Cablevision broadband customers are likely to see some new, faster upload speeds from the cable operator between now and sometime in July thanks to ongoing competition from Verizon FiOS.

Employees are informally telling Stop the Cap! the cable company has already dropped the “go-away” $300 installation fee for the company’s highest speed Ultra tiers and is set to formally introduce these packages this summer:

• Optimum Online Basic gets an upload speed boost. The 15Mbps download speed stays the same, but the 2Mbps upstream speed increases to 5Mbps;
• Optimum Online Boost will be retired. The 30/5Mbps service was Cablevision’s “turbo” tier, but now customers will be encouraged to consider faster packages;
• Optimum Online Boost Plus will be reintroduced as Optimum Ultra 50. The download speed remains 50Mbps, but upload speed is going up from 8Mbps to 25Mbps;
• Optimum Ultra also gets an upload speed boost. The 101/15Mbps tier becomes 101/35Mbps.

Courtesy: Sutheras

Cablevision did not get back to us in time to confirm the changes, but multiple sources have told us they are imminent.

Customers might appreciate the new speeds, but we’ve also heard from several readers Cablevision is now injecting ad banners into the browsing experience.

“I just started seeing advertisements for Optimum’s new website at the bottom of my screen, regardless of what web page I visit,” writes Dean Portew. “It just started happening and the ads disappear sometimes as quickly as they appear and Cablevision claims to not know anything about it.”

Reviewing the terms of service for Cablevision, the cable company doesn’t call it a web browser ad injection, they call it watermarking and to quote Det. Joe Fontana from the late Law & Order, “we’re authorized.”

32. Watermarking:

Subscriber understands and agrees that Cablevision may use “watermarking” techniques to message you about your account, Optimum services or for other communication purposes while using the Optimum Online Service. These “watermarks” may appear superimposed from time to time over portions of website pages you visit while using the Optimum Online Service, however, you understand and agree that this in no way indicates Cablevision’s approval of or responsibility for the content of such websites, which are solely the responsibility of the website operators and/or content providers. You further agree that you will not seek to hold Cablevision responsible in any way for any third party website content or the operation of any third party website accessed via the Optimum Online Service, or for the appearance of an Optimum “watermark” over a portion of any website.

A number of customers are not too happy about the intrusion, judging from an active discussion on DSL Reports’ Cablevision forum.

Optimum Wi-Fi is available from thousands of “hotspots” across New York, New Jersey and Connecticut. You can find them by starting your Wi-Fi device and viewing the available networks in range. The network name will be ‘optimumwifi’.

Cablevision broadband subscribers may soon get free Optimum Wi-Fi service on New Jersey commuter trains and inside railway stations, if the NJ Transit board approves an agreement with the cable company.

On Wednesday, the board will vote on a 20-year contract with Cablevision to build and maintain a wireless network entirely at the cable company’s expense and offer NJ Transit free use of its facilities to assist in its operations.

With more than two-thirds of all rail commuters using Internet service during their travels, the network will vastly improve Wi-Fi access and offload data traffic from nearby cellular towers.

Providing Wi-Fi on trains has proved more difficult than Cablevision and the transit group originally thought.

The NJ Transit system first issued a “request for proposals” from interested Wi-Fi vendors back in 2010. Three years later, the transportation agency finally chose Cablevision over Illinois-based RAILband Group.

Cablevision has also been dragging its feet installing Wi-Fi on the Long Island Railroad and Metro North, despite agreeing to offer service by 2011.

“Wi-Fi on the trains is complicated,” explained Tad Smith, Cablevision president of local media.

On a March 2013 conference call with Wall Street analysts, he admitted the service is still not up and running, but should be sometime in the future.

“We are in active, productive, very positive conversations with the trains,” said Smith. “I am optimistic for the future.”

The project in New Jersey is not anticipated to be complete until 2016. Wi-Fi will first be made available in railway stations. Individual railway cars will then gradually get the service.

Cablevision now provides its Optimum Wi-Fi service as a benefit exclusively for subscribers. Non-subscribers are limited to three 10-minute sessions per 30-day period, with a further limit of one 10-minute session per day.

The MTA required Cablevision to provide “reasonable” access to non-Cablevision subscribers, which may include daily, weekly, or monthly access passes at an additional cost. But no pricing or further details are now available.

NJ Transit is the nation’s largest statewide public transportation system providing more than 895,000 weekday trips on 240 bus routes, three light rail lines and 12 commuter rail lines. It is the third largest transit system in the country with 165 rail stations, 60 light rail stations and more than 18,000 bus stops linking major points in New Jersey, New York and Philadelphia.

One of America’s lowest-rated cable companies and an industry legend labeled by consumer advocates as the “Darth Vader of cable” may be joining forces to buy Time Warner Cable, according to Bloomberg News.

The blockbuster buyout would leap Charter Cable from fourth largest cable operator to second place, although still behind Comcast in terms of revenue and number of subscribers.

The spectacular return of Malone to the top echelon of the American cable industry was the talk of the industry’s Cable Show, ongoing this week in Washington, D.C. Those attending are reportedly buzzing Malone’s imminent return is likely to spark a massive consolidation of the U.S. cable industry to as few as three major cable operators serving more than 95 percent of the American cable marketplace.

Malone

Driving momentum to merge, in Malone’s view, is increasing cable video programming costs, which are cutting into profits. Having a fewer number of cable operators could hand the industry more leverage over broadcasters and unaffiliated cable programmers, but could also cut costs through marketplace efficiencies and volume discounts.

“If you’re John Malone, you’re thinking: we’ve got to get bigger,” Jim Boyle, managing director of SQAD and formerly a cable equity analyst for more than 19 years, said in a telephone interview with Bloomberg News. “The bigger Charter can get, the more economies of scale discounts it can get,” he said. “If everyone else is playing checkers, Malone is playing three-dimensional chess.”

For many on Wall Street, the only thing left to do is plan the funeral for the country’s second largest cable company.

“If you’re going to do a transformational deal, your choices are Time Warner Cable, Time Warner Cable and Time Warner Cable,” Craig Moffett, a veteran industry observer told Bloomberg. “You can roll up all the little guys if you want to, but even if you did, you haven’t built something that’s truly large-scale.”

“Time Warner Cable is gone,” Chris Marangi, a money manager at Gamco Investors Inc., said. “I think Charter will buy them eventually, whether it’s Liberty facilitating that or Charter doing it directly or the two companies doing it in partnership.”

Industry observers predict Malone will signal his dream deal by initially launching smaller mergers and acquisitions before attempting a buyout of a cable company considerably larger than Charter itself.

The first target: perennially bottom rated Mediacom, where any buyer is likely to be hailed as a rescuer by beleaguered subscribers who have regularly dismissed the cable operator as incompetent. Next, the Washington Post’s Cable ONE, which may already be plumping itself up as at attractive takeover target through investment in improving its network infrastructure.

But the most obvious foreshadowing of a big deal with Time Warner would most likely come if Charter first successfully acquires always-rumored-for-sale Cablevision, where the controlling Dolan family is rumored to be holding out for an exceptionally attractive buyout package other cable companies aren’t willing to offer. Time Warner itself has been rumored as a buyer, but current management has repeatedly stressed it will not pay a premium price for acquisition targets.

Malone may not be able to help himself. His long history in the cable industry includes a voracious appetite for merger and acquisition deals. For more than two decades, Malone led Tele-Communications, Inc. (TCI). When he arrived in 1972, TCI was a rural Texas and western states cable operation with 100,000 subscribers. By 1981, through mergers and acquisitions, he built TCI into America’s largest cable operator. In 1998, AT&T bought out TCI Cable. The phone company later exited the cable business and sold most of the operation to present owner Comcast.

The level of consolidation proposed by Malone is unheard of in the United States, but is familiar in Canada where two major cable operators — Rogers and Shaw — control the majority of cable subscriptions. Third largest Vidéotron leads in Québec and Cogeco serves pockets of Ontario and Québec bypassed by Rogers and Vidéotron, respectively.

Time Warner Cable has laid the foundation to eventually begin charging broadband customers usage-based pricing, raise the modem rental fee originally introduced last fall, and continue to offer customers unlimited broadband service if they are prepared to pay a new, higher price.

Time Warner Cable CEO Glenn Britt spoke at length at this week’s Bank of America/Merrill Lynch Global Telecom and Media Conference in London about how Time Warner Cable intends to price its broadband service going forward. The moderator peppered Britt with questions as investors looked on from the audience about if and when the cable company can raise prices for its broadband service or start a usage pricing plan that will generate higher revenues based on metering customer usage.

Britt

Britt repeated his earlier assertions that Time Warner Cable has no interest in capping customer usage. In fact, the company sees fatter profits from increased usage, as long as customers are willing to pay for it.

For the first time, Britt admitted customers seeking unlimited service should be ready to pay a higher cost for that option, telling the audience Time Warner would set a premium price on the unlimited tier and offer discounts to customers seeking downgrades to comparatively cheaper, usage-based pricing plans. The company hopes this new approach will limit political opposition and customer push-back.

Britt also said there is room to grow Time Warner Cable’s monthly modem rental fee ($3.95 a month), comparing it against Comcast’s current rental fee, which is $7 a month.

Britt complained that increasing usage and demand for broadband speed was requiring the company to invest more in its broadband service, something not clear on the company’s quarterly balance sheets. Real investment, except for expansion by the business/commercial services division, has been largely flat or in decline for several years. Time Warner Cable’s broadband prices have increased over the same period.

Britt also admitted that the costs to offer the service remain comparatively minor.

“In broadband there are the costs of connectivity and peering and all that sort of stuff, but they are pretty minor compared with (video) programming costs so it appears that broadband is usually profitable versus video.”

Britt also admitted the cable industry in general is increasingly dependent on broadband revenue and the profits it generates to shore up margin pressure on the industry’s formerly lucrative video service. As programming costs increase, pressure on profits increase. Yet the cable industry remains profitable, primarily because broadband earnings are making up the difference.

The meter is lurking

“I think if you look at the U.S. cable companies the EBITDA margins have been remarkably stable over a long time period,” Britt said. “The mix has [recently] changed. The video gross margin is getting squeezed, the broadband gross margin is larger and we are growing broadband so that is helping. The voice gross margin is higher than video and a little less than broadband and until recently that has been a growing part. And then we have business services which are growing rapidly and have a high gross margin.”

Additional Quotes:

Cable Modem Equipment Rental Charge: “It was received with a minimum of push-back and we’re still actually charging less than Comcast ($7/month), so I think there is room to charge more going forward. People can buy their own if they want and a small percentage of customers have chosen to do that which is fine with us.”

Usage-Based Pricing: “In order to keep up with the demand for throughput and speed which is going up every year, we are going to have to keep investing capital which we do on a regular basis, so we are going to have to figure out how to get paid for that. I think inevitably there is going to be some usage dimension, not just speed within the package, so what we have done is to put in place pretty much throughout our footprint, with a few exceptions, the idea that you can buy the standard service that [includes] unlimited usage and that costs whatever it costs, but if you want to save $5 (and that is the first thing we put in place) you can agree to a consumption limit, and we can start expanding on that.”

“I think the key to this — there has been push-back against caps in the past — I think the reason for the push-back is it was perceived in a sort of punitive, coercive fashion. The usual rhetoric is, ‘gee 20 percent of the people use 80 percent of the bandwidth or some number like that — we need to make them stop using so much.'”

“My feeling is we actually want everybody to use more, we want to invest the capital, we just want to get paid for it. So I think we should always have an unlimited offering and that should probably cost more than it costs today as the usage goes up and then people who don’t use as much should have the opportunity to save money. They don’t have to but they can, so I think that is a much more politically and consumer-acceptable way to do it than a sort of punitive thing people talk about.”