Time Warner’s “Because We Can” One-Time Charge applies to new customers signing up for certain promotions.

Time Warner Cable has increased the monthly rental fee for its leased cable modem from $3.95 a month to $4.99 a month and has introduced a “one-time charge” of $19.99 applicable to certain Internet service new customer promotions.

CEO Glenn Britt earlier commented that Time Warner Cable had room to grow its modem lease fee:

“It was received with a minimum of push-back and we’re still actually charging less than Comcast ($7/month), so I think there is room to charge more going forward. People can buy their own if they want and a small percentage of customers have chosen to do that which is fine with us.”

For now, the increase only applies to new customers, but Stop the Cap! expects it will also eventually apply to current customers as part of the next round of rate increases. The Internet Modem with Free Home Wi-Fi, available to customers ordering 30/5 or 50/5Mbps service costs $14.99 a month.

Time Warner Cable has pulled back on customer promotions since the beginning of the year and has begun shifting its pricing for its most profitable service — broadband, to capture price-sensitive customers who have been unable to previously afford Internet-only service from the company.

Time Warner has introduced a new “Lite” tier offering 1Mbps service for $20 a month and has made the 3Mbps “Basic” service the staple of many of its bundled promotions.

Stop the Cap! strongly encourages Time Warner Cable customers to buy their own cable modems and avoid the rental fees. Customers can also bypass the rental fee by signing up for Earthlink service through Time Warner Cable.

Our top modem choice remains the Motorola SB6141, which can be found at the “Buy It Now” price on eBay as low as $77.99 with free shipping and no upfront sales tax for most buyers. This model does not include Wi-Fi, but most people don’t need it — a router generally provides Wi-Fi connectivity on its own.

We highly recommend purchasing DOCSIS 3-ready modems to avoid obsolescence issues.

The most recent list of “acceptable” modems that can be activated with your Time Warner Cable broadband service are:

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.

Time Warner Cable has expanded the list of modems approved for customer purchase. Buying your own cable modem will exempt you from the company’s $3.95/month modem rental fee, applicable to all but customers on special promotions or the elite Signature Home tier.

The Motorola SB6121 ($79) is back on the approved list, although customers intending to aggressively upgrade speeds as Time Warner introduces faster tiers may be happier with the Motorola SB6141 ($99), which supports more bonded channels than its lesser counterpart. The models from Netgear and Zoom were undistinguished in customer reviews — the Zoom for a noticeable number of reports complaining about the product’s short longevity and the Netgear for compatibility issues, poor quality control, and irritating customer/technical support.

Stop the Cap! continues to recommend the Motorola SB6141, which delivers top-rated performance and is future-proof with support for up to eight bonded data channels — 300Mbps service. Although still expensive on Amazon.com, increased competition has dramatically cut pricing on eBay at “Buy It Now” prices ranging between $86-100 at time of writing. This means no bidding hassles, no upfront sales tax, and free shipping for most buyers. The Motorola 6141 is what we use here at Stop the Cap!, acquired from an eBay vendor for $99. Now you can do even better.

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.

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.