“I thought I was watching Comedy Central,” said Ralph Wilson, a longtime Charter customer in suburban Los Angeles. He was actually watching a Bloomberg News interview with the CEO of Charter Communications regarding yesterday’s formal merger announcement. “What cable company was Thomas Rutledge talking about when he said Charter would bring better service to Time Warner and Bright House? Charter blows.”

Wilson is just one of several unimpressed Charter customers responding to the news their cable company is about to grow more than four times larger with the acquisition of the larger Time Warner Cable and the smaller Bright House Networks.

“They promise you 60Mbps and you are lucky to see 40Mbps unless it is raining,” said Aaron Peters, a Charter customer in Texas. “Then you are lucky if you get anything. You sure won’t get anyone on their support line.”

“I’d rather have my fingernails pulled out than have to deal with Charter,” writes Betty, a 74-year old Stop the Cap! reader in Wyoming. “I’ve had cable out sometimes for five days and when the last time it was out, the slobs that showed up to fix it were shabbily dressed and one had his zipper down. It’s disgraceful.”

“Maybe it will go from F-minus to an F,” Terence Allen of Atlanta told the New York Times. Allen, among others, recited a litany of service problems familiar to many Charter customers around the country: Screen freeze and pixelation, unresponsive remote controls, uneven broadband speeds, slurring and skipping over dialogue, and problems getting a real person on the phone.

For Time Warner Cable customers in particular, it is unlikely that prayers for better service from a new owner are going to be answered.

“‘Not quite as bad’ may be about as good as they can get with this deal,” reflected the Times.

“Charter is not going to revolutionize Time Warner’s service quality, because Charter’s service quality is not that much better,” said Mark Cooper, director of research at the Consumer Federation of America.

Pay for 60Mbps, get 40ish instead.

One of the key arguments in favor of the merger is that long-suffering Time Warner Cable customers will finally get faster Internet speeds. Time Warner Cable Maxx upgrades, now likely to be shelved by Charter, were already outperforming several of Charter’s own speed commitments. Charter’s theme pushing faster speeds for one and all might appeal to the broad masses of Time Warner Cable customers yet to be upgraded.

“Except what Charter advertises is often not what they actually deliver,” complains Wilson. “They tell you it’s 60Mbps, but here in LA it is often closer to 40Mbps and when you complain, they claim they don’t guarantee speeds.”

Allen in Atlanta also signed up for faster speeds from Charter, but never got them.

“Their high end doesn’t seem to be very high-end,” Allen said.

He also called Charter to complain but never got to speak a customer service agent. Instead, an automated attendant instructed him to unplug his modem to reset it, to no avail.

“Getting a human on Charter’s customer service line to help you with a problem is a laugh,” said Sue Turner, a Charter customer in Montana. “They keep telling us Charter is better than the last three owners of our cable system because their repair service calls are way down. Well of course if you cannot actually reach anyone to schedule a service call, that works too.”

Turner has seen three cable companies come and go in her part of Montana since April 2002. Comcast sold many of its cable systems in the sparsely populated states of the Rockies to Bresnan Communications that year. Cablevision acquired Bresnan in 2010 and rebranded her cable system Optimum West. Just three years later, Cablevision sold all of its interests outside of the northeastern U.S. to Charter Communications, which runs things today.

“Badly,” Turner said. “The biggest problem is the weather which always affects our television and Internet service. Charter has been here six times in two years to try to fix things, but the only realistic way to get service is to go down to the cable office and demand they do something. You don’t get help on the phone.”

“I would say my impression overall of Charter is that they talk very well about their services and their breadth and depth, but quite honestly they don’t deliver very well,” Mr. Allen told the newspaper. “One of the things they push quite a bit is the bundle — telephone, Internet and cable. I would never even consider getting the telephone because their cable and Internet can be so dodgy.”

The Better Business Bureau in St. Louis, which tracks complaints about Charter, found at least 5,183 unsatisfied customers over the last three years willing to escalate matters to them. Most are about problems with Charter service, which would seem to show there is a problem.

Nonsense, counters Alex Dudley, one of Charter’s senior spokesmen.

“Charter takes our customer service very seriously,” Dudley said. “There are millions of Charter customers who are satisfied with our products.”

Shaneice Johnson in Connecticut isn’t one of them.

“Oh my God I thought Frontier was awful when they took over AT&T here,” she tells Stop the Cap! “But then when we switched to Charter my modem has dropped weekly and all I get is attitude from customer service about how they know how the Internet is supposed to be run and it must be my fault. Years of good service with AT&T with no problems but now it must be my fault because their service is off up and down the street? I don’t think so. We need to get some competition in here.”

On that point, many would agree.

“If Charter had Google Fiber here chasing them, I guarantee they would clean up their act, but when their only competition is AT&T DSL, they just don’t care,” said Wilson.

Cablevision may eventually get out of the cable television business.

Although industry analysts, consumer advocates, and technology columnists have long proclaimed the era of “cord cutting” is upon us, cable operators have always been in denial the product that got them their multi-billion dollar business — selling packages of television channels — is rapidly becoming obsolete.

But at least one CEO sees the writing on the wall.

If you don’t “ride the wave” you “get eaten by the wave,” declared Cablevision CEO James Dolan.

The Wall Street Journal sat down for a lengthy interview with Dolan, who predicted “there could come a day” when the cable television company quits selling television service, because a growing number of viewers have shifted to online video.

Dolan, like many Americans, isn’t watching television as much as he used to, and admitted that both he and his young children prefer spending their viewing time with Netflix, not Cablevision’s television package.

Jim Dolan

Dolan worries the next generation of television viewers don’t need or want a cable television package with hundreds of video channels. Today’s youth wants fast broadband with on-demand viewing of series, movies, and video clips. The transition may have already started. Cablevision reported Aug. 2 it lost 20,000 video customers over the last three months, many moving to broadband-only service and 11,000 abandoned the cable company altogether.

Dolan believes the industry is setting itself up for obsolescence.

“I don’t want to be saddled with an infrastructure that is as big as the one that I have now,” Dolan told the Journal, fearing the bloated cable television package is becoming too costly and unmanageable.

Instead, Dolan has ordered network upgrades to improve broadband service and help boost the company’s image with customers. Cablevision focused most of its spending on broadband and Wi-Fi service upgrades over the past year, both to meet relentless competition with Verizon’s fiber network FiOS, but also to develop the platform Dolan thinks will eventually be the only product the company sells. Although Cablevision cannot match Verizon’s upload speeds, the cable company offers a free Wi-Fi service for customers Verizon lacks. But the changes and network upgrades have been expensive and noticeable, because few cable operators are spending as much as Cablevision to improve service.

The changes in approach were too much for former chief operating officer Thomas Rutledge, who departed Cablevision to run Charter Cable in December 2011.

One of the primary reasons Rutledge left was Dolan’s increasing involvement in the business, causing a clash of business philosophies. Just a few months before Rutledge departed, the FCC issued a report that exposed Cablevision marketing broadband speeds its network could not sustain, especially during prime usage periods. Rutledge believed this was primarily a marketing problem. Dolan concluded the existing broadband infrastructure was inadequate.

“I felt that we needed to reinvest,” Dolan said. “When we took a hard look at what we were offering,… it just wasn’t what we wanted it to be.”

As Rutledge and his allies rapidly departed for Charter Cable, Dolan ordered a 32 percent increase in capital spending to $1.1 billion last year, at least $150 million targeted exclusively on broadband improvements. This year he has already informed Wall Street it will be more of the same, bringing expanded Wi-Fi, new and improved broadband modems for customers, even faster speeds, new outage detection equipment, and an improved cloud-based DVR service.

Existing customers like the changes, but don’t appreciate the price hikes that have accompanied them. Wall Street has the exact opposite point of view, welcoming increased revenue from rate hikes, but concerned about the company’s spending. Investors complain Cablevision’s returns are well below those of other cable operators which don’t face the Verizon FiOS juggernaut.

Still, for some customers, the changes have come too late and Verizon’s promotional offers to switch to fiber have been too good. Cablevision did at least manage to add 1,000 new broadband and 3,000 new voice customers during the second quarter.

“We’re not prepared to starve the business,” said chief financial officer Gregg Seibert. “In terms of upgrades, I think what you’re seeing with the high-speed rollout that we just did is that we feel that our plant is in very good condition. We’re delivering over advertised speeds in every day part. We intend to keep the plant in that type of condition.”

Dolan’s philosophy of upgrading service to improve customer relations also clashes with John Malone, who is rebuilding his cable industry power base at Rutledge’s new home — Charter Cable. Malone believes industry consolidation, not expensive network upgrades, is a better proposition for shareholders.

Dolan told investors Cablevision is, for now, out of the mergers and acquisitions business. It has completed selling off its Optimum West systems to Charter and plans no further expeditionary buyouts in the near future. Instead, the company intends to focus on its business in the northeast. Dolan acknowledged the company is a likely acquisition target, most likely by Charter or Time Warner Cable.

Dolan currently shows little interest in selling out what is and always has been a family affair. Chuck Dolan, 86, founded Cablevision and still offers almost daily advice to his son James, who now runs the business. James also appointed his wife Kristin to lead sales, marketing and product management, with questionable results.

Some other highlights from the second quarter:

• Cablevision has enhanced its Remote Storage DVR product, now providing two tiers: 160GB and 500GB. Customers can record up to 10 channels at the same time. The service is available on customers’ existing set-top boxes;
• Last month, Cablevision announced an increase in our broadband data speeds;
• Wi-Fi remains a major priority for Cablevision and customer usage of its wireless network continues to grow. More than 1 million customers have used the service over more than 90,000 access points;
• Price increases were critical for Cablevision’s revenue growth this year. The company booked increased revenue from a broad-based $5 broadband rate hike implemented in January as well as a “sports programming surcharge” initiated earlier this year. The average subscriber that buys a package including cable television pays $5.49 more this year than last — $162.42 a month.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/WSJ Future of Cable TV 8-5-13.flv[/flv]

The Wall Street Journal sat down with Cablevision CEO James Dolan, discussing the future of the business as the industry watches another cable television programming dispute between Time Warner Cable and CBS.  (5 minutes)

Here today, gone tomorrow.

Cablevision West, formerly known as Bresnan Communications, has been up for sale for weeks, and at least three major cable operators have submitted bids to acquire its 300,000 customers in Montana, Wyoming, Colorado and Utah.

Cablevision bought Bresnan Communications in 2010 for $1.37 billion. The cable operator invested millions updating the cable properties in the mountain west, but ultimately decided the more rural cable systems were too far away from its hometown systems in densely populated suburban New York, New Jersey, and Connecticut.

Selling Cablevision West would improve Cablevision’s balance sheet and allow the company to concentrate on its highly competitive home territory in the northeast, where Verizon FiOS frequently competes.

Among the three vying for Cablevision West, Charter Communications seems to be the best positioned to win. Charter already operates cable systems in the central and western United States, mostly in smaller cities and rural areas. Former Cablevision CEO Thomas Rutledge was in charge when Cablevision bought Bresnan Communications, and in his new role as CEO of Charter, he told CNBC he still admires those western systems.

Suddenlink has attained deeper pockets after its acquisition earlier this year by the Canada Pension Plan Investment Board, European private equity firm BC Partners and the cable operator’s current management. With money to spend, Suddenlink Communications could find itself the highest bidder. Suddenlink currently serves over 1.4 million residential and commercial customers, primarily in Texas, West Virginia, North Carolina, Oklahoma, Arkansas and Louisiana.

Time Warner Cable, the second-largest U.S. cable provider, is also among the stingiest of the three bidders. CEO Glenn Britt has consistently told investors the company will not engage in bidding wars or overpay for acquisition opportunities. The company has passed on several earlier opportunities for cable systems up for sale, although it did successfully acquire Insight Communications earlier this year.

The winner will likely be announced as early as January and then customers will have to prepare, once again, for another owner to take control.

Cable customers in Montana, Colorado, Utah, and Wyoming can be forgiven if they cannot remember the name of the cable company that provides them with service. Originally Bresnan Communications, then Cablevision’s Optimum West, customers are now learning Charter Communications could soon be their new service provider.

James Dolan, CEO of Cablevision Industries, last week acknowledged he had received “unsolicited interest” in the cable properties in the western United States, and told investors he may sell the systems for an undisclosed amount.

Cablevision acquired the systems formerly owned by Bill Bresnan two years ago, investing tens of millions in upgrades to bring them closer to modern standards. Cablevision has received praise from many subscribers for improved service and more competitive rates. But a sale could change that. Charter Cable is perennially rated among the worst cable companies in the United States by Consumer Reports.

Should Charter acquire the systems, it will also inherit a major tax fight initiated by Cablevision, protesting its Montana property tax bills for 2010 and 2011.

Cablevision is upset tax authorities defined the Optimum West operation as a single telecommunications company, not a cable company. That decision effectively doubles its tax rate from 3 to 6 percent — the same rate CenturyLink pays in the state.

If an appeals process finds the state erred in its decision, 29 counties will have to refund millions that Cablevision paid under protest.

Tax officials warn if Cablevision’s tax rate is cut in half and other companies reap similar rewards, homeowners and small businesses will cover the difference. Revenue director Dan Bucks warned that could mean annual tax bills $110 higher on a home assessed at $200,000.

Cable Montana is now Optimum West, Cablevision’s marketing name for the cable systems it acquired from Bresnan Communications.

Earlier today, customers in Billings, Laurel, Park City and Columbus were able to start using upgraded cable, phone, and broadband equipment on the updated cable system.  More than 2,200 Montanans were introduced to the Optimum name in a mailing sent to neighborhoods where service has been upgraded.  But all of the new equipment that comes with the service has created considerable confusion for long-standing Bresnan customers who have been using older Bresnan equipment for years.

The changes have been overwhelming for those used to Bresnan’s modest level of service for more than a decade.  Cablevision, best known for its Optimum service in suburban New York City, Connecticut, and New Jersey, has brought an enormous increase in programming, and improvements in broadband service, for many customers.

“All existing customers in Laurel, Park City and Columbus will be upgraded to Optimum TV by July 20, which will deliver many more channels, including access to more than 100 channels of free HD (high definition), thousands of titles of video on demand and other benefits like faster high-speed Internet and a better phone service with lower prices and more features than are available from any other provider,” says a Cablevision spokesperson.

When it works properly.

The Laurel Outlook reports some customers frustrated with the changeover have found themselves at local cable stores trying to sort out all the problems:

One Laurel customer installed his modem, but was not receiving service. A visit to the Laurel office did not provide answers to his satisfaction, so he drove to the Billings office on Monad Road, where he received two telephone numbers to call for tech support. He called one of the numbers, followed a menu, and was able to troubleshoot with a technician to get his Internet up and running.

A second customer installed her set-top box but was not receiving Optimum TV channels. She called the 1-800 number provided in the mailing packet, but technicians were unable to walk her through the necessary steps to receive service. Frustrated, she drove to the Laurel walk-in center on West First Street and made an appointment for a technician to come to her home. She discovered that not only must she program her television with the new Optimum channel numbers, she must also program the TV-top box with the correct numbers. After doing so, she was able to receive the new channels.

Many customers are likely going to need to reprogram their televisions more than once.  When the upgrades are complete, Cablevision says it plans to unify channel lineups across the area.