Highlights:

• Company still losing video customers, but picking up phone customers (on the cheap), and winning with broadband;
• Broadband consumption pricing still CEO’s favorite flavor of Internet billing, but only for other people’s content;
• Broadband speed matters, as Time Warner continues to win over dissatisfied DSL customers;
• ‘If customers love our broadband, we can charge more for it;’
• Verizon/Time Warner’s cooperative marketing agreement starts with discounts but ends with “exclusive product enhancements.”
• The future of Time Warner Cable Wi-Fi.

Time Warner Cable reported unexpectedly strong profits in its first quarter as the company’s broadband services helped stem the losses from departing cable TV customers.

The cable operator told investors it boosted profits 18%, mostly from increasing revenue the company earns selling broadband access to the Internet and convincing customers to add more Time Warner services.

Time Warner Cable said goodbye to 94,000 residential video subscribers last quarter, higher than analysts expected. But that did little damage to earnings because the company picked up an additional 214,000 broadband customers over the same period, most switching from phone company DSL service.

Time Warner Cable’s increasingly aggressive bundled service promotions, particularly on its triple-play offer of cable, broadband, and phone service, even managed to attract 112,000 new landline customers — a significant accomplishment as Americans continue to disconnect traditional phone lines in favor of cell phones.  It also helped increase the average revenue earned per subscriber.  Time Warner Cable pitches double play promotions as low as $79.00 a month. For just $10 a month more, customers can add a third service, and many do.

Most discounts last for one year, but the operator now often sends letters to customers reaching the end of their promotion offering additional, but lower-value discounts going forward. This has limited bill shock for customers surprised by the company’s regular prices. It also might reduce the urge for customers to shop around for a better deal.

Judging from the company’s financial results, most customers hang on to Time Warner Cable’s broadband regardless of price, if the competition happens to be traditional DSL from the phone company. In fact, as phone and cable companies realize they have sold broadband to virtually every home in their service area that wants it, growth in subscriber numbers going forward largely depends on poaching customers from someone else.  Nobody makes that easier than phone companies trying to sell customers DSL with speeds under 10Mbps.  According to CEO Glenn Britt, Time Warner Cable picked up more new broadband customers than Verizon and AT&T combined.

Time Warner Cable broadband speeds give headaches to phone companies trying to sell traditional DSL.

While phone companies continue to argue that speeds don’t matter (at least for their DSL product line), Time Warner believes otherwise and apparently so do their new customers.  The company reports that almost two-thirds of those dumping DSL said their old service was too slow.

Much of the company’s growth in broadband revenue is also coming from the high end, as customers increasingly gravitate towards faster broadband speed tiers.

Britt

Residential DOCSIS 3 (Extreme/Ultimate) customers increased 50% to 218,000, and almost 66% of new broadband customers signed up for either Turbo (20Mbps), Extreme (30Mbps) or Ultimate (50Mbps) service.  Together, these customers now make up 20% of Time Warner’s broadband subscribers, up from less than 16% a year earlier.

Customers are willing to pay higher prices for faster service, a point not lost on Britt, who noted that once customers perceive broadband has more and more value, the company can charge more for it over time.

If Britt’s steadfast belief in Internet Overcharging-consumption billing schemes holds true, some customers might find they are charged substantially more if the company decided to discontinue offering unlimited Internet service.

For now, the company plans to continue its experiments in consumption billing through its Internet Essentials program, now testing in South Texas, which limits customers to 5GB of usage per month before overlimit fees kick in.  But going forward:

“I think we’ve been pretty clear about this, we do think over time, there will be consumption element to the tiers,” Britt said.

But Britt says he wants to keep unlimited access for customers willing to pay for it.

Time Warner's Hotspots in southern California.

“We retained our unlimited tier with no cap (I actually don’t like the term cap),” Britt added. “And I think we should always have that. So that this was not in any way coercive, people who wanted to save money, could. People who wanted to keep what they had have kept it, and they still have unlimited. So our plan is to roll that out further across [the country] as the year goes on.”

Britt noted the company’s own streamed video products would not drain customers’ usage allowances.  But Netflix and other online streamed video would.  Britt adopted the same argument Comcast has used to defend the practice.

“So there’s a set of standards called the IP, Internet Protocol, and those can be used for a wide variety of things in the world,” Britt explains. “There’s also something called the public Internet, which happens to use IP standards. That doesn’t mean those two things are exactly the same. So the application that we have on the iPad is over our closed-circuit network. It’s just a different standard than we’ve used traditionally for our video. But it’s not the public Internet.”

In other developments, the company’s controversial co-marketing agreement with Verizon Wireless has now expanded to four cities: Raleigh, N.C., Cincinnati and Columbus, Ohio, and Kansas City, Mo.

Time Warner Cable executives told investors the early stages of the cooperative marketing agreement will consist of a promotion that includes a $200 gift card when a customer buys both a Verizon Wireless plan and upgrades at least one service on their Time Warner Cable account.  But the company plans to gradually reduce discounts and instead offer unspecified “exclusive product enhancements” that will only be available to customers who subscribe to both services.

Lastly, expect Time Warner Cable to continue aggressive deployment of its Wi-Fi networks in New York and Los Angeles.  The company signaled it intends to construct similar Wi-Fi networks in other cities in serves, but most likely not during 2012.

Time Warner Cable's office on Mt. Hope Avenue in Rochester, N.Y.

A major service outage Sunday disrupted cable-TV, phone, and broadband service for a large number of Time Warner Cable customers in the Rochester, N.Y. area.

Starting at around 8am, cable channels started to pixelate and freeze, broadband service began to fail, and calls to and from Time Warner Cable phone customers were, in some cases, disrupted.

Time Warner’s local service number was quickly jammed with calls, and the company placed a recording on that line indicating they were aware of the problem, which later was described as a “router problem.”

Service was finally restored in the mid-afternoon.

Time Warner Cable customers can receive credit for the service outage, but only if customers request it.

Customers can call, chat, or e-mail the cable operator and let them know credit is requested for yesterday’s outage.  A customer service representative will usually respond to e-mail requests within hours, with service credits appearing on the next bill.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/WHAM Rochester Time Warner Cable Service Restored In Rochester Area 4-29-12.mp4[/flv]

WHAM-TV led Sunday’s evening news with a report about the service outage’s impact on Rochester residents and businesses.  (2 minutes)

Time Warner Cable has completed its upgrade to DOCSIS 3 cable modem technology in New England and is providing its broadband subscribers a free speed increase.

Customers in Maine, Massachusetts, and New Hampshire are getting the same speeds customers in much of the rest of the northeast currently have from Time Warner:

• Standard Service was 8Mbps/512kbps.  Now: 10/1Mbps
• Turbo Internet was 15/1Mbps. Now: 20/2Mbps
• Basic Internet was 1.5Mbps/256kbps. Now: 3/1Mbps

The new speeds should already be in place for all customers.  Readers not receiving them can try unplugging their cable modem and then plugging it back in to reset the equipment.

The company’s DOCSIS 3-specific products: Extreme Interest (30/5Mbps) and Ultimate Internet (50/5Mbps) are also now available for purchase.

Time Warner DOCSIS 3 technology is now in place across 76 percent of its nationwide service area.

Habsburg Empire Redux: Slovakia achieves leadership in broadband speeds.

Fiber-fast broadband networks, advanced DSL, and the latest cable broadband technology has allowed Bohemian broadband to help kick Canada and the United States into middle place for broadband speeds and web page loading time, according to statistics released by Google.

Google crunched the data from visits to websites all over the world by site owners supporting Google Analytics. Google’s measurement of web page load times gives researchers several clues about how to assess broadband quality. The data combines the speed of the user’s broadband network, how congested that network is, the quality of the service provider’s backbone connection, and the design of the web site visited.

The findings deliver a boost to central Europe where the Czechs and Slovaks are nearly neck and neck for top honors.

Google found the world’s fastest page load times in Slovakia (formerly the eastern half of Czechoslovakia.)

From Bratislava to Košice, Slovaks wait an average of 3.3 seconds for web pages to load on their desktop computers. On mobile devices, the slightly longer wait time of 7.6 seconds still places the country in the top 10.  Americans wait 5.6 seconds for desktop connections, 9.2 seconds for wireless.

South Korea took second place.  Koreans have enjoyed the world’s fastest broadband in speed rankings for years, but Eastern Europe’s enormous investment in fiber broadband and upgrades to legacy telephone and cable networks all make a difference.

The Czech Republic won third place.  That’s not surprising, considering Spanish owned Telefónica O2 Czech Republic has been in a hurry to completely overhaul the former state-owned Český Telecom.  While Americans fight for 1-3Mbps DSL from suburban and rural phone companies, O2 provides most Czechs ADSL2+ or VDSL service in non-cable TV areas at speeds up to 25Mbps.  In larger Czech cities cable companies like UPC offer budget speeds of 2Mbps or lightning fast service up to 120Mbps for those who want it.

The lighter the color, the faster the speed.

The top scores for broadband speed were achieved in Europe or Asia.  Farther down the list are the United States and Canada.  Canada scored slightly higher than the United States.

Most of the countries stuck at the bottom are in Latin America, Africa, and poorer Asian nations.

Google refused to release the raw data, but Bloomberg News did a lot of the work identifying broadband winners and losers.

Examine the rankings below the page jump:

… Continue Reading

At a time when cable operators are more reluctant than ever to overbuild into another operator’s territory, something very strange is going on in central North Carolina.

Time Warner Cable is moving into the neighborhood — one already receiving service from a community-owned cable operator.  That would be like Time Warner moving into one of Comcast’s service areas.  For some reason, those large cable companies completely avoid competing head-to-head, but where community-owned provider MI-Connection has managed to sign up around 15,000 customers for service, Time Warner Cable has also arrived.

As a result, customers north of Charlotte, in communities around Davidson and Mooresville, are getting some amazing prices for cable television, phone, and broadband.  Time Warner will even deliver an offer right to your front door.

Susan Wagner in Mooresville got her deal when she threatened to cancel Time Warner Cable and return to MI-Connection.

“(Time Warner) gave everyone a really good offer when they first came in and then drove up the price after a while,” Wagner told the Charlotte Observer.

When Wagner called to cancel, Time Warner sent an employee to her door offering to slash her cable bill by $50 a month, enough to keep her business.

Other residents in nearby Cornelius are also getting prices substantially lower than residents in cities like Charlotte, where many residents have one choice for cable: Time Warner.  Sam, a Stop the Cap! reader in the Morrison Plantation neighborhood, noted they skipped the last few rate increases from the cable company.

“You just call and tell them the rate is too high and as soon as they find out you have MI-Connection as an alternative, they lower the price,” he said. “My niece in Charlotte can’t get the same deal even when we gave her the details — it’s only good in areas where MI-Connection operates.”

That leaves Charlotte residents paying $35-50 more a month than savvy customers further north can have for the asking.

“It sounds like predatory pricing to me when the company offers a special low price that people like my niece are probably subsidizing on their higher bill,” Sam suspects.

The Observer reports Time Warner is also laying cable in other neighborhoods, such as Heritage Green, where the cable company is soliciting business from MI-Connection subscribers door-to-door.

MI-Connection’s CEO, David Auger, formerly from Time Warner Cable himself, claims he’s unconcerned about Time Warner’s aggressive overbuild of his service area.

But the state’s largest commercial cable company has been signing up some of MI-Connection’s current customer base and successfully holding its existing customers in place with significant discounts on service.  Since last July, MI-Connection signed up 667 new customers, but also lost 577 others, most likely to Time Warner Cable.

MI-Connection was launched from the ashes of a bankrupt Adelphia Cable system acquired by the communities of Mooresville and Davidson.  After investing in a needed system upgrade, the community owned provider relaunched service nearly identical technically to other cable systems.  Unlike Wilson and Salisbury, where new fiber-to-the-home systems were built, MI-Connection offers a more traditional cable package.

That makes competition with Time Warner Cable more difficult, but the community provider is trying.  Time Warner Cable’s regular pricing in the area runs $68.49 a month for 85 basic channels.  MI-Connection sells 86 channels for $61.99.  But when customers call Time Warner to complain about their higher prices, the cable operator dramatically lowers them to keep the customer’s business.

“The regular price only matters until you call and complain about it,” says Sam.

There have been complaints, but many of them are less about the cable bill and more about politics.  MI-Connection has not come cheap either town, which had to cover some of the costs of a needed system upgrade and service installation, estimated to run about $1,000 for every new customer signed.

Last fall, mayoral challenger Vince Winegardner made local government involvement in broadband a political issue, saying the purchase of the cable system was a mistake.  He lost his bid, but the system’s money needs remain a frequent topic of discussion in all of the communities involved in MI-Connection, and earlier this year the company company asked for $1.1 million from Davidson and Mooresville to ride out the rest of the fiscal year.

Time Warner’s recent interest in invading a fellow cable operator’s service area and slashing prices for those customers has raised the question whether their overbuild is about competition or predatory pricing to drive MI-Connection out of business.

Wagner doesn’t seem to mind either way, telling the Observer it is a “win-win” for her, scoring a lower cable bill with Time Warner.

But Sam isn’t so sure the savings will last.

“It seems pretty clear to me that Time Warner isn’t hurrying to compete with Comcast or Charter — just MI-Connection and that makes me suspicious,” Sam says. “After spending all that money to ban community broadband in the state, they now seem to be trying to drive out of business the handful of companies that were exempted.”

“My niece is probably paying for this right now on her cable bill too, and once MI-Connection is out of the way, those prices will shoot right back up,” Sam concludes.