Cable ONE customers nationwide lost eight Turner Networks channels yesterday, despite the fact the cable company has a signed contract with Turner to pay for some of the networks that have gone dark.

“In an extraordinary act of retaliation and bullying, Turner Networks removed TBS, TNT and Cartoon Network from all Cable ONE systems without warning, when our prior Turner contract expired on October 1,” said Cable ONE CEO Tom Might. “This happened despite the fact that Cable ONE had signed new contracts and already agreed to pay an enormous nearly 50% rate increase for these three networks.”

Cable ONE was under pressure to carry all eight Turner-owned networks (in turn owned by Time Warner Entertainment) during contract renewal negotiations that included substantial fee increases. The cable company independently decided to boot five “less popular” networks from lineups nationwide: Boomerang, TruTV, TCM, CNN and CNN Headline News. It agreed to keep buying TBS, TNT, and Cartoon.

“We signed contracts for TBS, TNT and the Cartoon Network through the National Cable Television Cooperative (NCTC), which allows for the purchase of individual channels rather than the entire bundle of eight,” said Might. “In a disgraceful punitive reaction, Turner Networks refused to recognize the NCTC contracts and immediately de-authorized all Cable ONE systems in order to ‘teach’ Cable ONE a lesson about the power of cable programmers to tie and bundle channels together and force carriage of unwanted bundles.  They refuse to give cable operators or their customers any choice about what they can or cannot buy.”

Turner Networks claims Cable ONE has no authority to buy a slimmed-down package of channels through the NCTC and must negotiate with Turner directly.

Cable ONE will automatically credit its customers for the missing channels. The cable company is a subsidiary of The Washington Post Company and serves 730,000 customers in 19 states.

Cable ONE explains to its customers why eight Turner Network-owned channels are now missing from the channel lineup. (2 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Hawaiian non-profit customers of Time Warner Cable are receiving letters warning the cable company is terminating its discount program for charitable and community groups that could result in rates more than doubling for some customers.

Oceanic Time Warner Cable had provided free or heavily discounted cable or Internet service to qualifying organizations. Those discounts are ending, explains a letter obtained by Pacific Business News.

Time Warner Cable has adopted new policies regarding discounted or free service in light of IRS regulations that require 1099 forms to formalize the value of discounts or forgiven cable bills. The cable company is using the occasion to review its discount programs – ending some while tightening requirements for others.

“If we do not receive a reply from you within 30 days of this notice to update your account, it will be necessary for us to disconnect your existing services,” the letter explained.

Becky Dunning, managing director for the non-profit Honolulu Theatre for Youth called Time Warner to learn what “update your account” meant.

“The biggest thing is that when I called the number I was told that they aren’t offering discounted rates to nonprofits anymore, and that we’d have to pay their existing business rates; for our organization that means we would go from paying $106 a month to $227, which is a big difference — more than double,” Dunning said. “We can’t exist without Internet service.”

Dunning said the group would probably stay with Time Warner and attempt to make up the difference from somewhere in the organization’s budget.

Malone

So far Dr. John Malone isn’t getting very far with his ambitious plan to merge Charter Communications and Time Warner Cable into a single cable company, but that has not stopped him from trying.

GDP Insider reports Malone is quietly keeping the pressure on Time Warner Cable management to do a deal with Charter. Malone controls a substantial interest in Charter Communications.

Liberty Media, a holding company controlled by Malone, is spearheading the courtship under the direction of Greg Maffei, Liberty’s CEO. It’s a tall task, considering Time Warner Cable is a larger company than Charter.

Both men are betting they will get a friendlier reception after current CEO Glenn Britt retires at the end of the year.

TWC’s new chief financial officer, Artie Minson, isn’t exactly rebuffing Malone and Maffei.  Minson said that in the event of an acquisition or merger deal, the company will consider taking on more debt to help finance the transaction.

Many Charter shareholders are unconvinced such a deal is worth the amount of debt likely required to finance it, especially as cable television subscriber numbers continue to erode and the rate of new broadband sign ups has peaked.

Malone has argued a combined Charter-Time Warner Cable could realize savings in cable and broadcast retransmission fees through volume discounts.

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.”

When you bought a home or moved into an apartment, were you offered a special discount deal to sign up with Time Warner Cable? Or is cable television already provided as part of your lease?

While everyone enjoys saving on cable television, telephone and broadband service, chances are your landlord or the person who lets the cable installer into the building is getting a better deal than you ever will.

Cable companies often (quietly) offer realtors, builders, condo association leaders, landlords, superintendents and even their assistants free or deeply discounted cable service for a variety of reasons:

• Building owners and builders are given special consideration to help encourage contract agreements that offer bulk cable service to every resident in the complex. The cable operator usually also gets exclusive use of inside wiring, discouraging the competition;
• Realtors and property developers are often paid in cash for new subscriber leads, usually resulting from “welcome to your new home” move-in kits, “concierge” services offered by your realtor, or special flyers left at your door that pay rewards every time a customer signs up;
• Superintendents, landlords, and maintenance staff get free service in return for making life easier for Time Warner Cable technicians trying to get into a large multiple dwelling building on service calls. Free cable, including complimentary HBO and Showtime is almost always an effective incentive for those that can otherwise make life very difficult for service providers.

Time Warner Cable has provided free or deeply discounted “courtesy accounts” for more than a decade. For much of that time, the informal agreement required the recipient to provide little more than convenient building access for Time Warner Cable technicians. Participants in the program were also asked to pass along any service issues or complaints.

Sometimes, even customers act as informal salespeople for cable service. Time Warner’s “Shared Savings” Bulk Discount program is available in buildings where 40 residents or 50% of the building, whichever is greater, can be convinced to commit to a service contract with Time Warner Cable lasting up to three years. In return, customers are promised free standard installation, bulk-rate Digital TV service, discounted broadband and phone service, and flexible billing options that can either bill residents directly or dispatch a single monthly invoice to building management where service is bundled with a renter’s lease agreement.

This week, the New York Times reported Time Warner Cable was reviewing its courtesy accounts program and asking participants to recommit themselves (and include their Social Security number on an included IRS tax form).

Details about Time Warner’s Apartment Managers’ Program are hard to find. No cable company wants to openly advertise that select customers are getting cable service for free while others watch their bills continue to grow and grow. The Times outlines the new agreement the cable company is requiring New York City program participants to sign.

Real estate workers are now asked to send employment verification along with a signed, formal contract that includes commitments to act as a goodwill ambassador for Time Warner Cable, help the company sell products, and snoop on tenants suspected of stealing cable.

“It is the intention of Time Warner Cable to provide the Promotional Services contemplated in this Agreement to further solidify and enhance the mutually beneficial business relationship between your property and Time Warner Cable,” one California Time Warner Cable contract states. “In keeping with the spirit of this relationship, we expect the Recipient to be our goodwill ambassador to all employees and residents by positively promoting our products and services. […] Time Warner Cable employees will be allowed access to the property to install, maintain and market services door to door between the hours of 8AM and 9PM.”

The Times reports few real estate professionals have any ethical problems making sure the cable company has a reliable point of contact in the building to let workers in without delay and there isn’t much controversy over requests to report service problems either.

But there are concerns about language that informally appoints building workers as deputy ambassadors and marketers of Time Warner Cable products. One offer rewards a free month of Internet to a program participant for every three leads that turn into sales.

“We would consider that a borderline kickback,” Michael Jay Wolfe, president of Midboro Management, a large building management company told the newspaper. “I mean, what are they going to be selling next, Tupperware? They work for the building. They’re not an agent for anybody else.”

Others object to a clause requiring them to “identify, discourage and report” signal theft or equipment tampering, effectively spying on tenants.

Another reason some are balking is Time Warner’s insistence on a signed W-9 tax form, which includes the recipients’ Social Security number. In return, to comply with federal law, the cable company must issue an IRS Form 1099-MISC to all individuals that receive courtesy services worth $600 or more in a calendar year. In other words, the IRS is going to know the identities of those getting compensated with free cable service, which may have tax implications, making the service no longer free in the eyes of the tax man.

Ziggy Chau, a spokeswoman for Time Warner Cable defended the program saying it was intended to help customers.

“If there are service issues, customers want those issues fixed yesterday,” said Chau. “The people in these programs, they’re not going to do it for free. We’re building a good relationship.”

Some real estate workers are refusing to sign the new agreements and losing free cable as a result.