Comcast Corporation has announced its intention to pay $150 million for part-ownership of Arris Group, Inc., which manufacturers set top boxes and cable modems.

Comcast will own 10.6 million shares of Arris when the deal is complete.

The investment comes at the same time Arris is completing its acquisition of Motorola Home Business, which has been a major supplier of cable equipment for years.

With the investment, Comcast is signaling its intent to remain committed to Arris and Motorola brand equipment, but also more strongly influence its future development.

Cable operators have often griped about proprietary software powering set top boxes and the cost of buying and maintaining equipment. Many operators plan to leverage their broadband networks to develop new, cloud-based software to improve the user experience and reduce the cost of equipment.

“This investment by one of our largest customers is a strong indication of customer support for the Motorola Home acquisition and its potential to accelerate innovation to the benefit of the industry and consumers,” said Bob Stanzione, Arris chairman and CEO.

Cahill

A New York assemblyman is telling his upstate constituents to stop wasting money on Time Warner Cable’s monthly broadband modem equipment fee and buy your own device.

“I want consumers to know that they do not have to waste their hard-earned money on a product which was considered free for years,” said Assemblyman Kevin Cahill (D-Kingston) in a statement to members of his district. “Over the course of a year or two, depending on the model, the purchase of a new modem will pay for itself. Additionally, the models for purchase have more features than leased modems, like faster speeds and the capability to handle unlimited wireless devices.”

Time Warner expects less than three percent of its customers will take Cahill’s advice and avoid the $3.95 monthly fee, which opens a new, lucrative revenue stream for a cable operator that already enjoys up to 95 percent gross margin on its broadband service.

Cahill complained the 1996 U.S. Telecom Act prohibits the state’s Public Service Commission from intervening, but reminded customers there is a joint New York-New Jersey class action lawsuit against the cable operator over how the modem fee was implemented.

As of Jan. 14, Time Warner Cable has approved the following modems-for-purchase that can be activated for use with its broadband service, with our recommendations in red:

Comcast’s error correctly noting the return of a customer’s cable modem has cost a Washington, D.C. man his credit rating and $26,000 in additional mortgage fees. Now the man is suing Comcast to get his credit restored and his money back.

In June 2010, Marc Himmelstein bid Comcast adieu. The cable giant informed Himmelstein he was due a refund of $123.19 after the company’s equipment was removed from his home. But the company’s cable modem was left behind by mistake, costing Himmelstein $220 in unreturned equipment charges.

Himmelstein claims nobody from Comcast notified him about the missing modem, nor did he receive a bill for the difference between the equipment fee and his credit balance. He learned about his debt to Comcast when he called the company in August wondering where his refund was.

Once he discovered Comcast’s problem, Himmelstein says he returned the modem. Comcast promised to remove the unreturned equipment charge and assured him the matter was now resolved.

But Himmelstein ultimately never received his $123.19 refund. Instead, Comcast transferred his “past due” account to Credit Protection Association, which reported Himmelstein delinquent to the country’s three largest credit-reporting agencies.

That was bad timing. Himmelstein discovered Comcast’s hit on his credit in the spring of 2011, just as he was refinancing his mortgage. The mortgage lender insisted he pay an additional point in interest — $26,000 — because of the delinquent item.

Boasberg

Himmelstein filed a breach of contract claim and negligence against Comcast in D.C. federal court. Also named is Credit Protection Association, charged with negligence and violation of the Fair Credit Reporting Act. Himmelstein wants both companies to cover the $26,000 paid to the mortgage company, all attorney fees, and the $123.19 remaining credit balance Comcast still has not refunded.

In October, Comcast moved to dismiss all charges, and District Judge James Boasberg last week agreed to throw out claims of constructive fraud and “bad faith” breach of contract, but left the central claim of negligence stand. The case will either now proceed in court or Comcast and the collection agency will offer to settle.

Consumers canceling service should always insist on a printed receipt whenever company equipment in returned, and that receipt should be kept safe for at least six months in case of discrepancies. If an expected refund does not materialize or if a dispute arises, always write down the name of the representative spoken to on the phone or in person. Most cable companies do not refer past due accounts for outside collection activity until they are 90-120 days past due. If a collection company contacts you, demand written verification of the debt, which will force them to produce proof of the amount owed.

Lingering billing disputes should be referred to executive level customer service. Most cable operators have these specialized customer service representatives available to address red tape and special circumstances. Calling the company’s corporate office and asking to speak to the CEO will almost always get transferred to executive level customer service. Filing a complaint with the Better Business Bureau will also be answered by an executive level representative. In the case of Comcast, e-mailing [email protected] may also prove worthwhile.

Although “soft-launched” several weeks ago in many markets, Time Warner Cable has officially unveiled its holiday gift for 2012: a free 50% speed increase for Standard tier customers: 15/1Mbps service.

The speed increase is now complete across New York, New Jersey, New England, the Carolinas, Virginia and Alabama. Customers can activate the higher speed by briefly unplugging their cable modem for 10 seconds, plugging the cord back in, and in some cases rebooting their computer.

Customers outside of these areas can try this as well. Stop the Cap! has received reports from readers in the midwest, Texas, and California that the speed increase has arrived in their areas as well. All Time Warner Cable systems across the country should be providing the new speed by the end of this month.

Earthlink customers using Time Warner Cable should also see an identical speed increase.

Some Time Warner Cable customers are only now getting upgrades to DOCSIS 3 service, which open the door to 30/5 and 50/5Mbps speed tiers. The latest: Binghamton, N.Y. and surrounding southern tier communities. Customers further upstate have had that option for 1-2 years.

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