Time Warner Cable customers in southern California face substantial rate increases in 2012, including a budget-busting $49.99 service call fee to install increasingly expensive cable service.

The bad news is arriving in customer bills this month, with substantial price hikes for cable television —  including a 27.4% increase for the package that only includes local broadcast channels.  Time Warner Cable blames increasing programming costs for the rate increases, which are several times higher than the official rate of inflation — 3.5%.  Most customers with bundled television, telephone, and Internet service will see a smaller increase on the magnitude of a few dollars, but for those picking and choosing only a few items from Time Warner’s menu, the price tag for individual services will be higher.

The largest rate increase comes when the cable company sends a truck to a home or business.  Time Warner was charging $32.99, but will now charge $49.99 — a 51.5% increase.  The cable company has also been pushing its home networking Wi-Fi option, and will now charge $69.99 to install it, up from $49.99.

Time Warner Cable spokesman Jim Gordon tells the Los Angeles Times not everyone will pay those prices.  Certain promotions may lower those rates, or waive them altogether.  But the company offered little explanation to justify such a major price hike.

One of the cable company’s competitors, DirecTV, scoffed at Time Warner’s rate increase, noting the satellite company only raised prices an average of 4% earlier this year, and anticipates a similar increase in 2012.

The effect of the latest round of rate hikes is likely to drive even more customers to cancel or cut back on cable services.  An increasing number are dropping cable television service altogether, relying on broadband for video entertainment.  The cable industry’s response to cord-cutting has been a combination of increased online viewing options for cable-TV customers and usage caps and overlimit fees on broadband that either discourage online viewing or attempts to profit from it.  Time Warner Cable executives said as recently as December they plan to eventually introduce “usage based billing” of Internet service “the right way rather than quickly.”

As long as your life stops after 5GB per month.

Asian wireless operators are learning from their North American counterparts that artificially limiting wireless broadband consumption with usage caps and metered pricing can deliver enormous new profits companies can use to satisfy shareholders and attract higher dividend-seeking investors.

DoCoMo, Hong Kong’s CSL, and South Korea’s SK Telecom have all announced a shift towards usage-limited plans even as they launch new 4G networks that have at least three times the capacity of the older 3G networks they will eventually replace.  In fact, as Dow Jones reports, usage capping 4G wireless Internet access has little to do with congestion.  Instead, it’s a “revenue booster.”

Limiting data use and charging subscribers for excessive Web browsing on mobile devices may help boost carriers’ return on their investment at a time when many operators in the region have seen their earnings pressured due to falling voice revenue and hefty smartphone subsidies.

With the shift to charging subscribers for extra data usage, the region’s carriers are hopeful that they can boost their revenue.

While last generation 3G wireless broadband networks do face congestion issues, providers have maintained unlimited data plans until very recently.  But solving the 3G capacity crunch by upgrading to 4G has not removed the excuse to engage in Internet Overcharging.  It has only shifted the rationale for usage based pricing towards attracting increased revenue and investment.

Hong Kong-based CSL began offering 4G services in November last year for $44.85 for 5GB with an overlimit fee of $12.72/GB. At least CSL retains an unlimited use option, charging customers $60 a month for all-you-can-eat wireless broadband, a much better deal if you expect to exceed CSL’s 5GB limit.

While AT&T endures zoning-related delays to build out its fiber-to-the-neighborhood service U-verse, a scrappy anti-cap, pro-speed Internet provider in Santa Rosa has announced its intention to deliver gigabit speeds to San Franciscans over a fiber-to-the-home network that will begin construction early next year.

Sonic.net has been providing broadband services for years in northern California, using AT&T’s network of phone lines to deliver unlimited 20Mbps DSL service (including a phone line) for $40 a month.

Sunset District, San Francisco, Calif. (Courtesy: Stilfehler)

Now the company is branching beyond traditional DSL into fiber optics.  Sonic.net has already completed the first phase of its gigabit fiber network in Sebastopol, where it advertises 100Mbps service for $40 a month and 1000Mbps for $70 a month, both including phone service at no extra charge (two lines for the 1Gbps plan).

In San Francisco, Sonic plans to start with 2000 homes in the Sunset District, expanding its network to fully cover the city within five years.

Such a network could deliver serious competition to Comcast and AT&T, the currently-dominant providers.  AT&T’s U-verse buildout has been stalled over the need to install 768 large, unsightly metal cabinets on San Francisco street corners.  The company, as late as this summer, remains mired in zoning disputes and public protests.  Sonic’s fiber network will require similar equipment, and the San Francisco Chronicle reports Sonic filed its own application with the city Department of Public Works to install 188 cabinets, measuring 5 feet tall, starting next year.

Sonic may have a better chance if only because it does not have AT&T’s less-than-stellar reputation among some residents and customers who have been upset with the company’s wireless performance, and ongoing battles over cell tower placement.  Sonic.net CEO Dane Jasper tells the Chronicle:

“There is a huge demand in San Francisco for higher bandwidth services, and fiber is the only long-term way to meet this demand,” he said.

Given the fact that the company’s all-fiber network will bring “the fastest and cheapest” broadband service to the city, Jasper says he thinks the chances of overcoming the obstacles experienced by his larger rival are “pretty good.”

Sonic.net has gained a reputation for excellent customer service and vociferously opposes usage caps and other Internet Overcharging schemes.  The company has attracted the support of Google, which is using Sonic to manage its gigabit fiber network on the campus grounds of Stanford University in Palo Alto.

AT&T has previously dismissed fiber to the home service as too costly to provide, and has adopted in its place a fiber-to-the-neighborhood system that relies on traditional home phone wiring for the last part of its network.

Rogers Communications has mailed letters to rural Canadians announcing it will cease operation of its Portable Internet wireless broadband service effective March 1, 2012.

The service, which uses the Inukshuk Wireless network, delivers Internet access to over 150 communities across mostly rural-northern Canada, where DSL and cable broadband is simply unavailable.  Customers were paying $45 a month for up to 3Mbps service with a 30GB usage cap.

Rogers’ decision will now force most of those customers to use the company’s far more expensive 3G wireless network, which runs far slower and has substantially lower usage allowances.  How much more expensive?  Rogers’ 3G customers choosing the company’s 3G Flex data plan will pay between $94-104 a month (depending on speed), for a plan with a 15GB usage allowance.  Overlimit fees run $10/GB. Customers using 20GB on Rogers’ 3G Flex will pay the company $144-154 a month for slower service.

“The price disparity is absolutely enormous,” says Stop the Cap! reader Ted who uses Rogers Portable Internet service in Val Caron, Ont., located north of Sudbury.  “You might as well not bother using the Internet at all at these prices.”

Ted says Rogers Portable Internet was never a perfect solution, but it was priced similarly to what larger city residents pay for broadband.

“It’s not really WiMax, which came after Rogers introduced the service, and the speeds and ping times can be appalling if you don’t have good reception, but it was affordable,” Ted says.  “Using 3G service means even slower speeds and lower caps at double the price, which is typical for Rogers.”

Ted points out the 30GB one receives on the Portable Internet service for $45 would correspond to a bill for $25o on 3G — five times the price for worse service.

“I am talking to my wife about buying the Rocket Hub [Roger’s device for mobile broadband] so we have something, because Bell has told us not to expect DSL anytime soon,” Ted notes. “Rural Canada cannot catch a break.”

The other option rural Canadians have is satellite Internet access, but providers like Xplornet have faced withering criticism from customers for poor speeds, network speed throttling, and usage caps.

Time Warner Cable’s ruminations about charging usage-based pricing in 2012 has Wall Street all excited about the fatter profits made possible by nickle-and-diming broadband customers for their Internet use.  Forbes magazine tells investors the easy money earned from Internet Overcharging could boost the company’s profits and stock price:

We estimate that Time Warner Cable’s broadband business is single-most important business for the company, constituting about 42% to its value. The company’s management’s words essentially echo our estimates.

The company sees itself primarily as a broadband provider, bundling some extra services such as pay-TV for customer convenience. That said, any change to the pricing is likely to have notable impact on the company’s value, and therefore to its stock. Assuming that a tiered pricing is implemented and brings in more revenue per broadband subscriber, the company’s results could improve.

We believe that our fee per broadband subscriber forecast incorporate increasing penetration of high speed packages, but it could change if the company was to charge higher or implement a tiered pricing for high usage.

These kinds of earning estimates are what makes raising prices for Internet service so popular among the Wall Street crowd.  It fattens their portfolios, even if it increases cable bills which already routinely rise well beyond the national inflation rate.  The only caveat?  Customers could leave for other providers or eventually find the service too expensive to make it worthwhile.  Trefis, a business analysis firm, created an analysis tool (seen above) that allows readers to raise and lower the current estimates for Time Warner’s broadband pricing, add and remove competitors, and check out the impact on the company’s predicted stock price.  The results couldn’t be clearer.  The more you gouge consumers for expensive broadband, the bigger the Money Party, particularly if you live in an area with anemic DSL competition.