An insider at Charter Communications has told Broadband Reports it plans to introduce a $200 “activation fee” for customers choosing 100Mbps broadband from the cable provider.

“Ultra is a premium service which results in higher incremental network investments, equipment costs, and other operating expenses,” the company tells Karl Bode. “In an effort to maintain reasonable monthly recurring service fees, we have implemented a higher installation fee for Ultra customers.”

The new fee is scheduled to begin Oct. 16.

In July, Charter simplified its broadband tiers, leaving customers with two choices: 30Mbps (250GB limit) for $50 a month or 100Mbps (500GB limit) for $110 a month. The company eliminated modem rental charges at that time.

Time Warner Cable’s new $3.95 monthly cable modem fee applies to customers signed up for broadband service, but if you are a Time Warner “digital phone” customer and don’t subscribe to broadband, the fee does not apply even though the same equipment can sometimes be used for either service.

Time Warner Cable claims the new modem fee was needed to cover the cost of repairing and replacing cable modems over time. But New York City customers have been asking why Internet customers have to buy their own modem to avoid the fee while those using the same modem only for telephone service do not.

The New York Times reached out to Time Warner Cable’s director of public relations Justin Venech, who had to acknowledge the logic disconnect between “digital phone” and Internet customers, but could only offer this weak explanation:

“The way we have decided to charge this fee is, we’re charging it for use of the Internet portion of the modem,” Venech explained. “It’s a business decision. It’s a matter of starting to treat this equipment the same way we treat our other equipment.”

That explanation did not seem to fly… with Time Warner Cable’s own customer service representatives.

When Manhattan resident Tom Arana-Wolfe demanded an explanation for the inconsistent fees, the representative put his call on hold to transfer him to a supervisor, but forgot to hit the mute button.

“She was discussing our conversation with a co-worker and said that they have to come up with something better, because ‘He has a valid point,’” Arana-Wolfe said.

Arana-Wolfe is considering starting a class action lawsuit against the cable operator relating to the modem fee, but is also considering switching his service to Verizon FiOS, which charges no modem fees.

Shelly, a Time Warner Cable customer in New York City, ended up with a modem not on the company’s “approved for purchase” list, based on the recommendation of… Time Warner Cable.

Jon Weinberg has devoted more than six hours of his life trying to navigate around Time Warner Cable’s forthcoming $3.95 monthly modem rental fee, with no end in sight.

The 15-year Time Warner Cable customer is just about fed up and has started shopping around for another provider. The Staten Island resident tells Stop the Cap! asking for an additional $3.95 a month for a five year old cable modem is probably the last straw.

“Time Warner’s easy-to-miss postcard probably cost the company around 80 cents to print and mail, but their investment is going to cost them more than $1,500 a year they will shortly no longer be getting from me,” Weinberg said.

Weinberg, along with dozens of other Time Warner Cable customers in the Big Apple have been sharing their stories with Stop the Cap! since they learned the cable company was back for more of their hard-earned dough.

“This is simply ridiculous, because they have gotten enough money from me several times over to have paid for their modem,” Weinberg says. “I could understand if they wanted to charge new customers extra for a new modem ($2.50 a month), but demanding current customers pay $3.95 for equipment that is several years old is out of line.”

Many Time Warner Cable customers are choosing to purchase their own cable modems to avoid the fee, but the cable operator is making that as hard as possible. Customers are complaining about the very limited selection of “approved modems,” incredibly long hold times and delays activating new equipment, and impossibly long lines at the company’s store to return old equipment.

“I called seven times last week, always being left on hold for more than 30 minutes, trying to get my new Motorola 6141 modem activated,” Weinberg says. “When someone finally answers, it sounds like they are working out of a home and don’t understand what I am asking.”

Weinberg and several other readers, including your editor, also endured extended hold times and problems activating customer-owned modems. A supervisor earlier told Stop the Cap! a change to their billing system made it difficult to provision customer-owned modems last week. That problem appeared to be resolved by Saturday, but long hold times of 15-60 are not unusual after telling Time Warner’s automated  attendant you need to activate new equipment.

“Time Warner uses the same relentless hold music with a not-so-subtle prompt to use their online chat function, which connects you to India, Guatemala, or maybe the Philippines, with all of the frustrating results you can expect,” Weinberg says. “I tried that route while waiting on hold for 40 minutes and they told me I should call in because they could not handle my request.”

Krakow

Gary Krakow, senior technology correspondent for TheStreet, suspects this cable modem fee could turn out to be a giant nightmare for customers. Some customers, including Krakow, are initially being told it will take several days to provision customer-owned equipment:

After 5 interactive minutes [with Time Warner’s automated call attendant] I was transferred to Lina (that’s what it sounded like when she spoke into her headset). She’s one of Time Warner’s national advisers. I told her exactly what I wanted to do. She listened attentively and took down a lot of information. She then gave me a “case number” and told me to hold on to speak with someone on the Time Warner Provisioning Team.

After a minute or so I was speaking with Monica, who called herself a Customer Service agent. She began asking me to repeat all my information again, but I insisted that she could find all of that by searching the case number from Lina. After a minute or two (we all had to wait for Lina to exit the file) Monica had all the info she needed and began typing in a new  computer file.

In a minute or so she was done. She gave me a confirmation number (different from the case number) and told me that I’ll get a return call when they were ready. It turns out it will take as much as three days for a technician to make the change.

“But wait!” I exclaimed. “Your postcard had me go to your Web site, where I followed the instructions – installed the new modem – and called you to turn it on.”

Monica’s response: “Put back the old modem”.

Krakow is annoyed Time Warner gave New York-area customers just two weeks’ notice of the forthcoming fee and has so far dropped the ball helping out customers trying to avoid it.

“I can’t describe how pissed off I am with the cable company right now,” says Shelly, a Stop the Cap! reader from Manhattan. “I almost threw out their postcard because it looked like it was printed by someone on their personal ink jet printer. Time Warner has been totally unprofessional and unhelpful.”

Shelly ended up getting conflicting information from Time Warner about what modem to buy. A call center representative recommended modems from the company’s rental list, not the approved for purchase list.

“I bought and received the exact same modem Time Warner gave me a year ago for my service and then they told me they cannot activate it because it is not on their list,” Shelly says. “It’s the exact same modem so it must work, but they absolutely refused to help me and now I am out a 15% restocking fee and return postage to send this thing back.”

A supervisor offered her a $5 courtesy credit for the misunderstanding. Shelly was not impressed.

“It will cost me $15 in restock and shipping fees to deal with the problem they created with their money-grubbing.”

Verizon FiOS is not yet in her neighborhood, but Shelly says she will remember the modem fee when Verizon knocks on her door.

“This is an excellent example of how Time Warner treats customers,” she says. “They are in a real hurry to charge us more but can’t be bothered when customers want to avoid their crap.”

Weinberg finally managed to get his modem activated on Sunday, after another 45 minutes on hold. But his aggravation is not over.

“I decided to drop off my old equipment at the cable store and was told there would be at least a 90 minute wait with 20 people in line ahead of me, several with their own cable modems to return,” Weinberg reports. “They had two people working the desk while two others seemed to be doing paperwork. I left.”

Krakow ran into the same problem at the Time Warner Cable store on Manhattan’s Upper West Side.

“The line was out the door,” Krakow said. “I was told there was a one hour wait to ‘get a number and wait some more.'”

One strange side effect of the modem rental fee is that Time Warner Cable will allow you to keep your current cable (eMTA) modem if it is also used to support the company’s phone service. If you purchase your own cable modem, the company will deactivate the cable modem ports on the modem/eMTA they supplied and will not charge you a modem rental fee, even though you are still using their equipment.

Let the gouging begin. Here was the price being charged by an eBay vendor this past Tuesday for the SB6141 cable modem.

A few days ago, Stop the Cap! notified readers Time Warner Cable was planning to charge a $3.95/mo modem rental fee for current High Speed Internet customers planning to keep using company-supplied equipment.

With over $300 million in potential new revenue, this new surcharge from the folks living high on 1% Mountain is guaranteed to make the cable company a tidy sum for doing… absolutely nothing. Time Warner is not improving your broadband service — they are just charging you separately for a piece of equipment needed to use the service you already paid for. It would be like selling you a lamp and then start charging an extra monthly fee to keep the power cord.

We’ve had our own illuminating experience here at Stop the Cap! headquarters finding our way around this newest surcharge — by purchasing our own DOCSIS 3 cable modem and sending the soon-to-be $47.40 a year (until the end of time) Ubee modem packing back to Time Warner. Only we can’t.

I am unsure what bothers me more: Time Warner’s scanty “approved modems for purchase list” — mostly Cadillac-priced models that would fit in at Barney’s New York or Nordstrom, the bottom feeder eBay and Amazon Marketplace sellers who are capitalizing on the modem fee by increasing their prices for customer-owned equipment to gouging levels, or Time Warner’s failure to activate customer-purchased modems because it “changed its billing system this week” in preparation for the new modem fees “and can’t activate customer owned modems at the moment.”

As Time Warner Cable customers began ordering the SB6141 online, the price doubled. This is the same vendor that charged $99.95 two days earlier.

Out of the five “approved” models, the obvious best choice for those who do not require a modem-router combination is the Motorola SurfBoard SB6141 DOCSIS 3.0 Cable Modem. It features support for 8×4 DOCSIS 3 channels, which in non-technical terms means it will handle the best speeds Time Warner is likely to offer in the foreseeable future. We do not recommend customers invest in DOCSIS 2 modems, because that technology is closer to the end of its useful life and simply will not support broadband speeds customers will crave in the next few years.

Once Time Warner Cable made the announcement, the race was on… for the handful of online retailers carrying the SB6141 to jack up the price as quickly as possible. I predicted this was likely in the comment section of our earlier piece. When the nation’s second largest cable operator plans to subject millions of broadband customers to unnecessary modem rental fees and smart customers are clever enough to avoid them, demand is going to rise. Prices would rise much faster.

In the last 48 hours, the cost of the SB6141 has literally doubled from $99 to $200 thanks to some eBay sellers looking for quick profits. This unit is now barely available from Amazon.com Marketplace vendors, typically with a waiting list, for around $130. It was selling for as little as $89 just a few weeks earlier. We even found some refurbished units on eBay that formerly sold for less than $100 now selling for $199, just after Time Warner’s new fee hit the media.

Buying a refurbished unit won’t save you much. Two days ago, this eBay vendor was charging $100 for the same used cable modem.

Finding retailers for this particular model has proven difficult and because of the relentless price gouging, we are now recommending customers hold off on buying their cable modems, at least until Time Warner expands their list of approved models or a broader number of retailers start selling the model to help force prices back down to earth. Don’t pay an eBay gouger twice the usual price!

For customers who mistakenly ended up buying our earlier recommended model we quickly crossed off the list (the SB6121), we’ve found Amazon.com especially accommodating, even supplying a prepaid return shipping label, after explaining the modem model mess to Amazon’s customer service and requesting a free return. So yes, we got stuck with the wrong model too. Sending the 6121 back is our best recommendation as Time Warner Cable customer service explained as late as this evening they cannot activate customer-owned equipment not on their approved-for-purchase list (or anything else at the moment).

Our second order, for the SB6141 at the pre-gouge price of $99 arrived this afternoon, and that led to more frustration with Time Warner Cable, who ultimately failed to activate the modem.

After a very lengthy hold time, a Time Warner representative took my modem’s MAC address to activate the device, and it failed to register. A supervisor eventually explained Time Warner Cable updated their billing system to accommodate the forthcoming modem rental charge and in the process brought down the customer-owned equipment activation system (the one that will let Time Warner know who will not have to pay the fee) earlier this week. In other words, while adjusting their billing system to charge you more, a “glitch” made it impossible for customers across the eastern United States to prevent that from happening.

The problem, it was explained, was temporary and they expected to fix it by the end of the week. After explaining today is Thursday (the end of the week is already near), I was told to “call back this weekend or Monday” and “hopefully” the problem would be fixed. Hopefully before October 15th, when the fee kicks in for the Big Apple anyway. That was 40 minutes of my life I will never get back.

One would think if Time Warner was planning to throw a Money Party for themselves, they would at least take some of the forthcoming $300 million to invest in a better way to keep customers from long hold times and inconvenience to avoid the latest unnecessary fee, only to be told everything was broken and to call back some other time. This is why cable companies regularly earn the disdain of their customers.

Most Time Warner Cable broadband customers across the country will soon pay a $3.95 a month cable-modem lease fee in an effort by the cable operator to boost revenue by as much as $300 million annually.

New York City-area customers will be the first to see the modem rental charge, and customers began receiving postcards this week informing them of the new fee, which begins Oct. 15.

“It’s an outrage considering how much Time Warner Cable is already charging for broadband service,” says Stop the Cap! reader B.J., who received notification in yesterday’s mail. “My Ubee cable modem is four years old and they want to charge almost $50 a year for something that costs $40 retail brand new? Not a chance. I am calling Verizon. Goodbye Time Warner.”

A Time Warner Cable spokesperson said the company is busily printing notification cards that will arrive in customer mailboxes across the country in the next two months.

“Customers have the choice to purchase a modem from a third-party retailer to avoid paying the $3.95 per month,” according to the cable company.

Last year, Time Warner began gradually rolling out a $2.50 modem rental fee for new customers, but exempted current ones. Now the cable operator has increased the rental fee and intends to impose it on everyone except Starter Internet, Connected Learning, SignatureHome and certain IntelligentHome customers.

The cable operator may get resistance from customers, but Wall Street analysts state other cable operators, including Comcast, already charge up to $7 a month for modem leases.

Many customers will elect to buy their own cable modem, but the cable company has severely limited its approved device list in many areas to just a single manufacturer: Motorola Mobility, despite still leasing out often less-costly models from seven other manufacturers.

“It’s convenient how they will lease out inexpensive Ubee cable modems made in China but they won’t let you buy one,” says B.J. “There is nothing wrong with Motorola modems, but it reduces customer choice.”

Time Warner Cable (and Stop the Cap!) recommends all customers who plan to buy modems choose a DOCSIS 3 model for future compatibility. The company has switched out cable modems for customers at least twice over the decade plus history of cable broadband service. If history holds, the estimated useful life for a DOCSIS 2 cable modem will probably be five years or less before future standards make them obsolete. DOCSIS 2 modems are not capable of supporting the fastest broadband speeds, while DOCSIS 3 modems often cost just a little more.

Time Warner Cable’s Approved Modem List in the Northeastern U.S. And Our Reviews (all prices approximate, from Amazon.com — consult Time Warner Cable’s website for specific modems approved in your area):

DOCSIS 3

Recommended Motorola SurfBoard SB6141 DOCSIS 3.0 Cable Modem ($100): The SB6141 is now on the approved list for most TWC service areas and has gotten excellent reviews. It is an upgrade from the 6121, now off the list of approved devices. The 6121 could only support four-channel bonding for upstream and downstream, while the 6141 supports up to eight downstream channels and four upstream channels increasing data rates to over 300Mbps for received data and over 100Mbps when sending data. The only downside is that it is harder to find in stock for purchase.

Motorola SURFboard Gateway SBG6580 DOCSIS 3.0 Wireless Cable Modem ($117): The 6580 includes built-in gigabit Ethernet and a Wireless-N router, so it theoretically could replace your home router. My personal experience with cable modem-router combinations has been less than glowing, however. Consider this only if you do not already have a Wireless-N router. This model gets overall good, but not excellent reviews.

DOCSIS 2 – Consider a DOCSIS 3 modem to guarantee future compatibility.

Motorola Surfboard SB5101 Cable Modem ($50): This workhorse DOCSIS 2 cable modem has been around since 2003 and is popular with cable companies and customers, with a proven track record of performance. But it is not DOCSIS 3-capable, which means its useful life may be shortened as cable broadband standards continue to evolve.

Motorola Surfboard SB5101U Cable Modem ($53): Functionally equivalent to the 5101, the 5101U was introduced in tandem with Motorola’s cheaper 5101N model that omitted the USB port and driver CD. Choose the 5101 or 5101U based on which model is currently selling at the lowest price.

Not recommended Motorola SURFboard Gateway SBG901 DOCSIS 2.0 Wireless Cable Modem ($84): Overpriced and mixed reviews plague this aging Motorola DOCSIS 2 modem with built-in wireless G support. You would do better buying a Wireless N router yourself, or consider the SBG6580 if you absolutely need built-in Wi-Fi.

Updated 4:54pm ET: Readers report the SB6141 now has the best chance of being on TWC’s list of approved equipment, so we’re deleting the 6121 and replacing it with the 6141. If you happened to place an order for the 6121, make sure you verify whether it is on your area’s approved list. If not, cancel the order.

Update #2 10:00am ET 10/17/12: After publishing, Time Warner Cable overhauled their entire website. We have updated the link for the current approved list. None of the models have changed as far as I can see. I have also deleted the model 6121 entirely from the story — it is not on any approved list I’ve seen. As of today, the gouging continues on eBay with the 6141, still selling for up to $200. Amazon.com sellers have also jacked up the price to take advantage of current demand, though not as much.

Do NOT pay eBay sellers $200 for the 6141, which normally sells for $99. It only encourages the bottom-feeding speculators. If you want the 6141, I recommend you wait until prices drop to between $99-125. Do not pay more.

Some readers are finding used/refurbished cable modems that work perfectly fine on Craigslist and eBay. There is generally nothing wrong with these, unless they happen to be stolen or unreturned modems that really belong to Time Warner Cable, which will in turn not activate them. Be careful.