Time Warner Cable believes it has room to raise broadband prices and get away with it without much customer backlash.

The cable company’s chief financial officer, Arthur Minson, raised the prospect of more price hikes at Tuesday’s Goldman Sachs 22nd Annual Communacopia Conference.

“Look, the modem [fee] was really just a form of a High Speed Data rate increase,” Minson said, referring to the company’s introduction of a $4 cable modem rental fee last fall and a later increase to around $6 a month introduced this summer. “I do see an ability for us to continue to have ARPU increases on that product.”

“ARPU” refers to the Average Revenue Per User — a term that reflects what companies earn in revenue divided by the number of customers. In most cases, an ARPU increase comes from price hikes or customers subscribing to additional value-added services.

Minson

Minson suggested that the company’s gradual rollout of optional usage-based pricing tiers provides an alternative for price-sensitive customers that cannot afford rate increases on flat-rate service or are seeking a price reduction.

“I think we’re very pleased with where we are in the usage-based pricing front and I think that’s something we will continue,” Minson concluded. “I think over time it will be interesting to see how many people ultimately take the usage-based pricing, or will people say I just want to have unlimited and I think the market will speak on that.”

Time Warner Cable has focused investment on several fronts this year, and plans continued investments to expand offerings in these key areas:

1. Business broadband expansion. Some of the company’s biggest investments target wiring businesses and office parks for cable service, primarily to expand commercial broadband. “Commercial services is success-based capital that we see real meaningful returns on,” Minson said.
2. Wi-Fi expansion. Time Warner Cable will continue expanding Wi-Fi hotspots in select cities. Customers with Standard (15/1Mbps) service or above can use the service for free. Minson said that the company was very happy to offer customers subscribed to unlimited use tiers free access to Wi-Fi. Not so for those choosing usage-based pricing plans. They will have to upgrade to an unlimited plan to get free access. “That’s a real incentive to drive people into the higher tiers,” Minson noted.
3. DOCSIS 3.1. Time Warner plans to adopt and invest in DOCSIS 3.1 cable modem technology when it is officially released. DOCSIS 3.1 will offer more efficient broadband transport and will let companies offer even faster speeds. Minson noted that broadband is increasingly the company’s anchor product, so it will continue investments accordingly.

Customers looking for aggressive pricing won’t find much at Time Warner Cable. Minson noted the company will continue its year-long pullback on low-priced promotions.

“We have a $79 bundle out in the marketplace and you would say okay, that sounds similar to the offer in the marketplace last year,” Minson said. “It may be similar but in terms of what you get for that $79 it is very different from what we gave a year ago and what we have now is the ability to meaningfully up sell the customers from the beacon price.”

A year ago, Time Warner Cable didn’t have a modem rental fee and typically bundled its Standard tier Internet service in its promotional packages. A traditional triple-play package of phone, cable TV and Internet service starts at $89 today, but only includes 3Mbps broadband, doesn’t bundle DVR service, and doesn’t include a mandatory set-top box which now costs a minimum of $8.99 a month each. Combining the modem fee with the mandatory box charge raises the promotional price to $104.97 a month.

• Upgrading to Standard 15/1Mbps service costs an extra $10 a month.
• Adding a DVR? That costs an additional $21.94 a month.
• The “whole house” DVR package is now priced at $37.47 a month.
• Time Warner Cable has also recently increased the price of premium movie channels to a uniform $15.95 each for HBO, Cinemax, Showtime, and Starz.

Taking into account these popular upsold add-ons, the promotional price of $79-89 might be seen as bait and switch by some customers. The true cost for most choosing a triple play package including cable TV with DVR service, one set-top box, a Time Warner-supplied cable modem, and a speed upgrade to 15/1Mbps service is $127.92 a month before taxes and fees.

Customers unhappy with their cable bill who call to complain are now routed to specially trained retention operators, Minson said.

“We’ve taken about a 1,000 dedicated employees and focused them on retention and even within those centers there are areas of expertise,” Minson said. “For our Spanish language customers we have retention centers set-up to help them when they call in. For people who are coming off a promotional offer, we have dedicated reps who can deal with that group of customers. So it’s having a deeper set of expertise in those areas and the returns so far are well within our expectations and we are really pleased with how it’s going.”

Verizon’s moratorium on further expansion of its fiber to the home service will continue for “the next couple of years.”

Verizon FiOS won’t be coming soon to a home near you, unless that home is inside a community with a standing agreement with the phone company.

Verizon CEO Lowell McAdam made it clear to attendees at Tuesday’s Goldman Sachs 22^nd Annual Communacopia Conference his priority continues to be investing in the company’s highly profitable wireless business, while the company’s wired infrastructure is being targeted for more cost cutting, especially in areas designated to see existing copper infrastructure decommissioned. As for expanding FiOS into new communities, McAdam said he instead preferred to concentrate on improving market share and profits for the next few years in areas already getting the fiber optic service.

McAdam noted John Stratton, president of Verizon Enterprise Solutions, has been hard at work pruning Verizon’s wireline products and services targeted to business and government customers.

“I think [he] killed about 2,000 products this year, and we have taken 350 systems offline last year,” McAdam noted. “I think we are already at 250 this year. That sort of discipline gives you the ability to streamline your infrastructure.”

For residential customers, Verizon has two sets of offerings: one for customers served by FiOS fiber optics, the other for customers unlikely to see fiber upgrades indefinitely.

Inside Existing FiOS Service Areas

“We are doing some major technology shifts within FiOS to make it more efficient,” McAdam said. “We’re going to concentrate there for the next couple of years.”

McAdam’s signals to Wall Street were loud and clear: no more FiOS expansion into new communities for now.

McAdam

Instead, Verizon will focus on improving existing service in several key areas:

• Verizon has almost two million optical terminals that McAdam says were active at one point and are now sitting idle, suggesting FiOS has won and lost nearly two million customers since launching, either because the customer switched providers or moved away. McAdam said he wants to improve Verizon FiOS’ product set enough to attract those customers back. He noted with the terminals and cables already in place, the capital costs to win back a former customer are near zero;
• Verizon is introducing a new terminal this fall. Verizon’s FiOS Media Server “eliminates the requirement for coax, once you get into the optical terminal in the basement or wherever in the house,” McAdam said. “That slashes the installation time, and therefore makes the product a lot more profitable for us going forward. It eliminates set-top boxes, it is all IP-based going forward.”
• Verizon will continue to expand Verizon FiOS, particularly in New York City where it has a commitment to offer service.

Verizon FiOS has managed to build a much larger market share than its nearest neighbor, AT&T U-verse. McAdam claimed Verizon FiOS has achieved a 39 percent market share in broadband and around 34 percent on its television service so far. McAdam’s goal is to boost that to 45 percent. In areas of Texas where Verizon first introduced its FiOS fiber optic service, the company already has a penetration rate above 50 percent for broadband and 50 percent for television, demonstrating room to grow market share. AT&T’s U-verse TV penetration rate is 20.1 percent.

For Those Unserved by FiOS

Verizon’s 4G LTE Broadband Router with Voice

Except for Fire Island, N.Y., there are no significant announcements of FiOS expansion. Instead, Verizon has focused on investing to improve its wireless 4G LTE cell networks with the hope existing landline customers will consider switching to higher-profit wireless service. An attempted trial of Verizon Voice Link, intended to be an entry-level wireless replacement of landline service, failed badly on Fire Island due to an avalanche of complaints about poor quality reception, dropped and incomplete calls, and lack of support for data.

Now Verizon is back with a new offering, its 4G LTE Broadband Router with Voice ($49.99 2-yr contract with $175 early termination fee/$199.99 month-to-month).

“Securely connect wired and wireless devices to the 4G LTE network, and connect your landline phone to make calls,” Verizon’s website says. “Combine voice and data on a Share Everything Plan for added savings.”

The device can function as both a wireless landline replacement and router for data. The unit includes three Ethernet ports and Wi-Fi to share your connection. A landline phone or cordless phone base station can be plugged in as well.

Verizon charges an extra $20 a month for Home Service Monthly Line Access on Share Everything Plans, which covers your telephone service. Customers get unlimited local, long distance, call forwarding, call waiting, three-way calling, and voice mail. 911 is available, but Verizon disclaims any responsibility if you cannot reach an operator. The device also supports TTY-TTD calling.

Verizon claims users can expect 5-12Mbps downloading and 2-5Mbps uploading on Verizon’s 4G network, assuming there is solid coverage where you use the device. Usage caps apply. A backup battery keeps the service running for up to four hours of voice calling in the event of a power outage.

McAdam admitted the thing that keeps him up most at night are regulatory issues. He particularly called out Europe, which he believes is hostile for investment. But Europeans pay considerably less for wireless service than North Americans pay, and often have more choices due to competition and regulatory oversight.

“I think the beauty of the ’96 Telecom Act was that it was such a light touch on broadband and mobile,” said McAdam. “And that is — and I sit in Europe talking to investors all the time — that is the biggest difference between the U.S. and Europe.”

To head the FCC off from pursuing any additional regulatory oversight, McAdam claims he reluctantly approved Verizon’s lawsuit against the government on Net Neutrality.

“We have had to take some positions, frankly, that we didn’t want to take,” McAdam said of the lawsuit. “It opened the door for them to get into price regulation of broadband. And I think that is not their charter, and I think it would be a mistake for the U.S. economy and certainly the telecommunications ecosystem.”

[flv width=”488″ height=”300″]http://www.phillipdampier.com/video/Verizon 4G LTE Broadband Router with Voice 9-25-13.flv[/flv]

Verizon Wireless’ latest 4G LTE router supports wireless landline service and 4G data.  (1 minute)

Phillip “Unlimited Innovation depends on Unlimited Access” Dampier

Comcast wants to embrace innovation and change. Before it can succeed, the cable company needs to permanently retire usage caps and consumption billing schemes, now being market-tested for possible reintroduction nationwide.

Comcast today announced it created a new executive position — vice president of consumer services for video, phone, Internet, and home products and appointed Marcien Jenckes to the position. His role is to oversee development of ideas for new products and services that can be sold to Comcast customers.

Jenckes says Comcast’s product lines are blurring as convergence between television and broadband continues. His role is to keep customers of both services happy by embracing innovation and change.

He will find his hands tied should Comcast bring back its usage cap, now under serious consideration. Limiting residential broadband limits customers’ interest in innovative new online applications that carry the threat of a wallop to one’s wallet from overlimit fees. Comcast ditched its arbitrary 250GB usage cap in the spring of 2012, but continues to think about bringing it back. This year, Comcast has tested a new 300GB cap in certain states tied to an overlimit fee for customers exceeding their usage allowance.

Customers don’t like usage caps one bit. Neither should Comcast “innovators” like Mr. Jenckes.

The future of Internet innovation is likely to be developed on a platform that delivers faster Internet speeds, opening up new high bandwidth applications not easily possible today. Usage caps are anathema to that kind of innovation because customers will be unlikely to embrace new services that blow their usage allowance away.

If Mr. Jenckes is seriously interested in promoting a new spirit of innovation at Comcast, he should start by pressing his fellow executives to ditch usage caps and consumption billing once and for all. The future of unlimited innovation in broadband has its best chance of success with unlimited access.

Cox has pulled the plug on its summer trial of flareWatch, an over-the-top virtual cable TV service that works over an existing broadband connection. The sudden end of the trial, now scheduled for Sept. 27, comes several days after new participants found orders for the accompanying Fanhattan-made set-top box canceled without warning. Customers who paid $99.99 for the box, later reduced to $49.99, are supposed to be getting refunds according to Cox Customer Care.

“This limited trial was conducted as part of Cox’s ongoing customer research to determine how to best evolve our offerings to meet customers’ changing needs,” according to a Cox official. “We remain focused on helping customers discover and connect to the things they care about in ways that are easy-to-use and reliable and we will continue to test and explore new products. We will continue to evaluate the flareWatch trial results to determine how this might impact future product plans.”

Peter Litman got confirmation flareWatch has been put out.

Customers visiting Cox’s website dedicated to the IP-based video service found only a “Service Unavailable” message greeting them.

Cox’s flareWatch service offered about 100 channels (many over-the-air) for $34.99 a month, with a cloud-based DVR feature, and was available only to Cox customers in Orange County, Calif., with Preferred Internet service. Use of the service counted against your monthly Cox broadband usage allowance.

Later in the trial, Cox raised the price by $5 a month and bundled Rhapsody’s streaming music service and a small video-on-demand feature. It also cut the purchase price of the hardware in half.

Trial participants report the notification Cox was terminating the service seemed sudden and perhaps unplanned.

Cox says otherwise.

“As planned, the Orange County trial has successfully completed. We collected excellent customer feedback and usage data to inform our broader deployment of Fan TV,” said a Cox spokesperson. “As announced in May, Fanhattan plans to work directly with pay TV service providers to distribute Fan TV. Making sure it’s ready for primetime requires rigorous testing, trial customer feedback and constant iteration. This limited trial was a small, early step in that direction.”

As residents across flood-stricken Colorado begin the task of cleaning up damaged homes and in some cases rebuilding them on now-empty lots, many have navigate to these guys and made calls to various utilities, trash collectors, and service providers to hold off on further bills for services they cannot use. The electric, telephone, and trash hauling companies were all understanding and reassuring. DirecTV and AT&T were not. They want their money — one for the value of satellite equipment that may have since floated into New Mexico or Kansas, the other for fees incurred from excessive texting, talking, or data usage.

DirecTV was willing to settle with Jenny, a resident living outside of Boulder whose first floor was inundated with waves of water which swept her personal property out the rear door, if she was willing to charge $400 on her Visa credit card today for one lost satellite dish and two receivers. Otherwise, “collection activity will begin that could harm your credit.”

Jamestown resident Juliette Leon Bartsch is contending with 10 feet of mud, her husband’s car smashed against the house, and AT&T’s nagging fees for excessive texting.

That will be $400 please. Call your insurance company. We want to get paid.

Bartsch says AT&T has been pounding her phone with text messages telling her she will be paying AT&T’s regular prices of 20 cents per text, 30 cents for any text with attached photos, because she exceeded her allowance sending and receiving updates about the status of her home to worried friends and family. Her idea was to keep the phone lines clear for emergency personnel contending with serious telecom outages. AT&T’s idea was to rake in 20 cents for a short message that costs them virtually nothing to handle. Sending text messages is the preferred method of communicating in a disaster area over a wireless network and it turns out to be mighty profitable for AT&T as well.

Bartsch told the Denver Post AT&T store employees were “completely unhelpful” to her plight. AT&T also never misses an opportunity to upsell a traumatized customer to a more profitable service plan, even when that customer is a disaster victim.

After waiting around for 30 minutes, an AT&T employee rudely grabbed her phone in what Bartsch interpreted as a demand to “prove” her claims of disaster-related texting. After scrolling through the messages, all the employee was willing to offer was a paid upgrade to a more expensive texting plan to cover current and future text messages.

After contacted by the newspaper, AT&T changed its tune.

“As is our routine in an emergency, we began suspending collections calls to impacted customers last Friday, and we will not be billing those customers for flood-related overages to their wireless-minute or text-message plans,” a company spokeswoman said in a statement. “AT&T has reached out to our customers to clear the flood overage charges, and we apologize for the oversight and inconvenience.”

Bartsch has not heard back from AT&T to find out if her bill will be, in fact, credited for the charges.

DirecTV has a less opaque policy for disaster victims published on its website. Getting the company to follow it is another matter.

DIRECTV has policies in place to assist customers who are impacted by natural disasters. If you live in a declared disaster area, we’ll work with you to find a solution that best fits your needs. Options available include:

You are over your texting limit.

Jenny, a Stop the Cap! reader, heard a completely different story from DirecTV.

“They were adamant, they really wanted to get paid either by me or the insurance company,” Jenny writes. “They even wanted to know the name of my carrier and my insurance policy number, which I refused to give them.”

This isn’t the first time DirecTV has ignored its disaster policy in Colorado. During this summer’s wildfires, fire victims were treated to similar demands for compensation.

Jeremy Beach’s Black Forest home burned to the ground and melted his satellite dish and reduced his DirecTV receivers to charred boxes. Then came DirecTV’s demand for cash.

“I couldn’t believe it,” he told the newspaper. “I had lost everything and they acted like they could care less.”

Even more incredible, a DirecTV spokesperson told the newspaper it was ignoring its disaster assistance policy because “most people’s insurance would cover the cost of its equipment.”

That is the same response Beach received. He hung up on the representative making the demand for payment.