Pay $160 a month... or $89.99

Time Warner Cable attached their new rate schedule to my November cable bill which arrived in the mail last week.  It’s the second major rate increase in western New York this year, and it means customers who just want to watch standard basic cable television will now pay $80.50 a month to do so.  We’re a long, LONG way from the $20 cable TV package the industry used to advertise as “less expensive than a cup of coffee a day.”  This is Starbucks’ coffee pricing, with no end in sight.

Time Warner Cable’s Triple-Play package of phone, Internet, and television service will now run $160.49 a month here in Rochester.  It wasn’t too long ago that a bill that size was reserved for the gas and electric company, or perhaps for a used car payment.  That’s before taxes, franchise fees, and other pad-ons, too.  Need that extra set top box?  Add another $7 a month each with remote control.  Want to speed up your broadband?  $10 a month for that.  HBO?  Time Warner Cable’s premium channel-pricing completely ignores today’s economic and marketplace (Netflix/Redbox) realities.

The cable company does have competition in the television business. In the same day’s mail was the latest offer from DirecTV, which has nearly as many sneaky extra fees as local phone company Frontier Communications.  That $24.99 a month “amazing deal” starts to snowball as you build a package, and it also means a satellite dish on your roof, which some people just don’t want.

Assuming you stick with the cable company’s triple play package, the sobering truth is that doing business with Time Warner at their everyday-high-pricing will cost you at least $1,920 a year.  But you don’t always have to pay them the asking price.

So with rate increase notice in hand, what can you do?

1. Call them up and tell them the relationship is over unless changes are made.  Good things come to those who wait for the other side of the relationship to start sacrificing for a change.  You’ve coped with rate hikes for years and cable companies keep shoveling more channels you never watch and then raise rates because of “increased programming costs.” This time, let the cable company give a little.  Call and tell them you want to disconnect your service two weeks from today.  A retention specialist will attempt to negotiate with you (starting with efforts to pare down your package, leaving you still paying regular price for fewer services).  Be non-committal,  because better deals will start to arrive by phone as early as a few hours after telling them you’re leaving.  (But you have to answer those unfamiliar Caller-ID calls to hear about them.)  The worst that will happen is you don’t win a significantly better deal. You still have two weeks to rescind the cancel request with no interruption in service and at least get something for your efforts.  Consolation prizes to sweeten a mediocre retention deal: free sample of premium channels, a free Turbo-class upgrade for Road Runner, and/or a break on DVR service.

2. Compare prices.  If you live in an area with telephone company-delivered TV, offer to stay with the cable company if they will match the new customer offers you are probably already getting pelted with in your mailbox.  Most will.  There are customers who literally bounce back and forth between AT&T/Verizon and Comcast/Time Warner Cable year after year just to keep the $89-99 triple-play promotional price that effectively never expires.  Getting your existing provider to match it saves you and your provider the time and hassle of switching.

3. Demand a new customer price.  Do a Google search for “Time Warner Cable deals” (or for your respective cable company) and at least a dozen offers will appear, mostly from third-party, authorized resellers.  Double-play offers for broadband and cable-TV often range between $75-85.  A triple play offer which adds phone service is usually just a few dollars more.  Some resellers pitch combo offers that deliver a discounted rate and a substantial rebate ($150), like the one below:

Ask Time Warner to match the price of these offers (you likely won’t get the rebate, however).  They certainly can come close on retention deals — in fact they will go as low as $85 a month for an annual triple play deal in some areas.

Some customers deal with intransigent retention agents by canceling service and quickly signing up as a new customer soon after.  That is more of a hassle, and some areas require a waiting period before they’ll offer a new customer promotion again, but the usual trick around this is to sign up under a spouse’s name.

It pays to shop around and read the fine print carefully.

For example, in the deal above, I highlighted three important features — the $150 rebate, which is important for reasons I’ll explain in a moment, the free DVR service, and “standard installation.”  In some cases, promotional offers for new customers do not include free installation or equipment, so it is always important to ask exactly what is included.  The $150 rebate will help defray those expenses, but some competing deals omit the rebate and knock $10 off the $99 monthly price for the same bouquet of services and installation is free.

1. Drop services you don’t need.  Still paying for premium channels?  Why?  Also check your bill for extra mini-pay tiers for certain HD channels Time Warner Cable dropped a few years ago.  You may still be paying $5 a month or more for channels like HDNet Time Warner replaced with the hardly-comparable RFD-TV.  Some customers who signed up for a discounted promotional offer for Time Warner phone service are now paying upwards of $30 a month for the company’s regular-priced unlimited long distance plan.  Consider switching to the $20 “local calling only” plan.  You can make those long distance calls on your cell phone or Google Voice and save $120 a year.

Time Warner, like every other cable company, understands the word “cancel” very well.  The best way to put an end to endless rate increases is to refuse to pay them and being willing to cut the cord until they get the message.

Time Warner Cable experienced another challenging quarter, continuing to lose cable TV customers who either drop or pare back their television service, often in favor of broadband.

The company reported losses of an additional 128,000 video subscribers during the third quarter, but is partly winning that revenue back with new broadband customers — 89,000 of them in the last three months.

“Broadband is a powerful service for which there appears to be unquestionable consumer thirst,” Time Warner Cable CEO Glenn Britt said on the investor call. “Over time, we will contribute more of our plant’s capacity to broadband.”

The company is also poised to expand its marketing to win new broadband customers away from their primary competition — telephone company DSL service.  Company officials remain confounded by customers who subscribe to Time Warner’s cable TV service and take broadband from “inferior” phone company-delivered DSL.  Time Warner will continue to target these customers with win-over promotions offering a year of Road Runner Standard Service at the $29.95 promotional price point.

For the company as a whole, this is the tenth consecutive quarter of year-over-year residential broadband revenue improvement, coming from a combination of higher-priced, faster speed tiers, price increases, and subscriber additions.  The company’s DOCSIS 3 upgrade has proven itself a winner for customers and the company, with 18 percent of Time Warner subscribers now choosing 30 or 50Mbps broadband services.

Wall Street expressed some concern about statements from CEO Glenn Britt that the company was going to expand capital spending on broadband to handle increasing demand, especially from online video.  That concern comes despite the fact the company’s “capital intensity” (spending) from January-September was the lowest in the history of the company.  The full year’s capital spending is on track to reach up to $3 billion, which is consistent with what the company spent last year.

Glenn Britt

So despite the plans to spend more on broadband, that spending is actually in line with previous years.

In response to an opening question from Deutsche Bank’s Doug Mitchelson, Britt delivered an extended explanation downplaying the company’s spending plans:

In a way, there’s nothing really new here. I think you’ve seen this trend for a while. Our broadband product is very strong.

As most people know, the usage of broadband is skyrocketing, as it has been for some time. And that means that we will need to spend more money on it. We have been already, both in capital and operating expenses.

The great thing about the Internet is lots of third parties dream up lots of new applications that require more speed and more bandwidth. And we anticipate that we’re going to have to devote more capacity to that over time. We will do that by gradually removing our analog signals from our — analog TV signals from our plan. We’ve been doing that over the last several years by migrating to digital using Switched Digital technology. And over the next several years, we’ll be going all digital in the TV space.

I don’t see this driving a dramatic change in our cap spending, I think, to the core of your questions. The spending has been going on for a while, and I think you’re seeing a change in mix. The video spending is going down over time. The business services is going to go up, although it didn’t this quarter. And you’re going to see the spending on broadband going up. But I don’t think the overall trajectory is mutually different.

This quarter, the company’s conference call seemed to embrace greater broadband usage, and pondering Internet Overcharging schemes like usage caps or usage-based billing never came up.  But Richard Greenfield from BTIG alluded to usage in his questions to Rob Marcus, president and chief operating officer at Time Warner Cable.

“I think we’re somewhere in the 7GB a month [range] of downstream bandwidth on a median basis,” Marcus said. “The average is much higher given the disproportionate usage by our high-end users.”

There were plenty of other facts to be gleaned from this morning’s conference call:

TV

• Whole Home DVR service has been introduced nationwide.  In the coming year, Time Warner will begin deploying “home gateways,” which reduce equipment costs;
• Time Warner is testing improved cloud-based set top boxes with home networking capabilities in parts of Syracuse, Los Angeles and Dallas.  These boxes will expand across the country in 2012.  They offer better search capability and deliver an improved user experience;
• 60% of customers reject “triple-play” offers from Time Warner and choose either “single” or “double-play” service instead;
• Much of Time Warner’s revenue growth is coming from rate increases on programming, services, and equipment;
• TV Essentials, the smaller, less expensive video package, is now available in New York City and Northeast Ohio, as well as upstate New York. It will launch nationwide by year end.  Unsurprisingly, company officials admit the less-than-attractive channel lineup has resulted in the vast majority of customers calling about the offering taking the traditional video package instead;
• Customers continue to drop ancillary services to cut their cable bill.  The increasingly expensive DVR box is a new target for cutting, and premium movie channels, adult pay-per-view, and mini-pay services all continue to suffer significant declines in business;
• The Google-Motorola deal will likely have little impact on Time Warner’s set top boxes, which primarily come from Cisco and Samsung.

Broadband

• By the end of the year, Time Warner plans to offer an Android-based TV Everywhere application similar to the existing iPad application, which will also continue to be upgraded to include on-demand offerings;
• Time Warner will make their TV Everywhere service available on game consoles, smart TVs and PCs in the near future;
• New York City customers will soon be able to select from a range of local broadcast stations on the company’s iPad app.  Other markets will start to see local channels added to this app in 2012;
• Major parts of Time Warner’s capital investments this year are: building data centers in Charlotte and Denver, conversion to all-digital in Maine to make room for enhanced broadband, and the continued rollout of DOCSIS 3.0. The company is also continuing to spend significantly on wiring commercial buildings to sell services to business customers;
• TV Essentials customers will soon be offered a “lite user” slower speed discount broadband plan to accompany their video package;
• In Los Angeles, Wideband 50Mbps customers also get 2 gigabytes of 4G/3G mobile broadband for no additional monthly charge on the company-branded Clearwire service. For Turbo Plus and Wideband 30Mbps customers, they can get the same 4G/3G capability for an additional $10 a month. Standard and Turbo customers can get it for an extra $20.  The company’s mobile broadband add-on product has not enjoyed much success with paying customers, however.  Time Warner hopes the value-added bundling of mobile broadband will attract more interest.

Phone

• Cord-cutting is now impacting Time Warner “digital phone” service, too.  Customers are increasingly reluctant to purchase phone service from any landline provider.  Now Time Warner’s regular pricing is starting to cost them business.  Executives revealed Time Warner’s “digital phone” service costs the company $9.06 to provide.  They charge consumers $30.  With that kind of profit margin, the company admits it will have to get more aggressive in pricing to attract new customers (and potentially keep existing ones);
• Time Warner lost 8,000 residential voice line customers last quarter, cushioned by net additions of 13,000 business line customers;
• The company continues to show little interest in selling cell phone products or services, either owned by themselves or others.  Mobile data remains an exception.

In August, Time Warner Cable’s billing system went haywire for some 15,000 Ohio customers, some of whom found their promotional rates canceled, resulting in a doubling of their monthly bills.

One such Time Warner customer is Linda Sacash, who lives in Russell Township.  She had a three-year deal, in writing, with Time Warner that provided her family with a triple play package of Internet, telephone, and cable service for $89.95 a month.  But when her August bill arrived, Time Warner insisted she owed twice that amount — $179.

Sacash, among others, started calling Time Warner to complain about the inaccurate bills and was told the cable company unilaterally decided to expire promotional packages a year early.  Sacash wasn’t happy with that explanation, and noted a clause in her written agreement that limited rate increases to no more than 10 percent a year.  That didn’t matter much to Time Warner, who looked forward to receiving her new $179 payment by the due date on her bill.

Time Warner’s attitude changed, however, when WEWS-TV consumer troubleshooter Joe Pagonakis turned the camera on himself, and called the cable company looking for answers:

The company responded immediately, admitting some 15,000 bills were processed inaccurately during the summer.

Time Warner quickly corrected Sacash’s bill, and confirmed that her promotional offer will remain in place until November 2012, as stated in the Time Warner service invoice.

If considering a promotional offer, get it in writing and keep the paperwork for the length of the promotion, just in case your provider decides to renege on the deal. If signing up for a promotion over the phone, always get the name, extension/employee ID, and the exact details of the offer and keep those details in your files.  It’s often easier to get a company to stand up to their commitments when you have the name and extension number of the employee who sold it.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WEWS Cleveland Russell Township woman fights wins battle over inaccurate Time Warner digital cable bill 10-24-11.mp4[/flv]

WEWS-TV in Cleveland intervenes on behalf of a local woman who faced a doubling of her cable bill when Time Warner elected to end her promotion a year early.  (2 minutes)

Before the billing problems, apartment and building numbers appeared on customer bills.

Cox Communications’ third-party billing vendor decided a billing system upgrade was required to comply with post office regulations governing the bulk mail discounts the company receives when sending millions of subscriber bills.  But that upgrade caused some renters serious headaches this summer when apartment and building numbers were omitted from the envelopes, resulting in bills being returned to Cox undelivered.

Despite the billing snafus which began in June, customers were still expected to pay their bills on time to avoid late fees.  In Lincoln, R.I., one apartment complex is up in arms as residents in their 80s have been forced to drive to Cox offices just to find out how much they owe and pay their bills in person.

“At first they blamed the post office when I called,” said Cox subscriber Anita Messier.  “I’m 81 years old and I can’t see myself driving [to the cable company] this winter to pay my Cox bill.”

The problem: Cox deleted the apartment and building numbers from the billing addresses of many of their customers.  Now, only a generic street address is listed, and that is a problem for the affected Lincoln residents, many of whom live in apartment complexes with well over 100 individual families.  Mail carriers have not been equipped to guess what bill belongs in which mailbox, so Cox’s monthly statements stopped arriving.

Now they don't, and the post office won't deliver them.

The Messier family’s bill ceased arriving in June, and despite repeated calls and promises the issue would be corrected, they still haven’t received a Cox bill, and it is now October.

In frustration, Messier threw her hands up and called Providence TV station WPRI for help.

“I don’t usually ask for help,” Messier confesses.  “I usually come out of this by myself, but right now I’m frustrated with Cox.”

When the station called Cox, it appears to have lit a fire under the cable company to help finally resolve the issue.  Cox officials profusely apologized for the billing blunder, claim they will refund any late charges that result, and now Lincoln residents are wondering whether they will finally see their Cox bills return to their mailboxes before Halloween.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WPRI Providence Cox Stops Billing Lincoln Cable Customers 10-5-11.mp4[/flv]

WPRI in Providence intervenes on behalf of elderly Lincoln residents who have been forced to drive to local Cox offices to pay the cable bills they haven’t seen since June.  (3 minutes)

Customers of Time Warner Cable in Maine preparing for the cable company’s all-digital conversion that will eventually impact every customer nationwide are reporting more problems with the equipment the cable company is supplying to those without set top cable boxes.

Frank Dobbelaere from Augusta is disgusted with the digital box conversion, and is calling the cable company “anti-consumer.”

“They can cut service costs, forgo capacity upgrades and charge indefinitely per device, leaving consumers with inconveniences, obstacles and surcharges,” Dobbelaere says.  “Time Warner Cable staff said the digital cable adapters (DCA) are mandatory, for everything, unless you have a digital cable box per device. HDTVs with digital tuner do not get a pass. I quote: ‘No adapter = no TV. Cable TV is going to be password protected.'”

Indeed, Stop the Cap! has heard from several customers in Maine who report Time Warner Cable’s new digital conversion program even impacts customers with digital tuner-equipped sets, forcing them to either watch a downgraded analog signal or upgrade to a digital set top box.

“They have encrypted the basic cable lineup so QAM reception is not going to work, assuming you can even figure out how to program it in the first place,” writes Stop the Cap! reader Bill Adair.  “We tried their digital adapter for about five minutes, and that is all it took for us to take it back.  It’s absolute garbage.”

Adair reports the DTA Time Warner supplies significantly degrades picture quality.

“It’s absolutely awful with wavy lines in the background, grainy picture quality, and a picture that resembles a VCR tape,” he reports to us.

Adair said he wouldn’t even bother with the device on his 13 inch kitchen television.

“It’s unwatchable, in my opinion, on any television.”

Dobbelaere considers the resulting picture from his DTA sub-standard definition.

“I lost every local HD station. Most analog channels were blank. The DCA quality is worse in side by side analog comparison. It is prone to interference and signal degradation,” he reports to the Kennebec Journal. “Toss out the $100 all-in-one remote, put the TV on channel 3 (or 4) and use the chintzy DCA remote, without closed-captioning support. Two or more devices in a room? Thanks to DCAs, you can no longer control the channel independently, because each remote changes the channel on any DCA.”

Antenna retailers are using Time Warner's digital conversion as a sales opportunity.

The list of devices rendered effectively inoperable with the new digital system continues to grow unless you go through the painful, and pricey set top box route:

• VCRs
• DVRs like TiVo
• DVD Recorders
• PC TV Tuner Cards and Add-Ons
• Slingbox
• “Cable-ready” HD television sets

“What happened to free HD, cable without a box, buy a new HDTV and get cable to avoid a converter — so eagerly touted during the DTV transition and other commercials,” asks Dobbelaere. “We were perfectly happy viewing and recording the analog-digital mix; but now will pay more for less, while losing any recording and networking capability.  Of course, Time Warner would happily rent me a dozen digital cable boxes and DVRs.”

Dobbelaere has a better idea.  He’s planning to cut the cable and “go old school” with rabbit ears.

In fact, antenna retailers see an opportunity and are buying ads to remind Maine residents they can still watch HDTV programming over the air, without a digital box, a DTA, or monthly cable bill.