Concern about programming costs only goes so far. While Time Warner Cable and Bright House customers continue to go without Showtime and access to CBS programming online (in addition to local station blackouts in New York, Texas and California), the two cable companies have found room in the budget to add two new expensive sports networks to their lineups.

Fox Sports 1 and 2 replaced the much-less-expensive Speed and Fuel Networks Aug. 17 on both cable systems. Fox had been getting 23¢ per subscriber each month for Speed and about 20¢ monthly for Fuel. Fox expects both cable operators to pay a monthly fee of 80¢ per subscriber for Fox Sports 1, rising quickly to $1.50 within a few years, according to Sports Business Daily. The cost of Fox Sports 2 is unknown.

Fox wants the two networks to gradually rival the most expensive network in your cable television package – ESPN. To manage that, Fox will need to engage in a bidding war with its Walt Disney-owned rival to grab the most-watched sporting events. Sports franchises love that, because they will profit handsomely from the proceeds. But both Fox and Walt Disney are bidding with cable subscribers’ money. The more sports programming costs, the higher cable bills will rise. ESPN already charges at least $5 a month per subscriber. To rival ESPN, Fox Sports may eventually have to charge as much, boosting cable bills an extra $4-5 a month for the competing sports networks.

“It’s going to be a popular channel,” said Joe Durkin, Bright House senior director of corporate communications. “It’ll be rich with sports, and we’re happy to bring it to our customers.”

Fox Sports negotiated access to more than 90 million U.S. homes through agreements with most large cable, telephone, and satellite TV distributors. Attracting them: at least 5,000 annual hours of live events and original programming including college basketball and football, joined by Major League Baseball next year. The network will also feature NASCAR, international soccer and Ultimate Fighting Championship (UFC) competitions.

Fox Sports 2 will feature mixed martial arts at the outset, with more programming coming as the network develops.

Besides the two national sports networks, Fox also owns almost two dozen regional sports channels including Prime Ticket and Fox Sports West. It also acquired a 49% stake in New York’s YES, the Yankees Entertainment and Sports Network, with an option to buy it outright later. It also recently acquired a sports channel in Cleveland.

Fox also plans to launch another entertainment cable network Sep. 2 with the debut of a companion to the FX network Fox is calling FXX.

FXX is being programmed for… you guessed it, young adults aged 18-34 — the most coveted demographic for advertisers. It will feature reruns and original programming, including Parks and Recreation, Arrested Development, How I Met Your Mother, Freaks and Geeks, Sports Night, It’s Always Sunny in Philadelphia, The League and Totally Biased with W. Kamau Bell.

You may not have asked for the new network, but chances are you are getting it anyway. Fox has signed carriage agreements with Comcast, Time Warner Cable, Charter, Verizon FiOS, AT&T U-verse, and both satellite services.

AT&T and Camden Property Trust have announced an agreement to offer broadband, television, and phone services over fiber to the premises technology beginning this fall, serving new high-end apartment homes owned by the developer in Atlanta, Austin, and Orlando.

AT&T’s suggestion it will build a competing fiber network that would rival Google appears to be, for now, limited to selected, luxury multi-dwelling units participating in a strategic marketing partnership that can guarantee enough customers to make the investment in fiber optics worthwhile.

AT&T’s Connected Communities Initiative is a special program offered to large single-family homebuilders, developers, real estate investment trusts, apartment owners, property management groups and large homeowners’ associations that can deliver AT&T a virtually captive customer base in return for better-than-average service and kickbacks in the form of lucrative commissions.

Camden’s Gaines Ranch in Austin, Tex.

With AT&T’s latest agreement, the new Camden-managed properties will receive the next generation of U-verse High Speed Internet, U-verse TV and U-verse Voice on an all-fiber network that will deliver a level of enhanced service unavailable to most U-verse customers. Most importantly, the fiber infrastructure will let AT&T to offer faster broadband to residents without limiting their television viewing.

Most AT&T U-verse customers receive service over a hybrid fiber-copper phone wire network using a more advanced form of DSL. Fiber from the nearest AT&T central office extends into each neighborhood, but existing copper phone wiring carries the service the last several blocks into individual customer homes. The presence of copper limits the available bandwidth, which has kept AT&T’s top U-verse speeds at around 24Mbps. The only way to increase speeds is to cut the amount of copper in the network. Eliminating it completely is even better.

AT&T has been reluctant to follow Verizon’s lead deploying an all-fiber network. The cost to wire each home with fiber was too prohibitive for AT&T, but providing fiber connectivity to large apartment buildings, condos, or other multi-dwelling units has met AT&T’s cost concerns, especially when the property owner signs over exclusive rights to the buildings’ existing telecommunications infrastructure.

AT&T’s program encourages the participation of property owners with a variety of paid commissions and other compensation, including:

Exclusive Marketing Agreements: Under an AT&T Exclusive Marketing Agreement, residents may still choose their communications and entertainment services provider, but the builder, developer or property owner agrees to exclusively promote AT&T services. In doing so, AT&T provides financial incentives in the form of commissions for property owners and multiple service options for residents. In most cases, renters may have the mistaken impression they can only get service from AT&T, and are informally discouraged from considering alternative providers.

Bulk Contracts: An AT&T Connected Communities bulk agreement offers greater earning potential. With a single, monthly recurring bulk bill for all contracted units, developers and HOAs get below-retail pricing, increased savings on equipment costs, and other rewarding financial incentives. In most cases, building owners include AT&T services either as part of the monthly rent or billed as a mandatory services surcharge. A resident can still sign up for satellite or cable television, but has zero incentive to do so because they would be effectively paying for service twice.

Exclusive Use of Wire:  Property owners grant AT&T exclusive use of the wiring, including coaxial cable, at the property. In addition, owners agree to promote AT&T products to residents. This deters would-be competitors from providing service at a property signed up with AT&T. A cable or satellite competitor would not have access to existing wiring and have to arrange an agreement with the property owner to provision a second cable inside the building. Neither the competing provider or the property owner would have any incentive to do this, regardless of the wishes of renters.

Large properties can also contract with AT&T to provision a site-wide Wi-Fi network for the benefit of residents both around the property and at amenities like clubhouses or poolside.

While such agreements can benefit residents with bulk pricing discounts beyond what they could have obtained from AT&T themselves, it also strongly deters other providers from delivering competitive services.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/ATT Connected Communities 9-2012.flv[/flv]

Last fall, AT&T promoted its Connected Communities program with property developers, offering them commissions and other special deals if they sign exclusive marketing agreements with the phone company. In 2013, broadband speeds for certain U-verse Internet customers will be increasing, depending on the infrastructure available. (2 minutes)

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Camden Online Communities 8-13.flv[/flv]

Camden Properties emphasizes the online services available to residents, particularly those that promote social interaction. In some cases, those services will now be powered by AT&T U-verse. (1 minute)

Worst

Broadband customers in Lawrence, Kan. have been liberated from Internet Overcharging schemes after years of usage-capped Internet access from Sunflower Broadband and Knology.

WideOpenWest’s (better known as WOW!) acquisition of Knology, which in turn purchased Sunflower Broadband from the local newspaper, means usage limits are a thing of the past.

Consumer Reports has top-rated WOW! for customer friendly service, and banishing usage caps is an example of why the cable company earns such high marks.

The company reminds customers that “all WOW! Internet speeds have no usage caps.”

Sunflower Broadband originally offered four different broadband plans, only one without usage caps. Lawrence customers did get speed upgrades faster than many other cable broadband customers, but most were accompanied with draconian usage limits.

Bad

♦ Bronze: Originally offering 3Mbps/256kbps service, Sunflower’s “lite” usage plan included a 3GB monthly usage limit boosted by Knology in 2012 to $22.95/month offering 3/1Mbps service and a still ridiculously low 5GB usage limit. WOW! has kept the lite plan but removed the usage cap.

♦ Silver: Sunflower’s equivalent of Standard Internet service offered 10/1Mbps broadband with a 50GB usage cap. Knology raised the price to $37.95, left the 50GB cap intact and increased speeds to 18/2Mbps. WOW! dropped the cap.

♦ Gold: Sunflower’s premium 50/1Mbps service offered 250GB of usage for under $60 a month. When Knology took over, speeds were boosted to 50/5Mbps along with the price: $62.95 a month. But the usage cap stayed the same. Today WOW! continues the plan without any caps.

Much Better

♦ Palladium: Sunflower responded to customer complaints about metering Internet usage by offering residents a trade — an unlimited use plan with no speed promises. Palladium could be as slow as 2Mbps during peak usage, 25Mbps when traffic was very low. Knology kept the plan and its 1Mbps upload rate, but raised the price to $47.95 a month. WOW! dumped Palladium altogether, replacing it with a 30/2Mbps unlimited use plan for customers who don’t want to pay $63 a month for the Gold plan.

A number of Lawrence customers annoyed with Sunflower and Knology switched to AT&T U-verse when it was introduced locally. Although U-verse has a 250GB usage cap, Lawrence residents report it remains unenforced.

Stop the Cap! reader Mike, who shared the news WOW! had recently shelved the caps, tells us he switched to AT&T years ago and is happy with their service.

“So far, their cap is not enforced at all here,” Mike writes. “The minute they start enforcing it, I’ll switch to WOW!”

After repeated extensions, Time Warner Cable yanked several channels from your cable dial today, and before you ask, you are -not- entitled to any refunds. So don’t ask. (Actually, ask anyway.)

The affected channels are:

• CBS Owned-and-Operated TV stations in the following cities:
  Los Angeles:  KCBS and KCAL-Ind.
  New York:  WCBS
  Dallas-Ft. Worth:  KTVT-CBS and KTXA-Ind.
  Boston:  WBZ-CBS and WSBK-Ind. (carried in parts of NH and MA)
  Chicago:  WBBM-CBS (carried in parts of WI)
  Denver:  KCNC-CBS (carried in Gunnison and Telluride)
  Detroit:  WKBD-CW (carried in parts of OH)
  Pittsburgh:  KDKA-CBS and WPCW-CW (carried in parts of OH)
• Showtime
• The Movie Channel (TMC)
• Flix
• Smithsonian Channel

Phillip “FAQ” Dampier

If your local CBS station is not on this list, you will still be able to watch CBS programming because the dispute only affects local stations directly owned/operated by CBS. But cable subscribers nationwide may notice the loss of the cable networks and premium movie channels, if one subscribes.

As a courtesy, Time Warner Cable has elected to throw Showtime subscribers a bone (and avoid having to pay any refunds) by turning on Starz and Encore for affected customers. (If you happen to find anything worthwhile to watch on Starz, please post a comment and let the rest of us know what we are missing.) Encore is a better choice, but customers should feel free to arrange their own “credit” by canceling Showtime until the dispute is resolved. Time Warner Cable was running a promotion offering HBO and Cinemax for $5 a month each for six months to a year. Inquire if that option is still available if you are feeling premium movie channel withdrawal.

“We deeply regret being forced into this position by CBS, but we’re prepared to stand by our customers and do what it takes to fight these unreasonable demands,” writes Time Warner Cable.

In the meantime, we’ve helped massage Time Warner’s FAQ and rubbed in some truth extract:

Q:  Dear Time Warner Cable Assassins of Joy: Now that you’ve stopped carrying the channels I am still paying for, where can I find the darn shows I’m missing?

A:   There are any number of places, including free over-the-air using an antenna, if you remember what that looks like, plus some places online for free.  In addition, in NYC only, CBS is available through Aereo, which is currently offering a one-month-free-trial at www.aereo.com. Just don’t think about dropping your entire cable television package once you discover Aereo works well enough for you and you don’t need us to delete $70 a month from your wallet and recreate it in ours. Pretty please.

Courtesy: Rich Greenfield, BTIG

For national network prime time shows:

• Visit www.CBS.com to see recent airings (mostly repeats except for Stephen King’s ‘Small Town Under Glass’) of their primetime shows. Thank us we are not capping your Internet usage, sticking it to you for watching unauthorized shows (the ones we don’t own) for free.
• In addition, many primetime programs are available via national online services like Amazon.com, Hulu.com, iTunes.com, or Netflix.com, some for free, some as part of a subscription fee that is almost always far less than the pillaging prices we charge.

For daytime soap operas if you still bother to watch those:  www.cbs.com for free

For local news, weather, and sports:  Remember that your other local broadcast stations remain available on the Time Warner Cable lineup, along with NY1/YNN in select markets (because you want to get your local news from a wholly owned Time Warner Cable news network — the one that often shills our own products). And some of the local CBS stations stream their local newscasts for free over the Internet. Again, worship us for not capping your broadband. Check your local station’s website for information.

For syndicated shows like Dr. Oz, Ellen, Katie, and others:  They are probably all repeats anyway and how many times do you need to be told you are living your life all wrong. It’s summer. Go outside. Be happy. If you insist, most of those shows share either full episodes or highlights via their own websites, for free.

For shows that appear on Showtime, or movies:  Showtime makes some episodes and clips available for free at Sho.com and at Hulu.com. Because nothing equals the experience of watching an entire show like a 30 second clip! Other episodes can be found at paid services like Amazon.com, Netflix.com, and on iTunes. So while you are still paying us for those premium movie channels, go and pay someone else too. And remember that, as a courtesy so we don’t actually have to refund your money, we are providing replacement programming from Starz and Encore on a temporary basis.  Showtime and TMC customers should look in your onscreen guide for the Starz and Encore channel numbers.

For shows on Smithsonian:  If you can find the channel on our 1,000 channel lineup, you are better than us. If you actually watched any shows on Smithsonian, you can get by with similar shows on Discovery, National Geographic, TLC, Animal Planet, and many others, as long as you steer well clear of Honey Boo Boo. She’s a national treasure too, we know, but not enough to be on the Smithsonian Channel.

Frequently Asked Questions Not Well-Answered

Q. Why is this happening?

A:  $$$. We collect, count and stack your money for the pleasure of our executives and shareholders and now other programmers dare to want some of it. We’re not going to let that happen unless you give us more than enough to replace what we’re giving them.

Q:  This kind of blackout seems to happen to Time Warner Cable all the time; Screw you, I’m going to switch to another provider.

A:   Screw you right back. Unfortunately, these kinds of blackouts have occurred more often over the past few years—last year, over 80 broadcast TV stations withheld their channels from all kinds of video providers, including cable, satellite, and telephone companies because they smell the cash we currently get to play patty-cake with.  It’s not just Time Warner Cable, silly—every provider is at risk for losing the right to carry these channels that are available for free over the air to an antenna. Because when this kind of money is involved, all sorts of hell breaks loose. Switching to another provider won’t prevent similar blackouts from happening to you in the future, and you could miss some of your favorite programming, like…  NY1 in New York City. (Really.) We’ve been raising your rates and making you pay for hundreds of channels you never watch for years. Remember, sometimes the evil you know is better than the evil you don’t. We’re talking to you AT&T U-verse.

Q:  It seems odd that CBS SportsNet is still available, when the main CBS channel isn’t.  Why is that?

A:  Wait.

Q:  I live in Los Angeles; with KCAL not available, how do I see the Dodgers games?

A:  Get your lazy butt in the car, go to the stadium and buy tickets.

Q:  I’m an NFL fan, and I’m going to miss my team’s pre-season games.  Where else can I see them?

A:   See above.

Time Warner Cable admitted this morning extracting more revenue from existing customers was more important than attracting new ones, and long time subscribers responded by canceling service in above average numbers.

In a conference call largely hosted by incoming CEO Robert Marcus, a number of Wall Street analysts listened to Marcus’ vision for Time Warner under his forthcoming leadership. Marcus offered competing, potentially incompatible visions in his defense of a lackluster quarter: charge existing customers higher prices for service to boost average revenue per subscriber (ARPU) while also improving the customer-company relationship.

For most of 2013, Time Warner has been aggressively moving away from heavily discounted promotional offers to attract customers. Both outgoing CEO Glenn Britt and Marcus have repeatedly stressed heavy discounting of service during the past two years is now over, and the company is looking forward to resetting prices higher when the promotions end later this year.

It is part of the company’s plan to “drive better performance in the residential business.” An unfortunate side effect is that the company continues to lose video and phone customers and its broadband service growth has been so slow, one analyst called it “anemic.” The company’s quarterly results show Time Warner added only 8,000 new broadband customers in the last three months. The company still earned $1.42 billion from broadband sales alone over the last three months, mostly because of rising broadband bills.

Courtesy: Jacobson

Offsetting that growth, TWC lost 191,000 residential video subscribers, leaving it with about 11.9 million video customers. At least 56,000 customers also pulled the plug on Time Warner Cable telephone service.

“As we discussed before, this [new pricing] approach represents a conscious decision to pursue subscribers with higher ARPU, higher profit and lower churn even if that means fewer connects,” said Marcus as he defended the results. “So it’s not a surprise that as in the first quarter of 2013, subscriber net adds were down in the second quarter on a year-over-year basis.”

As customers deal with increasing prices for cable television and broadband service and the irritation of modem rental fees, many are cutting back on their packages to keep their bill stable.

Marcus admitted customer sign ups of triple play — phone, broadband, and cable TV service — were way down in the second quarter and a lot fewer single and double-play customers were convinced to upgrade. The company’s promotional offers have come with a higher price and slower broadband service, often only 3Mbps.

In a number of markets, especially in the midwest, customers are shopping around for other providers. They are finding AT&T U-verse to be a formidable competitor.

“Throughout the quarter, U-verse was pretty aggressive with a beacon price of $79 for their triple play and $49 for their double play,” said Marcus. “I would characterize those as aggressive promotional prices, and they had an impact. I would say that the impact was more pronounced as the quarter wore on. We’ve now responded to that in the market, and I expect that our relative performance should improve there.”

But for much of the rest of the country where competition is less robust, Time Warner intends to continue to hold the line on pricing and resist discounting even if it means subscribers threaten to cancel.

Time Warner Cable has gotten itself ready for an onslaught of unhappy customers, assigning nearly 1,000 employees to staff four national customer retention centers dedicated to trying to persuade customers not to leave. But these specially trained representatives have a dual mission — keep customers with Time Warner Cable, but don’t give away the store doing so.

Stock buybacks and shareholder dividends were a major priority for Time Warner Cable’s cash on hand.

“Not only are our reps saving more customers, they are also preserving more ARPU among the customers they save,” said Marcus. “As promotional roll-offs peak in the second half of 2013, we expect that our new retention capabilities will drive better revenue growth.”

In the broadband market, Time Warner changed little in the second quarter except to raise prices on service and equipment. Marcus could only point to the addition of 3,500 new Wi-Fi hotspots, mostly in New York City, as its signature achievement over the past three months.

On the residential side, broadband revenues were up 12.5%, but most of that growth came from a combination of the modem lease fee, an increase in the number of 30/5 and 50/5Mbps customers and a successful Turbo promotion.

Results for video and voice were considerably worse. Revenues were down about 4%.

But the company managed to report its highest ARPU ever, with customers now paying an average of more than $105 a month for Time Warner service. Most of that increase came from rising broadband prices.

Time Warner Cable has also been preoccupied with spending excess cash on hand to buy back its own stock, which creates shareholder value. Time Warner expects to spend at least $2.5 billion on stock buybacks this year. Shareholders also received $829 million in dividends (113% of Time Warner’s free cash flow).

“We repurchased 6.6 million shares for $638 million, and through July, we have repurchased approximately 83 million shares at an average cost of around $78.50 per share since we began the program in November of 2010,” reported chief financial officer Arthur T. Minson.

Time Warner Cable’s Board of Directors recently approved increasing spending up to $4 billion on stock buybacks.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WRGB Albany TWC Modem Fee 7-31-13.flv[/flv]

WRGB in Albany reports Time Warner Cable customers are angry about another price hike on the company’s modem lease fee effective Aug. 18. WRGB recommends customers buy their own modems to avoid the fee. Time Warner Cable’s Glenn Britt admitted earlier the fee is really just a hidden rate increase. (3 minutes)