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Best Buy Employees Tell Time Warner Customers: Dump Phone Service to Avoid New Fees

Phillip Dampier October 25, 2012 Consumer News, Data Caps, Editorial & Site News, Video 12 Comments

Telling Time Warner customers to get rid of the cable company’s phone service.

Best Buy employees in upstate New York are advising Time Warner Cable customers to dump Time Warner phone service and buy their own cable modem to completely avoid any additional monthly fees.

“We don’t have modems that will support Time Warner’s voice services, so basically any customer that has that bundle either has to make the decision to get rid of that service or deal with paying for that service every month,” said Syracuse Best Buy employee Drew Cacciola.

Cacciola told a Syracuse television station Time Warner’s supplied equipment is “old and refurbished” and that if customers purchase their own equipment, they will have the latest technology and won’t have to worry about ending up with another refurbished cable modem if the current modem fails.

“If [a new modem] breaks down you can get a new one you don’t have to send it back to them and you won’t get another refurbished one – you get a new one,” said Cacciola.

In fact, Time Warner phone customers do not have to cancel their phone service to avoid the modem fee, but they will be stuck with two pieces of equipment — a Time Warner-supplied eMTA that manages the phone service (with its Internet ports disabled) and the customer’s own purchased cable modem. For now, Time Warner is not charging customers for eMTA equipment used exclusively for its phone service.

Best Buy does not carry some of the models on Time Warner’s approved modem list, and the cheapest one WSYR reporters could find cost around $60, meaning it will take just over a year to recoup the cost of the modem.

Motorola cable modem

Time Warner Cable’s modem fee continues to create consternation for customers, especially when they learn the same piece of equipment used for both Internet and phone service costs $3.95 a month when used for broadband, but is free when used only for phone service.

Stop the Cap! reader Ben argued with a Time Warner representative trying to understand the reasoning.

“So, let me get this straight about the modem fee: If I have phone there is no fee but if I use the same modem to also get Internet, there is a fee?,” Ben asked.

Yes, came the answer. The explanation:

“About the modem fee: Our costs for Internet equipment keep increasing and unfortunately we could not continue to absorb the costs related to their purchase, maintenance and repair,” wrote a Time Warner employee named ‘Paul-E.’ “Leasing a modem ensures you have the most up to date and capable equipment to take advantage of our services as we offer faster speeds and additional functionality. These events sometimes require that we replace your current equipment to give you the best experience.”

Time Warner’s explanation for the new modem fee sounds plausible, but unfortunately for “Paul-E” (and the company),  much of it is demonstrably false.

Investors Business Daily reports the new $3.95 computer modem leasing fee could raise up to $500 million a year for the cable company.

“I would look at this as a price increase,” Bryan Kraft, an analyst at Evercore Partners, told IBD via email. “There are some questions that need to be answered before the impact on ARPU (average monthly revenue per user) can be reasonably estimated.”

Stop the Cap! took a look at Time Warner Cable’s financial reports and discovered the company’s capital expenses for its high speed Internet service (and cable modem equipment) have dropped for the third year in a row:

Time Warner Cable’s capital expenditures on customer premise equipment, including cable modems, has dropped for three years in a row.

Capital spending (as a whole) so far this year has decreased as a percentage of revenue to just 12% for residential customers. Time Warner has spent money primarily on extending service to potential business customers.

The need to charge you more for a cable modem is questionable when residential Internet service rate increases and customers gravitating to more expensive, higher speed services already deliver the company higher average revenue per customer without spiking their costs.

When the station relayed complaints about long hold times and busy signals for customers trying to activate their purchased cable modem, the response from Time Warner — don’t call on Monday or Friday or around morning or dinner time unless you are prepared to wait on hold.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSYR Syracuse Time Warner Cable modem charge 10-24-12.mp4[/flv]

WSYR in Syracuse covers the ongoing controversy with Time Warner Cable’s new modem fees, and a Best Buy employee tells Time Warner customers to get rid of the company’s phone service.  (3 minutes)

Currently there are 12 comments on this Article:

  1. madman999 says:

    no illusions, this is a cash grab/money generating revenue stream that offers no real value other than to give TWC a cash infusion just in time for bonus season. can;t be helped as they have a near monopoly. They are only following what Comcast did.

  2. Brett says:

    “Paul-E” (Polly?) implies that TW will supply the latest and greatest cable modem for the cost of renting. This is also demonstrably false, as TW has simply begun charging for used, refurbished DOCSIS 1.x modems that are already on hand. This is just a plot by TW to get customers to supply them the funds to purchase equipment… without turning ownership of that equipment over to the customer upon reaching the wholesale purchase price. It’s absolute bullsiht that they’re only letting customers supply their own equipment if they purchase the Cadillacs of cable modems.

  3. Dave Hancock says:

    While one should be very cautious about what a Best Buy sales person tells you – this one makes sense as phone service from ISP vendors such as Vonage or Oooma are MUCH cheaper than TW, If TW wants to stick you with the modem fee scam, then FIGHT BACK with Vonage or Oooma!

    • Scott says:

      You mean when you remove your TW VoiP phone service and see your bill rise $10 because you’re no longer buying their double or triple play bundle?

      Or they see too many of their customers have remove their phone service lowering their ARPU numbers, so they decide to hike their monthly internet service fee’s across the board another 3-5% to make up the difference in lost income as they’ve been doing with the losses from Cable TV subscribers?

      As long as you’re a customer of theirs you’re only fooling yourself if you think you’re “fighting back”.

      • Dave Hancock says:

        Sure, while you are at it:
        1) Cancel RR and sign up with Earthlink
        2) Cancel cable TV & sign up with DirecTV (or Dish)

        That will get a call from customer retentions who will offer you a MUCH better deal (just ask Phillip). I am on one of those retention deals (for 2 years) and just got my bill – no added “rent” for the modem. Sometime next year I am moving to the Buffalo area (Hamburg) and one of my prerequisites for a house is being in a FiOS area – that way there is some REAL competition for my business.

        • Al says:

          But TW handles all the billing and installation for EarthLink, at least here in NYC they do, so it ends up costing a little more for what is essentially the same crappy service under a different name. What’s the point of going with them?

          My building is only wired for TW, and no way would they ever let us stick a dish on the outside of the building (anyway, my apt. faces north, so I think I’d have signal problems), meaning that I, like a lot of people, am essentially stuck with Time Warner’s crap. And they have no incentive at all to discount.

  4. Al says:

    I bought a modem on their list only to find out afterwards that it wouldn’t support their phone service. So, I that need to reconnect their junk equipment anyway. But the notice they sent me had said nothing at all about this problem.

    Given the fact that they hard-sell the Triple Play, and thus a very large portion of their customer base uses their phone service, couldn’t they have at least told us that the approved modems wouldn’t support a third of the service that we’re paying for? Would it have been so hard to put an extra line conveying that information in the notice they sent out to all subscribers? Or at least put it on the webpage where they have the modems list?

    Why does Time Warner so often seem to go out of its way to infuriate its customers?

  5. Tony says:

    Why would anyone ever want or need a phone service from a ISP or Telco? Sign up for google voice and get a OBI device, there is no charge for phones calls.
    Secondly, sign up for a VOIP account elsewhere, like callcentric and you got very inexpensive phone service with 911.

  6. Jay says:

    Obviously, none of us likes a rate increase. But, they do happen from time to time. Though the seemingly unanswerable question is: Why does Time Warner feel the unending need to appear like the proverbial ‘used car salesman’ due to their unwillingness to call the new modem rental fee a ‘rate increase’?

  7. Charlie says:

    Whats funny is standard customers get refurbished equipment but if you join their ‘Signature Home’ service they give you brand new equipment. Makes you think they value the ‘Signature’ and ‘business’ contracts more than the people who make up the majority of their profit margins.

    • Ben says:

      Not true. I’m a Sig Home sub and have the same phone modem I got 5 years ago (was new at the time and still works great), a refurbished Moto Wideband Modem which the wireless doesn’t work on (I have to use my own router and they won’t discount my bill for the lack of THEIR service), and I had two used 8642’s until I found a local office with the new 8742’s in stock to trade for. I’m still stuck with the GARBAGE Navigator software and actively shopping competitors because the DVR is virtually unusable. Bottom line is they don’t care about Sig Home subs either. I saw the ad that said I’d get an “Advanced DVR” and I got the same piece of trash everyone else has!

  8. Kevin M says:

    I was getting tired of what my DSL was costing me and failed promises of u-Verse rollout. I found a Motorola SB5120 at a local charity thrift store for $10. It is/was not on the approved modems, but I was told by a tech that it would work anyway. (I was going with the Basic 3 Mbps plan, by the way.). Since it was new service, the install required a rollout. The tech got my modem activated no problems and I still use it today. I would imagine there are a LOT of modems that WILL work that are not on the approved list… it’s just a matter of getting the right person to go ahead with it.

    About a week later I was offered phone for a rock bottom promotion price as well, so I went with it ridding myself of ‘the other company’. I went to the local office and picked up a ‘do it yourself kit’ which included an ARRIS modem. Since I have two drops to the room where my equipment is and access to my house box, the install was easy. I am not being charged a modem fee and glad of it. (recovered my investment in less than 3 months.) I also don’t miss the faster DSL download as I actually seem to do BETTER because of the higher upload speed. We have three computers and use Netflix. I was amazed at how little internet speed I actually ‘need’.

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