Time Warner Cable will increase the broadband speed for its most popular Standard service to 15/1Mbps across the country over the next 60 days.

With increased competition from Verizon’s FiOS fiber to the home network and AT&T U-verse, Time Warner is boosting Internet speeds to stay competitive with aggressive promotions on offer from phone companies throughout its service area.

Rob Marcus, chief operating officer for Time Warner, today told investors U-verse was available in about a quarter of the company’s footprint, with Verizon FiOS offering service in 12% of the areas where the cable company provides service.

“Last quarter, U-verse featured fairly aggressive double play promotions, especially in Texas and the midwest, while FiOS continued to aggressively enter new buildings in New York City,” Marcus said.

Marcus

Time Warner Cable failed to meet investor expectations for broadband growth during the third quarter, and some are questioning the company’s wisdom narrowly-targeting promotions to specific segments of its customer base. Bloomerg Industries analyst Paul Sweeney suggested the company was struggling to market the correct bundles of services to its customers.

Marcus reported Time Warner has seen the largest growth in DOCSIS 3.0 enhanced broadband so far, with 73,000 new customers signing up for the company’s 30/5Mbps Extreme tier or 50/5Mbps Ultimate tier during the last quarter. Combined with Turbo customers, this represents over 22% of all Time Warner’s residential broadband customers.

But while the company celebrated its new revenue from cable modem rental fees, the new charge has alienated a number of customers, some now shopping around for a better deal from competitors.

“In essence, this is a rate increase on [broadband] service, but the key is our customers have a choice,” Marcus said. “If customers prefer to buy their own modem from a qualified list of options, we’re all for it. After all, if the modem is on the customer’s balance sheet, that is less capital expense for us and fewer truck rolls.”

Marcus’ statement conflicts with one made earlier by Joli Plucknette-Farmen, communications manager for Time Warner Cable in western New York. She told WGRZ-TV last month the new fee was not  a “rate hike dressed up as a fee”, as some critics have suggested.

The company made no announcements about increasing the speeds of its higher-speed tiers to maintain their value in light of the forthcoming speed increase for Standard service.

This will cost you $10/month in Milwaukee

Stop the Cap! has learned Time Warner Cable is back with another equipment rate increase, this time for television set top boxes that will now cost $10 a month each, beginning in Wisconsin.

Time Warner Cable customers in the Milwaukee area are first getting the notice of the $1.05 rate increase on their latest bill. The new rate takes effect in November.

“Many businesses, including ours, are facing rising costs and have to adjust prices in order to maintain their operations,” explains Time Warner Cable Wisconsin spokeswoman Stacy Zaja. “We also understand that some of our customers are struggling in this economy, and are doing the best to hold the line on our prices.”

The rate increase comes at the same time Time Warner is introducing a $3.95 monthly modem rental fee for its broadband service. Unlike cable modems, however, Time Warner will not allow customers to purchase their own set top boxes, so it represents a rate increase customers can only avoid by canceling service or negotiating a lower rate.

At this time, Time Warner will not increase its prices for cable television service, just the equipment needed to view it.

The Business Journal notes Time Warner may be taking a chance on its latest rate increase, because AT&T’s U-verse service is increasingly available as an alternative choice for Milwaukee residents. Time Warner last raised the set top box rental fee by $1 in 2011, along with a $5 monthly rate hike for its cable television service.

Telling Time Warner customers to get rid of the cable company’s phone service.

Best Buy employees in upstate New York are advising Time Warner Cable customers to dump Time Warner phone service and buy their own cable modem to completely avoid any additional monthly fees.

“We don’t have modems that will support Time Warner’s voice services, so basically any customer that has that bundle either has to make the decision to get rid of that service or deal with paying for that service every month,” said Syracuse Best Buy employee Drew Cacciola.

Cacciola told a Syracuse television station Time Warner’s supplied equipment is “old and refurbished” and that if customers purchase their own equipment, they will have the latest technology and won’t have to worry about ending up with another refurbished cable modem if the current modem fails.

“If [a new modem] breaks down you can get a new one you don’t have to send it back to them and you won’t get another refurbished one – you get a new one,” said Cacciola.

In fact, Time Warner phone customers do not have to cancel their phone service to avoid the modem fee, but they will be stuck with two pieces of equipment — a Time Warner-supplied eMTA that manages the phone service (with its Internet ports disabled) and the customer’s own purchased cable modem. For now, Time Warner is not charging customers for eMTA equipment used exclusively for its phone service.

Best Buy does not carry some of the models on Time Warner’s approved modem list, and the cheapest one WSYR reporters could find cost around $60, meaning it will take just over a year to recoup the cost of the modem.

Motorola cable modem

Time Warner Cable’s modem fee continues to create consternation for customers, especially when they learn the same piece of equipment used for both Internet and phone service costs $3.95 a month when used for broadband, but is free when used only for phone service.

Stop the Cap! reader Ben argued with a Time Warner representative trying to understand the reasoning.

“So, let me get this straight about the modem fee: If I have phone there is no fee but if I use the same modem to also get Internet, there is a fee?,” Ben asked.

Yes, came the answer. The explanation:

“About the modem fee: Our costs for Internet equipment keep increasing and unfortunately we could not continue to absorb the costs related to their purchase, maintenance and repair,” wrote a Time Warner employee named ‘Paul-E.’ “Leasing a modem ensures you have the most up to date and capable equipment to take advantage of our services as we offer faster speeds and additional functionality. These events sometimes require that we replace your current equipment to give you the best experience.”

Time Warner’s explanation for the new modem fee sounds plausible, but unfortunately for “Paul-E” (and the company),  much of it is demonstrably false.

Investors Business Daily reports the new $3.95 computer modem leasing fee could raise up to $500 million a year for the cable company.

“I would look at this as a price increase,” Bryan Kraft, an analyst at Evercore Partners, told IBD via email. “There are some questions that need to be answered before the impact on ARPU (average monthly revenue per user) can be reasonably estimated.”

Stop the Cap! took a look at Time Warner Cable’s financial reports and discovered the company’s capital expenses for its high speed Internet service (and cable modem equipment) have dropped for the third year in a row:

Time Warner Cable’s capital expenditures on customer premise equipment, including cable modems, has dropped for three years in a row.

Capital spending (as a whole) so far this year has decreased as a percentage of revenue to just 12% for residential customers. Time Warner has spent money primarily on extending service to potential business customers.

The need to charge you more for a cable modem is questionable when residential Internet service rate increases and customers gravitating to more expensive, higher speed services already deliver the company higher average revenue per customer without spiking their costs.

When the station relayed complaints about long hold times and busy signals for customers trying to activate their purchased cable modem, the response from Time Warner — don’t call on Monday or Friday or around morning or dinner time unless you are prepared to wait on hold.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSYR Syracuse Time Warner Cable modem charge 10-24-12.mp4[/flv]

WSYR in Syracuse covers the ongoing controversy with Time Warner Cable’s new modem fees, and a Best Buy employee tells Time Warner customers to get rid of the company’s phone service.  (3 minutes)

[flv width=”480″ height=”288″]http://www.phillipdampier.com/video/WGRZ Buffalo Time Warner To Add New Fee For Internet Users 10-16-12.flv[/flv]

Time Warner Cable continues tapdancing around whether its new $3.95 monthly modem rental fee is a hidden rate increase. WGRZ in Buffalo presses a spokeswoman on whether this is just another cable company money grab.   (2 minutes)

Cable companies are starting to lay the groundwork to support the next generation of HD video — first with 4K, an improvement over today’s HD standard, and eventually 8K Ultra High Definition TV — delivering pictures 16 times better than the current 1080p HD standard and coming close to the level of detail supported by IMAX.

The 8K evolving standard, proposed by Japan’s public broadcaster NHK and dubbed Super Hi-Vision, remains years away, but cable operators are preparing their systems to support 4K UHDTV (3840 x 2160 – 8.3 megapixels)  much sooner.

By the time 8K comes into use, most cable operators will rely entirely on a single broadband pipe to deliver video, Internet access and telephone service. To handle that traffic, and the bandwidth UHDTV demands, providers will have to upgrade their systems to support much faster speeds. A single video channel transmitted in 8K UHDTV requires around 360Mbps.

That makes Google’s decision to construct a gigabit broadband network in Kansas City seem less revolutionary and almost evolutionary, considering how quickly bandwidth demand will increase in the next eight years.

The cable industry is now moving fast to finalize the next version of the DOCSIS standard which supports cable broadband. DOCSIS 3.1 is expected to be introduced Thursday at the Cable-Tec Expo. An initial preview seems to suggest the standard will be backwards-compatible with prior DOCSIS versions — good news for those buying their own cable modems — and will support multi-gigabit speeds, if the cable operator decides to dedicate more of its available bandwidth to broadband.

An essential goal of the cable industry is to match or beat 1Gbps, currently on offer from several fiber to the home service providers and Google. Some operators want even more — up to 10/2Gbps capacity, as they consider future speed needs.

But engineering advancements and innovation fly in the face of bean counters attempting to monetize broadband usage with usage caps and usage-based billing. The industry’s justification for usage caps becomes even more tenuous as it moves to a single pipeline for all of its services and treats its cable TV package differently from Internet traffic. AT&T and Bell are already doing that today with their U-verse and Fibe platforms. Both claim their TV channels move over a different network than traditional Internet, but as costs for both continue to decline, that is becoming a distinction with little difference.

Google and a handful of independent or community-owned broadband networks are largely the only ones calling out the cable industry’s bogus claims that consumers don’t need super fast broadband, usage caps are necessary, and broadband speed upgrades are difficult and too expensive. These new competitors have correctly predicted the exponential growth in bandwidth demand and are prepared for it, even as the industry continues to dismiss their competitors’ networks as unnecessary overkill.

But cable’s hurry to DOCSIS 3.1 tells a different story.

Jeff Baumgartner from Light Reading Cable observed cable executives at Tuesday’s annual Cable & Telecommunications Association for Marketing (CTAM) conference, where those attending beat the drum for faster and better networks:

[DOCSIS 3.1] will also focus on the quality of cable’s pipe, reduced latency and other smarts designed to help enable a new set of broadband-based services. Cable’s interest in offering 4K HD services, which offer four times the resolution of today’s HD, was an example that was brought up several times during the session.

The cable industry also hopes to shorten the process of creating the specs and having them turn into deployable products. An average generation of DOCSIS has typically taken three to four years.

“We can no longer do that,” said Phil McKinney, the new president and CEO of CableLabs, but didn’t offer a guess on the anticipated cycle for 3.1. “We have to deliver higher and higher performance.”

[…] And 3.1 is also about the almighty dollar as broadband usage continues to climb. Getting costs down “is a key part of Docsis 3.1,” said Cox Communications Inc. EVP and CTO Kevin Hart.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Light Reading NBCU Ultra-HD Demo 10-12.flv[/flv]

Jeff Baumgartner from Light Reading Cable was invited to a demonstration of 8K UHDTV, which will require much faster broadband networks to handle the super high quality video. (3 minutes)