When Jeff McDonaghe celebrated the beginning of 2013, his cable and Internet bill from Shaw Communications was roughly $117 a month. In April, Shaw announced a wide-ranging rate increase that cost the Calgary resident an extra $7 a month. Now Shaw is back for more with another rate increase that will cost the McDonaghe family an additional $11 a month. His October bill: nearly $135 — $18 more a month.

“Shaw seems to have gotten quite comfortable raising rates at least twice a year, because my bill has gone up like clockwork every six months or so,” McDonaghe tells Stop the Cap!

Shaw representatives blamed the “price adjustment” on the cost of programming, its upgraded “digital gateway” set-top box, and higher licensing and regulatory fees.

September 2013 Rate Adjustment

At Shaw, we’re committed to providing quality products and services at the best value for all customers.

To continue delivering the best entertainment options, you may notice a few changes to your monthly bill, effective September 1, 2013.

For customers in Manitoba and Ontario (excluding Hamilton), these changes will take effect on October 1, 2013.

Changes are as follows:

Some of the most significant rate hikes will affect grandfathered service plans, leaving some customers scratching their heads.

Shaw’s old 20Mbps plan (no longer listed on the company’s website) now costs $60 a month, the same price charged for Shaw’s newer 25Mbps tier.

The company’s old “discount” Internet plan delivered DSL-like speed of 7.5Mbps for $45 a month. On Sept. 1, Shaw raised its price to $50. Today, Shaw’s entry-level 10Mbps broadband package sells for $55 a month — only $5 more — with a 125GB monthly usage cap.

Despite the company’s claims of increased costs, Shaw reported $250 million in profits during the third quarter of this year, delivering better than anticipated results with a promise to return some of the excess cash to shareholders in the form of dividends.

“Given the improvement in free cash flow and assuming continued favorable market conditions, our board plans to target dividend increases of five to ten percent over the next two years,” said Brad Shaw, CEO of Shaw Communications.

Shaw’s financial gains come at the cost of its declining customer base. During the summer, Shaw lost at least 26,578 basic cable subscribers due to increased competition from Telus’ TV service. The company did better adding broadband customers (4,157), but its greatest growth has come from its phone business, where the company picked up 17,719 new landline customers.

Drew McReynolds from RBC Capital Markets said Shaw was growing revenue mostly by “better monetizing the existing subscriber base.”

“Shaw’s revenue and EBITDA beat was mostly due to price increases,” added Greg MacDonald, managing director at Macquarie Capital Markets Canada.

Former CEO Jim Shaw is costing Shaw some of its earnings as well with a pension payout of almost $500,000 a month. In fact, the Shaw family that founded the cable company has three generations of pension and salary obligations it expects to be honored:

• J.R. Shaw, the company chairman has an annual pension of $5.4 million;
• Jim Shaw, J.R.’s son, now gets $5.95 million annually;
• Bradley Shaw, Jim’s brother and current CEO is eligible for a $3.97 million pension at age 65. His accrued pension obligation is $37.6 million.

Jim Shaw’s pension alone has cost Shaw more than $71 million in financing expenses because the company’s executive pension plan is not pre-financed; the costs are instead paid from annual cash flow as a compensation expense.

“Those price hikes are going to executive compensation and to shareholder dividend payments, because my service has not improved a bit despite paying almost $20 more a month this year,” complains McDonaghe. “The best mere mortals like ourselves can get when threatening to cancel are some temporary credits of around $5 a month for each of their services. Even with those credits, my bill is still higher.”

Oceanic Time Warner Cable is now providing free Wi-Fi access for Standard Internet (or above) broadband customers on the island of Oahu.

“Increasingly, our Hawaii customers want to take their high-speed Internet with them out of the home and on-the-go,” said Oceanic president Bob Barlow. “The TWC Wi-Fi network we’re building for Hawaii will allow our customers to greatly maximize their TWC Internet subscription – at no additional charge.”

The company has launched the service on the island with more than 400 Ruckus Wireless-branded hotspots in areas like Sunset Beach, Stan Sheriff, and the Kailua District Park. The hotspots can be identified by their network name: TWCWiFi. Customers can get access by logging in with their Oceanic/Time Warner Cable MyServices account name and password. Guest users can buy a “pay as you go” TWC Access Pass starting at $2.95 an hour.

TWC’s Wi-Fi network is now focused on Honolulu, but customers in most major communities on the island will also find limited service.

Time Warner is gradually expanding its Wi-Fi services in high traffic areas and where it faces competition from Google Fiber. TWC Wi-Fi is available from 1,000 access points in Manhattan and more than 12,000 hotspots in Los Angeles. Wi-Fi service was also introduced in downtown Charlotte, N.C., Kansas City and Austin.

Coming soon nationwide? Comcast, Time Warner, AT&T and CenturyLink sure hope not.

Verizon is talking to major cable programmers about launching a nationwide version of FiOS TV as an over-the-top video service that works with your existing broadband provider.

The NY Post reports Verizon is looking at launching an online pay television service for customers without installing additional fiber optic lines to deliver it.

The service would likely be an extension of the “TV Everywhere” online video platforms that many national cable and telco-TV providers already offer existing cable TV subscribers. What would make Verizon’s offer radically different is selling the virtual cable TV service in areas where it does not offer FiOS service.

Verizon must carefully negotiate with programmers to distribute networks over an online video service that would likely compete directly with those programmers’ best customers: cable operators and telco IPTV services like U-verse and Prism TV.

The concept was rejected out of hand Wednesday by Time Warner Cable chief operating officer Rob Marcus, who agreed with Comcast executive vice president Steve Burke’s contention that “over the top” video services that offer virtual cable television outside of their respective service areas lacked a compelling business model and would be difficult to monetize.

“At this point we don’t really aspire to delivering an over-the-top service,” Marcus said. “Our value proposition is delivering video via our facilities as opposed to being a retailer of somebody else’s video, which is a somewhat commoditized product.”

Neither cable executive mentioned the fact cable operators have also maintained an informal “wink and nod” agreement to steer clear of head-on competition with each other for decades.

Verizon: The next big supporter of Net Neutrality?

Verizon apparently wants to shake things up and sell online video without incurring the cost of expanding its fiber optic network FiOS to deliver it.

“They’ve had exploratory talks about how to become a virtual [multiple-system operator],” one person close to the conversations told the Post. “It’s a question of how to get there.”

Interestingly, Verizon CEO Lowell McAdam is worried about developing the service without Net Neutrality protection or some other form of government oversight of broadband. Verizon could spend millions to negotiate programming contracts only to find competitors with their own TV packages to protect outmaneuvering the venture. Without Net Neutrality, Verizon could find its service blocked by competitors or made untenable with the implementation of broadband usage caps or consumption billing that would make a subscription too costly to consider.

The company is now trying to figure out exactly which branch of government (or agency) controls broadband policy in the nation.

The FCC’s current Net Neutrality policy depends on a shaky regulatory framework now being challenged in federal court.

Verizon declined to comment.

Steve Burke is CEO of NBCUniversal and an executive vice president at Comcast.

Comcast is in the enviable position of negotiating with itself for permission to carry Comcast-owned NBC stations over Comcast Cable, earning the company hundreds of millions in retransmission consent fees paid by cable subscribers.

Comcast executive vice president Steve Burke, who also oversees the Comcast-owned NBCUniversal, said retransmission fees are changing the broadcast business, and makes Comcast a ton of money along the way.

“NBC made virtually nothing on retransmission consent two years ago,” Burke told investors at the Bank of America Merrill Lynch 2013 Media, Communications & Entertainment Conference. “This year we’ll make about $200 million.”

Since acquiring NBCUniversal, cable subscribers cannot help but find themselves watching at least one channel owned by the entertainment and cable conglomerate. Burke said in addition to owning NBC local stations in the largest U.S. cities, Comcast also owns or controls an impressive number of popular cable channels including USA, Syfy, Bravo, E!, MSNBC, CNBC, The Weather Channel, and a variety of sports networks. Seven Comcast-owned cable networks earn the company more than $200 million annually, providing almost two-thirds of the programming division’s operating cash flow.

But Burke isn’t satisfied with those earnings, claiming cable companies undervalue the networks’ true worth by 20-25 percent.

“There is a monetization gap between how those channels are doing and how they should be doing measured by how peer cable channels are doing,” Burke explained. “In other words we are not paid as much as we think we should be given our ratings and our positioning by cable and satellite companies.”

Burke told investors the company is positioning to capitalize on the growth of retransmission consent fees that will deliver more revenue to the broadcast and cable programming divisions of Comcast that will be eventually reflected on subscribers’ bills.

“The key to retransmission consent is to have contracts expire with the big distributors that allow you to reopen the existing retransmission consent contracts,” Burke said. “One thing that we really hadn’t figured on when we did the deal was how rapidly retransmission consent was going to establish itself. We underestimated that frankly. That’s a very good thing for NBCUniversal, but not so good I think for Comcast Cable.”

Although Comcast has been very vocal about unreasonable price increases for broadcast and cable television programming owned by other companies, it expects comparable compensation for its own stations and networks.

“As our contracts come up, we will get those revenues the same way CBS, ABC and FOX have,” Burke argues. “I see no reason why we won’t […] get paid in a similar fashion to the way that they get paid in the future.”

Incoming Rogers CEO Guy Laurence has a reputation for hating cubicles, desks, meetings, and paper. How many Rogers’ employees will be left to enjoy the changes is unknown.

Rogers Communications has tapped Guy Laurence, the head of one of Great Britain’s largest cell phone operators to lead eastern Canada’s biggest cable and wireless firm after current CEO Nadir Mohamed retires in early December.

The company has spent months on a global search to find its next chief executive and signaled how important its wireless business is by selecting the current CEO of Vodafone UK to run the business.

Shareholders barely registered this morning’s announcement, with little movement in the stock, but analysts at some of Wall Street’s largest investment banks think the choice will help Rogers better position itself against increasing competition from Bell/BCE and Telus, which have stolen away some of Rogers’ cable and wireless customers.

“Its unique mix of wireless, cable and media assets offer a brilliant platform to provide innovative service to Canadians. I intend to build on the strong foundation established under Nadir’s leadership to compete and win in the market,” Laurence said in the statement.

When Laurence relocates to Rogers’ headquarters in Toronto, he will be immediately confronted with a Conservative government that has made wireless competition a hallmark of its political platform. In January, Rogers will be a participant in federal spectrum actions for coveted new 700MHz frequencies that Rogers wants to expand its cellular network. Ottawa wants some of those frequencies to be set aside for new competitors to bolster wireless competition. Rogers, along with the other large incumbents, wants access to bid on all available spectrum.

The company has struggled with declining market share as a growing number of customers finishing their wireless contracts have taken the opportunity to change providers, mostly to Bell and Telus’ benefit.

Rogers Cable has also suffered subscriber losses in Ontario from increasing competition from Bell’s IPTV service Fibe, which continues to run aggressive new customer promotions.

Rogers may be hoping for an image reset in Canada, and Laurence’s unconventional way of doing business may help.

“I don’t believe in offices. They’re a thing of the past. Offices produce things like a conventional company,” Laurence told a British newspaper in 2011.

To underline his point, Laurence abolished offices and personal desks for Vodafone employees and underlined the new policy by ordering cleaning staff to incinerate any items left on desks overnight. Vodafone workers are given a laptop, a Vodafone mobile phone and an employee locker. Where they choose to conduct business is up to them. Meetings are heavily frowned upon.

The incoming Rogers CEO also despises paper, and wants employees to use as little of it as possible.  At Vodafone, workers often had to buy paper themselves for use in the office and hide it from view.

Rogers’ dress code may also radically change. At Vodafone, Laurence insisted employees dress the same way customers do.

“When you remove the barriers of offices, meetings and all the rest of it, people can spend more time doing what they’re supposed to do,” Laurence said. “As a consequence, people start to perform better. It used to take us 90 days to do a pricing change. We do that in four days now.”

Analysts suspect fixing Rogers’ lousy reputation for customer service will be one of his top priorities. Rogers’ executives will also be updating their resumes — Laurence has a reputation for shaking up middle and upper management. But one priority Rogers’ investors expect will not change: protecting the company’s high profit margins and continued efforts to cut costs.

Laurence did not forget everything he learned while getting his MBA. After joining Vodafone, he initiated a brutal workforce reduction that separated 2,350 Vodafone employees from their desks and lockers – permanently, slashing the payroll from 9,500 to 7,150 workers.