Despite its pending merger with Comcast, Time Warner Cable is still promising to boost broadband speeds by the end of this year in New York City and Los Angeles.

The TWC Maxx program was announced before the merger, but Time Warner says it is still going ahead with upgrades and produced a video showing some of the behind-the-scenes work in Los Angeles.

Although the video doesn’t show much more than people pointing at equipment displays and maintaining equipment racks, it does include an interview about what Time Warner is doing to prepare for infrastructure upgrades serious enough to need a bigger air conditioner for the building.

Time Warner does warn customers they may experience brief service interruptions as a result of the work.

When complete, Time Warner Cable customers in both cities will have all-digital television service and major broadband speed upgrades:

These upgrades may be modified if/when Comcast takes over, and Time Warner has not disclosed which cities will get the upgrades next.

[flv]http://www.phillipdampier.com/video/TWC Behind The Scenes at a Los Angeles Hub Time Warner Cable 3-26-14.flv[/flv]

Jay Gormley, a former reporter for KTVT in Dallas now working for Time Warner Cable takes customers on a tour of a Los Angeles Time Warner Cable hub slated to get service upgrades. (2:01)

The Arris IP805-M DVR, produced for Time Warner Cable

Time Warner Cable customers in New York City and Los Angeles will get a major set-top box upgrade from a next generation DVR allowing six programs to be recorded and once and viewed anywhere in the home.

Arris filed papers with the Federal Communications Commission seeking certification of its new IP805-M set-top, branded with the Time Warner Cable logo.

The new device includes six internal tuners, 1TB of recording space, and a “whole house” platform that will let customers watch recordings from other televisions or portable wireless devices within the home. The new DVR is capable of transcoding traditional QAM channels into IP video.

Time Warner Cable will unveil the new box later this year as part of plans to upgrade service in New York City and Los Angeles under the TWC Maxx project. Customers in other cities may have to wait for the device to become available.

Time Warner has fallen behind many other cable operators, satellite providers and phone companies that offer superior DVR equipment.

Arris’ newest piece of equipment, caught by FierceCable, is just one of the upgrades the company announced last week.

Time Warner Cable today announced major improvements in its service, including a tripling of broadband speeds and equipment upgrades that will first arrive in New York City and Los Angeles.

With the cable company facing a hostile takeover effort by Charter Communications with Comcast’s help, CEO Rob Marcus sought to appease shareholders that worry the cable company’s recent lackluster results originate from outdated technology, poor customer service, and broadband speeds that are well below the cable industry average.

Time Warner Cable will have to increase capital spending to pay for the upgrades, expected to cost $3.8 billion annually for the next three years.

CEO Rob Marcus calls the effort a “transformation of the Time Warner Cable customer experience.” The upgrade program is called TWC Maxx for now inside Time Warner Cable, but will have its own brand when it publicly launches later this year.

Here are some highlights:

Marcus

TV Service

• Network infrastructure upgrades to enhance reliability
• New advanced set-top boxes
• A six-tuner DVR
• A cloud-based interface and navigation
• An expanded on-demand library

Internet

• Dramatic free speed boosts for all customers
• A new Ultimate speed tier of 300/20Mbps

Unfortunately, customers outside of Los Angeles and New York will have to wait up to two years for the upgrades to reach their community.

“With ‘TWC Maxx,’ we’re going to essentially reinvent the TWC experience market–by-market,” said Marcus. “We’ll triple Internet speeds for customers with our most popular tiers of service, add more community WiFi, dramatically improve the TV product and, perhaps most importantly, we’ll set a high bar in our industry for differentiated exceptional customer service. We’re focused on providing the features and benefits that matter most to our customers.”

The most noticeable improvement will be free broadband speed upgrades. Customers with Standard or above Internet service will also receive the latest generation cable modems including Advanced Wireless Gateways for customers with Turbo to Ultimate tier service. Marcus did not say whether the company is ending is monthly equipment fees for cable modems.

Here are the new speed tiers:

• Everyday Low Price – Currently 2/1Mbps – New 3/1Mbps
• Basic – Currently 3/1Mbps – New 10/1Mbps
• Standard – Currently 15/1Mbps – New 50/5Mbps
• Turbo – Currently 20/2Mbps – New 100/10Mbps
• Extreme – Currently 30/5Mbps – New 200/20Mbps
• Ultimate – Currently 50/5Mbps – New 300/20Mbps

New York and Los Angeles Upgrade Schedule

The first four network hubs scheduled for upgrade are those in West Hollywood and Costa Mesa, Calif. and portions of Woodside (Queens) and Staten Island, N.Y. The rest of both cities will be upgraded by the end of this year.

Los Angeles customers will also see analog cable television service discontinued in favor of digital later this year. New York City has already been converted to all-digital television. Customers in both cities will be able to schedule same-day appointments and one-hour service windows.

Who Gets Upgraded Next?

Analysts expect Time Warner Cable will upgrade cities where they face competition from U-verse and FiOS after completing NYC and LA.

Analysts say Time Warner Cable’s upgrade plans are more aggressive than initially anticipated and many expect the company to move quickly, especially in competitive markets, to boost subscriber numbers and cut customer defections to help convince shareholders it is worthwhile to reject Charter’s hostile takeover bid.

The most likely markets to be targeted for upgrades after New York and Los Angeles are those facing stiff competition from Google Fiber and Verizon FiOS. Cities where AT&T U-verse delivers competition are likely to come next, and those cities where Time Warner Cable only faces competition from telephone company DSL service will likely be the last to be upgraded. However, long before that, Time Warner Cable could be sold off to other cable operators that will make these upgrade plans moot.

Marcus today reiterated his rejection of Charter’s latest $132.50 a share offer. Marcus said the cable company is only interested in an offer above $160 a share, and that at least $100 of that must be in cash, with the balance in Charter stock. Charter will have trouble delivering that amount of cash without the assistance of other cable operators.

Craig Moffett with MoffettNathanson Research isn’t sure Marcus’ plans are enough to keep TWC from being sold. He expects Charter to soon increase its offer above $140 with the help of Comcast, which is willing to pay cash for Time Warner Cable systems in New York, New England, and North Carolina after a deal with Charter is complete.

[flv]http://www.phillipdampier.com/video/Bloomberg Rob Marcus Interviewed 1-30-14.flv[/flv]

Robert Marcus, chief executive officer of Time Warner Cable Inc., talks about the cable company’s fourth-quarter earnings and its forthcoming upgrades, and Charter Communications Inc.’s $37.4 billion buyout bid. Time Warner Cable beat fourth-quarter profit estimates and forecast subscriber growth. Marcus speaks with Betty Liu on Bloomberg Television. (8:38)

Set-top box-less Time Warner Cable subscribers in parts of New York City will find more than 90 percent of the basic cable lineup missing from their QAM-equipped televisions as the cable company completes a transition away from analog cable television and begins encrypting almost all its digital channels.

The Federal Communications Commission changed the rules last year allowing large cable operators to begin encrypting basic cable, requiring customers to rent cable boxes or CableCARD units to keep watching.

Time Warner Cable began the all-digital, encrypted channel conversion earlier this year in Mount Vernon, Staten Island and Bergen County, N.J., and is now switching on encryption in the New York City region on a neighborhood-by-neighborhood basis.

The switch renders televisions useless for receiving cable channels without extra equipment supplied by Time Warner Cable. Encryption is deployed as an anti-theft measure, but it also inconveniences customers who have to rent equipment for each of their televisions. Encrypting basic channels also benefits Time Warner Cable by allowing service authorizations and disconnects to be handed from the office, reducing in-home appointments.

Customers will need a traditional set-top box, a Digital Transport Adapter (DTA), or a CableCARD to get the channels back. DTA boxes are being provided at no charge until 2015, after which they will cost $0.99 a month each.

Some customers also complain Time Warner is testing “copy protection” permissions, preventing some channels from being recorded. In Queens, one customer noted copy protection was active on C-SPAN, preventing recordings of the network. Some programmers may insist on copy protection technology being implemented as part of future cable carriage contracts. Most expect pay-per-view and on-demand events will be the first blocked from recording, potentially followed by premium movie channels.

At this time, Time Warner Cable says its encryption initiative is limited to the New York City area.

Time Warner Cable customers in Los Angeles, New York, and Hawaii subscribed to the company’s top 50/5Mbps Ultimate speed tier will get a free upgrade to 100/5Mbps between now and the end of this year.

“Residential customers in Los Angeles who subscribe to our Ultimate 50 tier are being automatically upgraded to Ultimate 100 at no extra cost,” said Time Warner’s Andrew Russell. “Ultimate 50 residential customers in New York City and Hawaii will be upgraded by year’s end. By early 2014, all customers in these markets will have access to Ultimate 100, with more TWC markets to follow next year.”

“Consumers are adding more and more connected devices into their digital lifestyle,” said Steve Cook, general manager of Time Warner Cable residential Internet. “These new ultra-fast Internet speeds are designed to satisfy their growing demand to stream, download and connect simultaneously across multiple devices.”

Time Warner Cable announced several speed upgrades over the last year, but it still remains the least aggressive major cable operator in the speed category. Among the largest five cable operators, Time Warner Cable’s premium speed tiers are the slowest, with top upstream speeds of just 5Mbps and a maximum downstream speed of 50Mbps for most. But Time Warner Cable has no compulsory usage caps or consumption billing.

Over the last year, Time Warner Cable increased speeds for all but their Extreme customers (30/5Mbps), the only plan to have not seen any major speed boost in most markets since being standardized as an entry level DOCSIS 3 tier.

Time Warner also announced a speed improvement for their budget-conscious Lite tier, now 1/1Mbps in most markets.

Priced at $14.99 per month, the new offering will deliver 2/1Mbps — adequate for basic web browsing, e-mail and limited multimedia use — and becomes available nationwide beginning Nov. 4.

“We’re making our entry-level product even better and more affordable for the casual Internet user and cost-conscious consumer,” said Cook. “At both ends of our speed options and everything in between, we’re focused on giving our customers the best experience at the best value.”

Time Warner Cable will now offer most customers seven different speed tiers, all unlimited use (except when opting in to usage limited plans in return for a discount):

• Lite: 2/1Mbps
• Basic: 3/1Mbps
• Standard: 15/1Mbps
• Turbo: 20/2Mbps
• Extreme: 30/5Mbps
• Ultimate: 100/5Mbps