Time Warner’s Enhanced DVR works fine, but those avoiding TWC equipment run into DRM problems.

If you’re accustomed to using Time Warner Cable’s DVR box, you probably don’t realize how heavy-handed Time Warner Cable can be with copy protection, but as set-top box alternatives proliferate, more customers are encountering the frustration of digital rights restrictions.

For several years, customers using alternatives to Time Warner’s set-top boxes or who wanted to store their DVR recordings on another hard drive quickly discovered the cable operator heavily enforces copy protection mechanisms designed to thwart digital archival copies of programs recorded from cable television.

Copy Control Information (CCI) is an invisible flag sent in digital television signals that is designed to give control to copyright owners over how their shows can be duplicated. Since at least 2007, Time Warner Cable and Bright House Networks customers have been frustrated if they use their own DVR or devices like TiVo. When customers attempt to copy their recorded shows to other devices or playback units in their home, the CCI flag often stops the copy cold.

ZatzNotFunny has covered this issue for years, noting Time Warner Cable, Bright House, and Cox have been particularly unfriendly to third-party set-top boxes like TiVo.

Among cable operators, the most common flags are Copy Freely and Copy Once. Many cable operators set their basic cable network CCI flags to “copy freely,” while premium pay movie channels like HBO are set to “copy once” — primarily to allow time-shifting devices like a DVR to record the show. Once your DVR has a copy of a show with a restricted flag, it cannot be copied again.

Digital Rights Management policies are part of the nation’s struggle between Hollywood-inspired copy protection and the public’s right to make and store recordings of programming for their own personal use. Some telecom companies like Verizon and Comcast have come down more in favor of consumers, while Time Warner Cable and Bright House (which have traditionally shared engineering practices and programming contracts for at least a decade) are far more responsive to Hollywood. The result for subscribers with $200 cable bills is endless frustration, especially if they choose not to use the pricey set-top boxes and DVRs supplied by the TWC or Bright House.

CableCARD and TiVo users, as well as those relying on Extenders for Windows Media Center like the Xbox 360 are often stymied by CCI flags, especially when a consumer tries to watch a show in one room and finish it in another using Multi-Room Viewing features.

ZatzNotFunny rates TWC, Bright House and Cox as unfriendly to alternative set-top boxes like TiVo. (Image: ZatzNotFunny)

Wikipedia supplies insight into the available CCI options cable operators can choose to use for cable television channels:

• 0x00 – Copy freely – Content is not copy protected.
• 0x01 – Copy No More – A copy of the content has already occurred and no more copies are permitted.†
• 0x02 – Copy Once – One recording can be made, but it cannot be copied to another device.†
• 0x03 – Copy Never – the content can be recorded and viewed for 90 minutes after transmission, and is not transferable.†
• 0x04 – Content is Copy Once for digital output, but would have Macrovision 7 Day Unlimited restriction applied on the analog outputs. This affects content viewed either on an HDTV with component cabling or on a standard definition TV. It also affects content saved to VCR or DVD when the recorder is connected to an analog output on the DVR.†
• 0x07 – Content is Copy Never for digital content (deleted after 90 minutes) and Macrovision 7 day/24 hour for content recorded from analog channels. Content cannot be transferred via TiVoToGo transfers or MRV, and cannot be saved to VCR or DVD.†

† – Any live stream with a CCI flag set higher than 0x00 is to be encrypted or protected in a way that only trusted platforms that will obey the flag (Such as Microsoft’s PlayReady system used in Windows Media center) can access it.

A Time Warner Cable customer known as MachineShedFred noticed this problem first hand and wrote about it in a complaint to Time Warner Cable back in March, and Stop the Cap! reader Chris N. pointed us to this ongoing issue:

The only software that allows me to use the CableCARD hardware that you officially support and distribute is Windows Media Center, which Microsoft is no longer developing, and is no longer distributing.  All other DVR software available for every platform will not work, as they cannot decrypt the video stream due to the abuse of the CCI flag.

No other cable company in the US abuses the CCI flag in this manner, and every other cable subscriber in the US that isn’t on Time Warner has a wide choice of solutions for enjoying their service better than we can as your subscribers.  Why are you restricting the choices of your subscribers for no reason?  It’s clearly not contractual from the media networks, as they would have pushed for the same stipulations with at least one of your competitors.  Yet, anyone outside of TWC’s monopoly can use any other software they want.

When even Comcast allows their subscribers more subscriber-friendly choices, you know you’re doing it wrong.  Please revisit this ridiculous policy and cease the overuse of the CopyOnce CCI flag that unduly burdens your subscribers by forcing them to replace perfectly good hardware, or replace YOU.

Some believed this problem could eventually resolve itself with Charter Communications’ buyout of Time Warner Cable and Bright House Networks. Would Charter bring their own policies to affected TWC/BH customers, or will Charter customers soon have to contend with the CCI CopyOnce flag loved by Time Warner Cable as well.

An official complaint to the FCC brought a cryptic non-answer answer from William Wesselman, Time Warner Cable’s regulatory compliance counsel. Wesselman implied the liberal use of the CCI  CopyOnce flag was the result of restrictions in contracts with major programmers, which seems unlikely because other cable operators — larger and smaller — have successfully navigated around this issue. Wesselman’s answer implies as Time Warner Cable and Bright House are brought into the Charter hegemony, “the policies of the two companies will ultimately become the same.”

Of course, he never defines which policy Charter, TWC and BH customers across the country will eventually get by sometime in 2017.

Mr. Wesselman’s full response:

At this time, TWC and Charter continue to integrate their two systems into one. Both TWC and Charter, like other distributors of multichannel video programming, negotiate the distribution rights for the content it carries independently with individual rights holders. These bilateral commercial negotiations take into consideration many different factors, include the content protection and digital rights management requirements of the rights holder; applicable law, license and regulations; and the interests of subscribers. Each of these commercial negotiations, and the terms of the agreements that result, are unique to the specific distributor and programmer involved. As the integration of the two companies continues, Mr. X will notice that the policies of the two companies will ultimately become the same based on our agreements.

For the first time, the average American now pays over $100 a month just to watch television.

Leichtman Research Group, which has measured cable television rates annually for years, just released a report finding the average amount paid for cable television is now $103.10 a month. That’s an increase of about 4% over last year, the lowest annual increase in five years. But it’s still a 39% increase from 2011-2015, which is nearly eight times the rate of inflation.

As rates rise, customers are increasingly cutting cable’s cord for good. More than 800,000 Americans said goodbye to cable TV in the second quarter of this year alone, according to cable industry researcher SNL Kagan. eMarketer says the biggest reason customers are leaving is obvious: higher bills.

“About 82% of households that use a TV currently subscribe to a pay-TV service. This is down from where it was five years ago, and similar to the penetration level eleven years ago,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “The rates of those exiting the category, or intending to leave, are actually similar to recent years. The decline in penetration is also due to a lack of those who are coming into the category, and the industry not keeping pace with movers and related rental housing growth.”

Customers are no longer fooled by promotional rates that offer cable TV for $30-50 a month, usually expiring after one year. Once their first bill arrives, they are unhappy to discover growing mandatory equipment fees and bill padding charges for sports programming, local stations, fake official-sounding surcharges like “regulatory recovery fees,” and more.

“Once the XFINITY bill arrives, my $60 television promotion is $104 after the $5 fee for local stations, $3 for sports, additional outlet charges, equipment rental fees, and taxes/surcharges,” said Comcast customer Dan Ho from central California. “You almost have to take the internet and phone service just to feel like you are getting anything of value for your money, because the bundle price seems like a better deal.”

The cable industry argues cord-cutting won’t save consumers much money, but as Fortune magazine reports, those arguments are traditionally based on temporary rates that never tell the whole story,

“Too often, the comparisons quote a low, promotional, or entry-level price for the cost of a cable TV package instead of looking at the real prices people actually pay,” wrote Fortune author Aaron Pressman. “Left out of the superficial analysis all too often are set-top box fees, regional sports network fees, fees dressed up as faux taxes, and actual taxes.”

Fortune adds every year is a new record high for cable television bills.

Leichtman Research reports that once consumers cut the cord, an increasing number never look back, while those still subscribed to cable are often earching for a better deal:

• Overall, about 3% of TV households last subscribed to a cable/pay-TV service 1-3 years ago, about 6% subscribed over 3 years ago, and about 6% never subscribed to a pay-TV service;
• 7% of current cable subscribers did not subscribe to a TV service for more than a month at some time over the past two years;
• 25% of those who moved in the past year do not currently subscribe to a cable TV service — a higher level than in previous years;
• 12% of cable subscribers are likely to switch from their provider in the next six months — similar to 11% in 2015, and 12% in 2014;
• 6% of pay-TV subscribers are likely to disconnect from their provider and not subscribe to any TV service in the next six months — similar to 7% in 2015, and 7% in 2014.

Is this the future of satellite TV?

Ten years ago, large programmers like NBC-Universal, Fox, Viacom, and Time Warner started bundling new niche channels into their programming packages, forcing pay television providers to add networks few wanted just to get a contract renewal agreement in place for the networks they did want. Now, in the era of cord-cutting, those programming conglomerates are preparing to slim down.

One of the largest — Comcast/NBCUniversal — is the first to admit “there are just too many networks,” to quote NBCUniversal CEO Steve Burke.

Burke warned investors back in July that axing networks like Style and G4 was just the beginning.

“You’ll see us and others trimming channels,” Burke said during Comcast’s second-quarter earnings call. “We will continue to invest what we need to invest into our bigger channels, and we’ll continue to trim the smaller ones.”

Cable operators hope that day arrives sooner rather than later as cord-cutting continues to have an impact on cable-TV subscriptions.

For every popular cable network like USA and Bravo, cable operators get stuck carrying ratings-dogs like CNBC World, Centric, Cloo, VH1 Classic, Fox Business Network, and Fuse — all of which attract fewer than 100,000 viewers nationwide at any one time. Fuse barely attracted 51,000 viewers in 2015. But just about every cable TV customer pays for these channels, and many more.

Many cable channels wouldn’t survive without subscription fees because advertisers consider them too small to warrant much attention.

While Burke’s prediction has yet to slash the cable dial by more than a few networks so far, it has slowed down the rate of new network launches considerably. One millennial-targeted network, Pivot, will never sign on because it failed to attract enough cable distribution and advertisers, despite a $200 million investment from a Canadian billionaire. Time, Inc.’s attempts to launch three new networks around its print magazines Sports Illustrated, InStyle and People have gone the Over The Top (OTT) video route, direct to consumers who can stream their videos from the magazines’ respective websites.

Fierce Cable this week opined that forthcoming cord cutter-targeted TV packages streamed over the internet from players including DirecTV/AT&T and Hulu, among others, will likely start a war of cable network attrition, which may make the concept of a-la-carte cable a thing of the past. Editor Daniel Frankel believes the future will be a finite number of cable networks delivered primarily over IP networks, which are expected to dramatically pare down the traditional cable TV bundle into fewer than 100 channels. Only the most popular networks will be included in a traditional cable TV lineup, and some of these providers expect to deliver a bundle of fewer than 50 channels, including local stations. Those booted out of the bundle may still find life from viewers going OTT, if those networks can attract enough people to watch.

AT&T is hoping for the best of both worlds as it prepares to launch an internet-based package of networks under its DirecTV brand called DirecTV Now. Sources told Bloomberg News AT&T is hoping DirecTV Now will attract more subscribers by 2020 than its satellite service. At some point in the future, it may even replace DirecTV’s satellite television service.

DirecTV Now is expected by the end of this year and will likely offer a 100 channel package of programming priced at between $40-55 a month, viewable on up to two screens simultaneously. The app-based service will be available for video streaming to televisions and portable devices like tablets and phones. No truck rolls for installation, no service calls, and no equipment to buy or rent are all attractive propositions for AT&T, hoping to cut costs.

Since AT&T has taken over DirecTV, it has lost over 100,000 satellite customers. The threat to AT&T U-verse TV is also significant as customers increasingly look for alternatives to cable TV’s bloated and expensive programming packages. AT&T no doubt noticed the impending arrival of Hulu’s cable TV streaming platform next year and other services like Sling TV. Deploying their own streaming alternative with AT&T’s volume discounts from the combined subscribers of DirecTV and U-verse means AT&T can sell its streaming service at a substantial discount.

If consumers find the offerings from DirecTV Now and Hulu a credible alternative to traditional cable television, cord cutting could dramatically accelerate, provoking a response from cable operators likely to offer their own slimmed-down packages. So being among the 100 or so networks carried on DirecTV Now, or among the 50 or so networks Hulu is planning to offer, could be crucial to the future survival of any cable network. Those stranded in the 500-channel Universe of today’s cable television packages could be forced off the air or to an alternative means of reaching an audience such as OTT.

The lesson learned by the cable television industry is that customers are tapped out and unwilling to pay ever-rising cable TV bills for dozens of networks they’ve never watched and don’t intend to. The longer term lesson may be even more scary for some networks. Live, linear television as a concept may have seen its time come and go, at least for entertainment programming. While viewers are always going to seek live television for sports and breaking news, alternative on-demand viewing of everything else, preferably commercial-free, is a growing priority for many, especially if the price is right.

Charter channels Don Rumsfeld

A Charter Communications executive told a western Massachusetts cable advisory board he had no idea how much Charter’s set-top boxes cost the company.

The question was just one of many asked by concerned public officials and residents worried cable bills could skyrocket as much as 50 percent after Charter takes over for Time Warner Cable early next year in the region.

Charter will require all cable television subscribers to rent a set-top converter for each connected television that will cost $6.99 a month each after a two-year grace period. The Five-Town Cable Advisory Committee that represents the interests of residents of Great Barrington, Lee, Lenox, Sheffield, and Stockbridge, Mass., call that illegal, claiming it violates a 10-year agreement signed in 2013 with Time Warner Cable and transferred to Charter in 2015.

Charter promised officials there would be no changes after taking over Time Warner Cable’s 10-year contract, but officials and some residents are now pushing back against the cable operator after learning customers paying $14 a month for 20-channel basic service will now have to pay at least $21 — a 50% rate hike — to keep cable service after Charter Spectrum arrives.

The Berkshire Eagle covered an open meeting held last night at the Great Barrington Firehouse, where residents and officials wondered why they could only lease a cable box from Charter, and asked the company to share how much the set-top box actually costs the company.

Charter representative Tom Cohan and his lawyer responded they did not know the cost of the equipment and added Charter’s upgrade, which will digitally encrypt all cable television channels, would have happened with Time Warner Cable as well.

Cohan also declared that since Charter views the encrypting of cable channels as “an upgrade,” that means they are not in violation of the agreement with the towns, and they have no say in the matter anyway.

“As the cable operator, we have authority over what technology we use,” said Cohan.

Town officials pointed out there has not been a case of prosecutable cable theft over the last five years, making encryption unnecessary.

“It’s not proper to make us pay for something we don’t need and don’t want,” said Linda Miller, the committee’s chairwoman. “We don’t want to file a lawsuit, but we will if we have to.”

Walmart is recommending customers consider cutting off cable television for good with a step-by-step guide advocating an end to high-priced bills for hundreds of channels you’ll never watch:

When you sign up for cable, you are sold on the possibly hundreds of channels you will have access to, but how many do you actually watch? Most people find that they have, at most, a couple dozen channels that carry all of their favorite shows, while the rest are just filler. Unfortunately, whether you watch them or not, you’re still paying for all of those extra channels. Part of the tremendous savings (an average of $80 a month) in cutting the cord is moving to services that offer a smaller set of channels representing only what you want to watch. Not only do you just have the channels that you actually want, but streaming services are far more convenient, since they’re geared towards on-demand delivery of content. You watch what you want when you want. Most are month-to-month, meaning you can switch it up anytime rather than being stuck in a long-term contract.

The guide gives Walmart the obvious opportunity of selling customers on new televisions and equipment to enhance their streaming experience, and they don’t forget to mention how to hook up an antenna they just happen to sell to get local stations back on your cable-less television.

Walmart also uses its “cord-cutting” guide to upsell customers on VUDU, an often-forgotten pay-per-view streaming service Walmart just happens to own.