Time Warner’s maze of explanations and excuses still don’t add up.

Instead of waiting for the outcome of a class action case against Time Warner Cable’s new $3.95 monthly modem fee, readers might do better taking their case direct to the company. Longtime Stop the Cap! reader “PreventCAPS” rattled the cages of Time Warner’s social media customer service representatives, which resulted in credits worth six months of modem rental fees.

Our reader tells us he brought pointed questions about the modem fee, complaints about the inconsistent reasons for imposing them, and irritation about the lack of notification.

Some Q&A:

Q. Why is Time Warner Cable now charging a modem fee? Earlier reports that the fee would cover the cost of equipment do not make sense because the company is not automatically supplying customers with new cable modems and already assesses $24-150 penalty fees to “cover costs” of damaged or unreturned cable modems. 

A. Time Warner Cable now says the fee is to cover the costs of increasing broadband speeds. A representative explained that the company wants to make sure everyone can be assured of getting the speeds advertised, and there are still customers with DOCSIS 1x equipment that can only support broadband speeds up to 9Mbps, which already conflicts with the company’s advertised 10Mbps Standard Service speed (soon to be 15Mbps).

Our Take: DOCSIS 1x equipment was recalled from western New York customers years ago. It was first introduced locally in 1998 and is long past its expiry date. It is a safe bet only a very tiny percentage of Time Warner customers still have first generation equipment. The overwhelming majority of current broadband customers have DOCSIS 2 modems, many installed years earlier. Those customers will keep that equipment for years to come unless they choose to upgrade to 30/5Mbps speeds or higher because a DOCSIS 3 modem is required for faster speeds. Our reader pointedly asked if the new modem fee guarantees every customer will receive the newest equipment and increased service. The answer in response was “no.”

These phony explanations and justifications tapdance around the reality this modem fee is being introduced as a revenue enhancer — nothing more, nothing less.

Customers are not buying this!

Q. Why is the list of supported DOCSIS 3.0 modems so thin and limited?

A. The representative speculated the reason Time Warner Cable so heavily favored Motorola equipment came from contractual support agreements and guarantee obligations with that company. But the representative claimed Time Warner Cable “will activate and support any modem model they currently lease to customers.”

Our Take: This claim represents a new development, but one unlikely to prove consistent across the country. Time Warner Cable’s national call centers have employees currently trained to activate and support only those modems on the approved list. However, local technical support and “Tier 3” agents inside of local offices seem to have a more flexible attitude about accepting other equipment. This is a classic case of “your results may vary.”

Q. Why are there modem fees for Internet service but no modem fee if I use the exact same equipment for my Time Warner Cable phone service.

A. The representative claimed it has to do with Federal Communications Commission rules governing phone equipment.

Our Take: We are not certain what rules would apply in this case, but it is possible the company’s lawyers found some “exposure” if Time Warner began charging the fee for phone service equipment. Again, we suspect the fee applies to broadband primarily because it is the service customers are least-likely to cancel over a price hike. Phone service is more tenuous. Increase the price and disconnect requests are likely to rise.

Q. Why are these fees being instituted to “cover costs” when records show capital expenses for Internet service (and cable modem equipment) have dropped for the past three years in a row?

A. The representative claimed that capital costs don’t cover cable modems.

Our Take: That answer is completely inaccurate. Nice try. Stop the Cap! earlier reported that capital expenditures for customer premise equipment dropped for the last three years in a row. For the benefit of readers (and Time Warner Cable), here is the company’s own definition of that equipment¹:

“Such equipment includes digital (including high-definition) set-top boxes, remote controls, high-speed data modems (including wireless), telephone modems and the costs of installing such new equipment.”

 ¹- Time Warner Cable 2011 Annual Report, “TWC’s capital expenditures,” p.60

Two class-action lawsuits were filed Tuesday on behalf of Time Warner Cable customers in 29 states to force the company to refund ill-gotten modem rental fees in violation of consumer fraud laws.

“It’s a massive hi-tech consumer fraud accomplished by low-tech methods,” said attorney Steven L. Wittels. “Send customers confusing notice of the fee in a junk mail postcard they’ll throw in the garbage, sock them with a $500 million dollar a year rate hike, then announce on your website that customer satisfaction is your #1 priority. That’s some way to deliver satisfaction.”

The context for the class action suit is that Time Warner Cable began imposing the fee Nov. 1 without giving customers appropriate notification. New York City residents had little more than two weeks notice in the form of a poorly printed postcard. Some residents in western New York and other cities have still not received notification from the cable company, either on bills or in the mail.

The two lawsuits were brought on behalf of Manhattan resident Kathleen McNally and Fort Lee, N.J. resident Natalie Lenett, but the suit asks the court to order refunds for all Time Warner Cable customers charged modem fees across their national service area.

The Consumerist thought the company’s failure to meet the timely notification requirement about the forthcoming modem rental fee might have the cable company dead to rights:

Pricing and Service Changes

Unless otherwise provided by applicable law, Time Warner Cable will notify you 30 days in advance of any price or service change. Notice of these changes may be provided on your monthly bill, as a bill insert, as a separate mailing, in the Legal Notice section of the newspaper, on the cable system channel(s) or through other written means.

But on closer examination, that provision only applies to pricing and service changes for Time Warner Cable’s television service, not broadband or home phone service.

In fact, Time Warner Cable’s new Subscriber Agreement has reserved the right to change just about anything it likes, just by updating the terms and conditions on its website:

We May Change our Customer Agreements

(a) We may change our Customer Agreements by amending the on-line version of the relevant document.  Unless you have entered into an Addendum that ensures a fixed price for a period of time (for instance, a Price Lock Guarantee Addendum), we may also change the prices for our services or the manner in which we charge for them.

(b) If you continue to use the Services following any change in our Customer Agreements, prices or other policies, you will have accepted the changes (in other words, made them legally binding).  If you do not agree to the changes, you will need to contact your local TWC office to cancel your Services.

(c) Any changes to our Customer Agreements are intended to be prospective only.  In other words, the amended version of the relevant document only becomes binding on you as of the date that we make the change.

One significant change Time Warner inserted in its Subscriber Agreement (the one printed in tiny print on tissue-thin paper, occasionally mailed with your bill) was deemed so important, it appears highlighted and in bold language:

Time Warner Cable now requires customers to submit disputes individually to binding arbitration, denying the right to bring or participate in any class action case. However, customers can opt-out of this provision simply by notifying the company through an online form. (You will need your Time Warner Cable account number.)

In practice, this would require McNally, Lenett, and millions of other customers to individually submit to a time-consuming arbitration proceeding — all to fight a $3.95 monthly fee. Few would bother. Wittels told The Consumerist the lawsuit still has merits because of other language Time Warner Cable maintains in its agreement which he believes holds the door open to a class action challenge.

Although customers are invited to purchase their own cable modem equipment to avoid the fee, the lawyers involved say the options are limited and expensive.

The United States scores 44th (Canada is 67th) in the global upload speed race. North Americans can take a moment (or two… or three… or four) and ponder the meaningfulness of statistics gathered by Net Index that explains why uploading that home movie to grandma last month seemed to take forever. Because it did.

The average upload speed in the United States is an embarrassing 4.05Mbps (and it stings even worse to realize your cable or phone company provider has probably locked you in even slower at 1-2Mbps for uploading content.) Canadian broadband advocates can’t even be seen in public. The country’s comfortable telco-cable duopoly gives consumers in the north just 2.35Mbps for upstream connectivity.

So who among the league of broadband nations has us beat? Countries that have barely survived civil conflicts bordering on all-out war, others plagued with bouts of starvation, and a handful whose currency can be counted into the thousands and it still wouldn’t be enough to buy you breakfast. But they can upload pictures of the restaurant you are not eating at far faster than you can.

CenturyLink CEO Glenn Post does not think much about AT&T’s plans to shift its most rural landline customers to wireless in its efforts to decommission traditional landline service.

“From a regulatory standpoint, that could be a tough go,” Post explained to Wall Street investors on a conference call last week. “There may be some areas that will have better service with wireless in some ways. As far as a competitive threat, we don’t see that being a real issue for us because just the bandwidth requirements and the limited wireless access or capability in a lot of areas.”

CenturyLink, one of four large independent phone companies and owner of former Baby Bell Qwest, is doubling down on its wired infrastructure to reach customers. The company recently announced Phoenix would be the latest city to get its fiber-to-the-neighborhood service Prism TV — the first legacy Qwest market to get IPTV service from CenturyLink. The service soft-launches in Phoenix this month, with a second city in the region or Pacific Northwest slated to get Prism sometime next year.

The company has spent much of 2012 investing in broadband, managed hosting and cloud computing for business customers, and fiber expansion to reach more than 15,000 cell towers across CenturyLink’s national service area, depicted in green on the accompanying map.

But CenturyLink executives stress their investments are “strategic” — made in areas that are most likely to deliver quick returns for the company.

While CenturyLink spends money to secure video franchising agreements in metro Denver and Colorado Springs for Prism TV service, it is moving at “a snail’s pace” to deliver broadband service in northeastern North Carolina’s Northampton County. County officials there anticipate CenturyLink will take years to deploy basic DSL service to communities outside and around Conway and Gaston.

The broadband problem in income-challenged parts of North Carolina illustrate the conundrum for county officials, who have to advocate for broadband improvement while combating misleading broadband maps that suggest access is not a problem in the state.

Donna Sullivan with the Department of Commerce notes that broadband maps in states like North Carolina have a census block granularity which does not always reveal the true picture of broadband availability.

“That means if one household in that census block can receive broadband services, the entire census block is considered covered—even though there very well may be households who cannot receive broadband to that location,” she told the Roanoke-Chowan News-Herald.

Northampton County, N.C.

CenturyLink is in no hurry to expand broadband to the 1,921 households in the county of 22,000 who cannot buy broadband service at any price.

Derek Kelly, a CenturyLink spokesman, said the company is working to expand broadband services in the region, but noted the costs to lay down a fiber network to help reach the unserved is “one of the largest costs.”

That cost is much less of a problem if the customer at the end of the line happens to be a wireless company like Verizon or AT&T.

Company officials admit they are spending enormous sums “investing in fiber builds to as many [cell] towers in our service area as economically feasible.” In the third quarter alone, more than 1,000 cell towers received fiber upgrades for a total of 3,300 so far this year. The company hopes to reach 4,000-4,500 cell towers by New Year’s Eve.

The reason why CenturyLink chases wireless business while allowing rural and income-challenged service areas to go without broadband is a simple matter of economics. Cell phone companies sign lucrative, multi-year contracts for fiber connectivity to cell towers to support forthcoming 4G service. In contrast, CenturyLink was surprised to find an astounding 94 percent of families with children in Northampton are qualified for the company’s special Lifeline Program which delivers slow speed, discounted broadband service for families on public assistance.

Post

For CenturyLink’s more urban and prosperous service areas, the news for broadband service improvements is better.

As CenturyLink continues to extend its middle mile fiber network, broadband speeds are gradually improving.

Over 70 percent of CenturyLink customers can receive at least 6Mbps DSL service, more than 57% can receive at least 10Mbps and 29% can access the Internet at 20Mbps speeds or better, according to Post.

But the more urban and prosperous a service area is, the greater the chance a cable competitor has successfully poached many of CenturyLink’s DSL customers with the promise of better speed.

Post said he recognizes the company must do better to remain competitive.

“We’re shooting for 20-25Mbps for a very large percentage of our areas,” Post said. “But with [pair] bonding, we can virtually double the broadband capacity and speeds in our markets. We’re already doing bonding in a number of markets today. So where we have 20Mbps, we could have 40Mbps.”

CenturyLink’s fiber to the neighborhood network, essential where it plans to roll out Prism TV, can also support faster broadband speeds if a customer wants broadband alone and does not care about television service.

Nationwide, the company added 10,000 Prism TV subscribers in the third quarter and has a total customer base of around 104,000 subscribers. But that represents a penetration rate of just over 10%, hardly noticed by still-dominant cable operators.

CenturyLink executives were asked to comment on AT&T’s strategic plan to transform their landline network announced last week in New York. Post found little in common between CenturyLink and AT&T’s vision for the future and does not think the company has to respond to AT&T’s attempt to redefine rural America as wireless territory.

“We don’t see that as a major investment for us or a major risk at this point.”

Bell has the perfect gift for themselves this holiday season: significant rate increases on phone, broadband and television service that will leave some customers paying at least $120 more a year for service.

Stop the Cap! reader Alex Perrier shared the bad news with us:

“What a great Christmas gift,” Perrier writes. “With few exceptions, all Bell home services get a ‘price update.'”

Home phone customers may be in for some bill shock if they happen to use on-demand calling features or directory assistance. Some of those rates are increasing by more than 500%.

Home phone packages

The monthly fee for all Bell Home phone packages (Home phone Lite, Home phone Basic, Home phone Choice, Home phone Complete) are increasing by $2.03 effective January 1, 2013.

Long distance plans

Features

Effective January 1, 2013, the price of Home phone pay-per-use calling features (Last Call Return, Busy Call Return and Three-Way Calling) will increase by $0.45 to $2.95 per use. The monthly cap on Home phone pay-per-use calling features will also increase to $29.50

Effective January 1, 2013, Directory Assistance will increase by $0.50 to $3.00 per use.

Bell TV

Bell Internet

Note: Bell Internet 5 and Bell Internet 5 Plus are excluded from the price increase.