Time Warner Cable CEO Glenn Britt, attending a conference sponsored by Sanford “He Who Loves Cable & Fat Profits” Bernstein, made it be known he still loves the concept of consumption based billing for the Internet, and what he sees as potentially fat profits that come from it.

“Clearly, we didn’t handle the public relations very well and had a bit of debacle to be honest,” said Britt.  “I still think the use-less-pay-less and use-more-pay-more model can work.”

At their prices?  Wasn’t one backlash enough for them?

Britt also repeated that their experiment in Beaumont, Texas, which they have apparently considered an appropriate test for the entire Time Warner Cable service area nationwide, was “successful.”

Meanwhile, investors don’t think the company performance has been all that successful.

Shares of TWC are declining after company Britt admitted that the company is seeing a continued slowdown in subscriber growth.

Perhaps their antagonistic policies and abusive behavior against their customers might be part of the reason.

Britt is convinced that 40GB per month, as delivered in Beaumont, was more than enough for the average user, and those who consume more should pay more.  Indeed, up to 300% more for the exact same level of service customers get today.

He dismissed notions that speed-based pricing is appropriate, claiming most customers find speeds meaningless.  Britt feels all the action, and the big profits, will come from turning a meter loose on customers and billing them for consumption of online video and other high bandwidth applications.

While Britt continues to claim that heavy users should bear the expense of upgrading Time Warner’s network, he also announced they would not be making any significant upgrades to that network, because what they have now is good enough for the next 10 years.

“I’m very comfortable with our plant,” he said. “I don’t see a need for a massive upgrade.”

In fact, the company is seeking ways to reduce their infrastructure spending further.  They plan to explore utilizing less powerful set top boxes to cut their costs, for example.

Time Warner Cable is finding the broadband component of their service offerings more and more important to customers as time passes.  For a growing number, it is the key component.  Leveraging that value, particularly in markets that aren’t as competitive, could bring massive new profits to the company.  Time Warner Cable acknowledges it has just two big competitors for broadband – Verizon FiOS and AT&T U-Verse.  Everyone else, wireless or copper wire DSL, just don’t have that great of an impact.  Cities that have or will have fiber or AT&T’s hybrid network, will force the company to keep service levels high and prices competitive.  In markets where those competitors don’t exist, it could become a profit free-for-all, as customers will find few, if any alternatives.

In yesterday’s story, FairPoint Communications learned that the state utility commissions in Vermont, New Hampshire, and Maine, were underwhelmed by their proposal to take control of telephone service formerly provided by Verizon.  The regulatory authorities in all three states felt state residents would bear most of the risk, and too few rewards in return for approving the deal.  New Hampshire was among the most skeptical.

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WMUR Manchester FairPoint and Verizon Plan to Refile Proposal 12-21-07.flv[/flv]

Vermont wasn’t overwhelmed with what it saw either:

[flv width=”320″ height=”240″]http://www.phillipdampier.com/video/WCAX Burlington FairPoint’s New Plan.flv[/flv]

But FairPoint returned to the negotiating table to make additional promises and concessions.  But would they ultimately keep them?

… Continue Reading

Dr. John Malone

Dr. John Malone, who formerly presided over TeleCommunications, Inc., (TCI, which became AT&T Cable, which then merged with Comcast) has decided that the Internet video free-for-all is too confusing and chaotic for Internet users, and told The Wall Street Journal‘s “D7: All Things Digital” conference attendees that online video needs a “content aggregator” to control and package online video for consumers.  Oh, and by the way, they also need to charge for watching it.

Malone, who now runs Liberty Media, a programming distribution and entertainment company closely aligned with the cable and satellite television industry, said his company would be perfect for the job.

“We’d love to be the aggregator; so would the cable industry,” he said.

Malone also said the traditional model of television is changing, where networks and channels are becoming less important than individual programs.  The worst mistake, in his view, is that content providers are giving it all away for free online when they should be charging a fee instead.

“Clearly advertising has proven to be insufficient, particularly in cycles we go through, to create robust product creation and distribution,” he said.

He pointed to Hulu as a failed model, because it doesn’t have enough ads to generate revenue to produce new content, and relies mostly on reruns and older shows that have been seen on television for years.

Malone compares the online video world to the early days of cable television, before cable programmers began exponentially increasing their rates in order to produce or purchase more “valuable” programming.  Malone claims he understands the dilemma of subscribers who are used to getting content for free, but feels that has to change, and customers will pay for programming they want to see.

He pointed to sports programming in particular, noting the success of the $300 annual fee for the NFL’s Sunday Ticket package, which offers every pro football game to viewers.

Malone has a controversial history, however, being called the head of a “Cable Cosa Nostra” mafia-like family of industry executives and “cable’s Darth Vadar” by then Sen. Al Gore (D-TN).  That was because Malone was a proponent of maintaining strict and unyielding control over programming, and extracting top dollar for the right to view it.  Turning John Malone loose on broadband Internet video has every indication of becoming a repeat performance, where content is served through an online portal controlled by him or other industry executives, and at a price every American should refuse.

Here 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)

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.]

Concluding that all rural Americans must have the opportunity to reap the full benefits of broadband services, Acting Federal Communications Commission Chairman Michael J. Copps released a report today providing a starting point for the development of policies to deliver broadband to rural areas and restore economic growth and opportunity for Americans residing and working in those areas.

Recognizing that the need for broadband in rural America is becoming ever-more critical, Congress in the 2008 Farm Bill required the FCC Chairman, in coordination with the Secretary of the Department of Agriculture, to submit a report to Congress describing a rural broadband strategy. Entitled “Bringing Broadband to Rural America: Report on a Rural Broadband Strategy,” the report by Acting Chairman Copps identifies common problems affecting rural broadband, including technological challenges, lack of data, and high network costs, and offers some recommendations to address those problems.

Broadband “is the interstate highway of the 21st century for small towns and rural communities, the vital connection to the broader nation and, increasingly, the global economy,” Acting Chairman Copps said in the report. “Our nation as a whole will prosper and benefit from a concerted effort to bring broadband to rural America.”

According to Secretary of Agriculture Tom Vilsack, “Providing broadband access to rural communities will not only enhance farmers and ranchers’ ability to market goods and enhance production, it will help residents in rural communities obtain needed medical care, gain access to higher education, and benefit from resulting economic activity and job growth.”

Consistent with the statute’s provisions to make recommendations concerning improving inter-agency coordination, the report includes a number of recommendations, including: enhancing coordination among and between federal, Tribal, state, and community agencies, governments and organizations; reviewing existing federal programs to identify barriers to rural broadband deployment; coordinating broadband program terminology consistent with current laws; coordinating data collection and mapping efforts at the federal, Tribal, and state levels to better inform the public and policymakers; supporting consumer education and training initiatives to stimulate and sustain broadband demand; and identifying important policies and proceedings that support further broadband deployment such as universal service and network openness. The report also recognizes that the new administration has already taken important steps to improve coordination efforts and to prioritize broadband initiatives.

In the report, Acting Chairman Copps notes that Congress has provided new direction and support for federal broadband policies and initiatives, in particular through the American Recovery and Reinvestment Act of 2009. In addition to providing $7.2 billion for broadband grants, loans and loan guarantees administered by the Agriculture and Commerce departments, that law charges the FCC with developing a national broadband plan by next February.

“I view this report as a prelude to, and building block for, the national broadband plan, which will address in greater detail and on a vastly more complete record, the input of all stakeholders and the steps the nation must take to achieve its broadband goals,” Acting Chairman Copps said in the report. Although the national plan will be broader in scope and will focus on bringing broadband to all Americans regardless of where they live, the Rural Broadband report released today “provides another, critical step in the Commission’s efforts to develop an effective, efficient and achievable national broadband plan.”