast network loses a “few hundred million dollars” every year. Carey said he came to Washington to explain to lawmakers why Fox needed two streams of revenue and explain why public declarations of support for Cablevision from more than 50 lawmakers only helped to prolong the standoff.

“We’re not running a nonprofit,” Carey said.

Was John Kerry responsible...

If Fox is unprofitable, you wouldn’t know it from Carey’s compensation package.  The COO will earn $8.1 million this year, plus a $15 million bonus and additional compensation totaling more than 26 million dollars.

Carey is upset with Democrats for inserting themselves in private corporate matters, despite the fact the resulting dispute left millions of cable subscribers without the networks they were paying for (and forced to fight for refunds from Cablevision.)

“You’re going to bastardize every negotiation because you’re going to have this specter of arbitration,” he said.

At least 50 members of Congress, many from the northeastern United States where cable blackouts have been the most prevalent, support binding arbitration for such disputes, and criticized Fox for demanding increasing amounts of money for formerly free television signals.  Cablevision contends it was forced to pay an “unfair amount” to get the signals back on cable.

Carey especially targeted Democratic senator John Kerry from Massachusetts, who was among the most vocal opponents of cable systems and programmers putting viewers in the middle of disputes.

...or Rupert Murdoch?

Kerry intends to introduce legislation during the lame duck session of Congress to force both parties to keep programming on while negotiations are underway, especially because consumers have already paid, often in advance, for such programming.  Analysts say Republicans in the Senate will likely filibuster any such measure.  Most Republicans are inclined to share Carey’s view and let the companies duel it out amongst themselves, according to Andrew D. Lipman, a Washington-based partner with the law firm Bingham McCutchen.

Carey himself has been on both sides of the issue.  His former job was chief executive of DirecTV, the largest U.S. satellite-television provider.  Carey at the time thought the television networks and local stations were responsible for their own failing business models and were late to the table demanding payments for cable carriage.  When the Great Recession caused advertising revenue to plummet, both networks and local stations decided the concept of free, ad-supported television was no longer a viable business model.  Now stations want dual revenue streams — ad revenue and payments from the majority of Americans who watch those stations on cable, satellite, or telco-TV.

More importantly, Carey wants the government to butt out, even when consumer dollars are at stake.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Bloomberg Man Who Blacked Out World Series Blames Politicians 11-9-10.flv[/flv]

Bloomberg News reflects on the dispute between News Corp.’s Chase Carey and Cablevision.  (3 minutes)

Although the cable trade press reports it is business as usual at most of the nation’s largest cable companies, news that several companies are losing more cable-TV subscribers than they are adding is creating concern in boardrooms and on Wall Street.  Although the power of the perennial “rate increase” has kept revenues up, cable operators like Time Warner Cable are beginning to realize they can’t just keep raising rates expecting customers to sit still for it.

For more than 30 years, cable operators have assumed (correctly) that raising rates far in excess of inflation will bring about a lot of grumbling from upset subscribers, but few will actually resort to cutting the cord and going back to free TV (or books).  But as many cable households now routinely pay “triple-play” bills well in excess of $200 a month, that is finally starting to change:

• For many households, the switch to digital TV and an increasing number of sub-channels has proved adequate to meet the needs of many viewers, so long as they receive a decent picture and at least a handful of digital sub-channels;
• Online access to at least some cable programming, movies, and television shows on-demand has solved the problem of having too few viewing options.  If nothing of interest is running on local channels, a quick visit to Netflix or Hulu can satisfy most viewers;
• Many increasingly prefer spending their free time online instead of parked in front of the television;
• The realities of the current economy and tightened middle class budgets make many cable packages simply unaffordable, even if customers wanted them.

Time Warner Cable has recognized the growing strain on their video side of the business and has initiated some strong marketing efforts to hold onto customers who are one rate increase away from canceling.

This fall, the cable company unveiled its $33 per service promotion, charging that price for each component of their triple-play package for a year.  While Time Warner has more aggressively priced individual services in the past for new customers, this one is unique because it is open to existing customers as well.  Customers speaking to Time Warner’s retention agents are being offered this package in an effort to keep customers hooked up to the company’s video, broadband, and phone services.  Currently, many markets also include a free year of Showtime or at least six months of DVR service, and a year of Road Runner Turbo.  In highly competitive markets, informal promotions can bring even lower prices or extra add-ons.

A few weeks ago, the cable company unveiled online video streaming of ESPN Networks for existing cable subscribers, and an online remote DVR-programming application that lets subscribers set up recordings while away from home.

Now the company is further bolstering its video packages:

1. As part of its long term agreement with Disney, ABC and ESPN, this week Time Warner Cable added over 300 hours of new On Demand programming content from ABC, Disney and ESPN. In addition, the company will launch Primetime HD On Demand tomorrow, which will also be available to Digital Cable customers at no additional cost.  The new channel Primetime HD On Demand will carry primetime programming from ABC, NBC and CBS in High Definition. Subscribers will have over 100 hours of the networks’ popular primetime programs including NBC’s 30 Rock and The Office; ABC’s Grey’s Anatomy and Desperate Housewives; and CBS’ Medium and CSI.
2. Time Warner Cable Look Back will bolster the existing “Start Over” feature by archiving up to three days of programming on more than two dozen different networks and cable channels.  Now, if you missed a favorite show that aired the evening before, you can watch it on demand.  As with “Start Over,” Time Warner has disabled fast-forwarding, so no zipping through commercials is allowed.  But the service comes free of charge, and includes an impressive lineup of participating networks including ABC, NBC, Fox Cable Networks, Discovery Networks, and Scripps’ Food Network, Cooking Channel, HGTV, and DIY.
3. HBO Max and Go Max, part of TV Everywhere, will reach more than 50 million Time Warner Cable customers by the end of the month.  These services deliver online on-demand access to movies, series, and specials airing on HBO and Cinemax and will be available to customers paying for the premium channels at no additional charge.  More than 70 million customers will have access by the second quarter of 2011.
4. Time Warner Cable CEO Glenn Britt told investors on a conference call held last week that the cable company is aggressively pursuing renewal agreements with programmers that allow the cable company to begin offering smaller, budget priced packages of cable-TV programming.  While it won’t be the a-la-carte option many consumers crave, cable programming packages could begin to resemble what home satellite dish customers used to receive — a core package of two dozen channels with theme or network-based add-on “programming packs” for additional fees.  For example, customers looking for reality or educational programming might buy a “Home and Garden” package consisting of Food TV, HGTV, The Weather Channel, Discovery and The Learning Channel.  Movie fans might get a package of Encore, AMC, Turner Classic Movies, Fox Movies and MGM.  “We have negotiated some additional flexibility beyond what we had a few years ago that will allow us to begin to offer some smaller packages at lower prices. Probably not all the way where we’d like to be. But we’re moving in the right direction,” Britt told investors.

The cable company’s friendly former owner — Time Warner, Inc.,  has also helped man the barricades against cable’s competitors.  For Netflix and Redbox customers: longer waiting times for access to the latest Time Warner movies are likely.  The current delay of 28 days could be extended, according to CEO Jeff Bewkes.

“So far the 28-day window has clearly been a success versus no delay,” Bewkes told investors. “The question of whether we ought to go longer is very much under scrutiny. It may well be a good idea.”

Even local movie theaters face some potential competition, as Time Warner considers introducing a premium pay-per-view option that would allow cable customers to watch movies currently in theaters at home.  But they’ll pay a heavy price to watch — reportedly between $30-50 per title, and the cable operator will insert anti-recording technology into the signal to prevent digital recordings.

Will these new services ultimately stop the bleeding from departing cable customers?  For most it’s a matter of dollars and sense.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Cutting Cable’s Cord 11-9-10.flv[/flv]

The media has gotten aggressive about talking to viewers about how they can get rid of their cable-TV subscription and save plenty.  (10 minutes)

Thomas Clancy Jr., 35, in Long Beach, N.Y., canceled the family’s Cablevision subscription this spring. He said he has been happy with Netflix and other Internet video services since then, even though there isn’t a lot of live sports to be had online.

“The amount of sports that I watched certainly didn’t justify a hundred-dollar-a-month expense for all this stuff. I mean, that’s twelve hundred dollars a year,” Clancy told the Associated Press. “Twelve hundred dollars is … near a vacation.”

Customers like Clancy are comfortable with technology and well-versed on how to hook up Internet video and integrate it with the family’s TV sets.  For customers like him, online video will increasingly be an attractive alternative to high cable TV bills.

For some western New Yorkers, Wegmans' Redbox kiosk is their new "cable company."

For homes with less tech-savvy subscribers who have watched their wages fall over the past decade even as cable rates keep increasing, economic realities driven home by the Great Recession are making the decision for them.

“The price of cable TV has risen to the point where it’s simply not affordable to lots of lower-income homes. And right now there are an awful lot of lower-income homes,” Craig Moffett, a Wall Street analyst who favors the cable industry said. “The evidence suggests that what we’re seeing is a poverty problem rather than a technology phenomenon.”

For these customers, including many in the middle class, each time cable companies like Time Warner increase cable rates, they drop a service or two.

“First it was Showtime, the Movie Channel, and Starz!,” writes Stop the Cap! reader Joanne in Penfield, N.Y., a suburb of Rochester. “Then when they raised the rates again on the premium channels, we dropped them all — bye bye HBO and Cinemax.”

“When Time Warner sends us their rate increase notice right after Christmas as they’ve done for years, we’re dropping digital cable and returning our cable boxes,” she writes.  “If they keep it up, we’ll drop cable altogether — something we might have done earlier if we had some competition around here.”

“I don’t care how much they claim it’s a ‘great value,'” Joanne says. “My husband got laid off from his job at Xerox in 2009 and was just let go from his new job at Carestream.  I already work myself and we have three kids, and our health insurance premiums are skyrocketing at the end of the year.  We haven’t had a real raise in five years, so that made the decision for us.”

Joanne now rents movies from Redbox just inside the local Wegmans grocery store and has a $9 monthly subscription with Netflix, mostly for online streaming.

“It’s more than made up for the $40+ a month we used to spend on premium channels with Time Warner,” she said.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WISN Milwaukee Time Warner Cable Offers Start Over For WISN 12 ABC Programs 11-9-10.flv[/flv]

WISN-TV in Milwaukee introduces viewers to Time Warner Cable’s newest on-demand features.  (1 minute)