Time Warner Cable lost another 215,000 video subscribers during the fourth quarter of 2013, leaving the company with 825,000 fewer subscribers than it had one year ago.

Customers are dropping service with the cable company because of rate increases, programming disputes, competition with AT&T and Verizon, and cord cutting.

Despite the video losses, Time Warner attracted 55,000 new broadband customers, many defecting from DSL, and 15,000 new landline customers signing up for phone service as part of a larger bundle.

Time Warner Cable’s poor results are fueling speculation that takeover offers promising increased shareholder value are potentially days away. Dr. John Malone’s Liberty Media and Charter Communications are expected to formally offer $62 billion for Time Warner as early as this week.

Malone has spent the last six weeks lining up Wall Street banks to help finance the transaction with loans that would leave a larger Charter Cable with substantial debt.

Dr. John Malone’s Liberty Media is moving to acquire the 48 percent of SiriusXM it does not already own in a $10 billion all-stock deal that could have future implications for Malone’s interest in merging Charter Communications with Time Warner Cable.

Malone’s company has effectively controlled the satellite radio venture since bailing the company out with a loan during the Great Recession. Since assuming control, SiriusXM has raised prices and is earning more revenue from its subscribers in the U.S. and Canada.

Malone’s initial $1 billion investment is already valued at more than $10 billion, but as full owner Liberty will control a company worth $21.5 billion.

Malone

Through a carefully constructed transaction, the deal will be entirely tax-free for both companies and their shareholders. When complete, Liberty will be able to free up additional capital and flexibility which could prove useful to its ongoing investment in Charter Communications.

Should Charter formally bid for a Time Warner Cable takeover, Liberty Media may be called on to help finance the transaction expected to be worth at least $40 billion.

But don’t expect Malone’s Liberty Media to keep ownership of SiriusXM forever. Malone has a long history of increasing the value of his media assets for shareholders, usually with rate increases and cost cutting, and then spins the companies off in tax-free transactions.

Liberty Media has done exactly that with its former properties, including Discovery Communications, Starz and DirecTV.

Stop the Cap! reader Steve L. has heard enough of AT&T’s promises that deregulation would bring more competition and better deals to Californians.

The Carlsbad resident is staring at the fruits of AT&T’s labor — winning deregulation of phone rates in 2006: a  basic phone bill that has increased from $5.70 a month before deregulation to $21.25 effective Jan. 2, 2014. That represents a 272 percent increase for basic measured (pay-per-minute) local telephone service. As if that was not enough, AT&T is also raising the per-minute rate for semi-local calls for the second time in two years. Earlier this year, AT&T slashed customers’ calling allowances by 25 percent, reducing the 225 minutes a month of toll-free calling down to 168 minutes in January.

Customers living in large, spread out cities in California are accustomed to Zone Usage Measurement (ZUM) charges for calls placed to numbers more than 12 miles from the local telephone exchange. But they may get bill shock after noticing how much the per-minute rates have increased:

• ZUM 1/2 (12-15 miles): Calls have doubled in price over the last 36 months. Prior to 2013, calls cost three cents per minute. AT&T raised prices to four cents in January and will raise them again to six cents per minute on Jan. 1;
• ZUM 3 (15-16 miles): Calling prices have increased from five cents a minute in 2012 to six cents a minute in 2013 and will be seven cents per minute in 2014.

“After surcharges, fees, and taxes, my bill will be nearly $30 per month for measured rate service, representing a near doubling of cost in just a 22-month period,” Steve writes. “I have no other choice than AT&T for a true powered landline, but I am rejecting this latest increase and plan to test and move to a VoIP system.”

The constant parade of rate increases from the state’s largest local telephone company began shortly after the California Public Utilities Commission (CPUC) unanimously approved sweeping deregulation of telephone rates in August 2006. Then Republican Commissioner Rachelle Chong was the driving force behind the effort, reports the San Francisco Chronicle.

Chong embraced AT&T’s attitude about telecommunications deregulation, promising consumers would not face abusive rate hikes or bad service. Under the old system, AT&T telephone rates were capped in California. AT&T had to approach the CPUC and justify any proposed increases. Without solid evidence, the company’s rate increase requests were rejected. Under deregulation, AT&T was permitted to set rates at-will.

“By the end of the 2010, these rate caps will no longer be necessary,” Chong promised as the new rules were being phased in. “The market will be so competitive it will discipline prices.”

Not quite.

AT&T’s rates have shot up as much as 222 percent for the average Californian’s measured rate phone service. Some customers, including our reader, found rates nearly three times higher than they were before deregulation. In the last few years, AT&T has increased prices on landline service and calling features even more dramatically across the state:

• AT&T Flat-Rate landline service jumped 115 percent since 2006, from $10.69 to $23 a month;
• Call Waiting, a popular phone feature, is up nearly 180 percent;
• Anonymous Call Rejection fees have almost quadrupled;
• Lifeline Service for California’s most disadvantaged is up 28 percent.

“My belief is that AT&T is essentially harvesting,” Dane Jasper, chief executive of Sonic.net, a competing broadband Internet service in Santa Rosa that tosses in domestic phone service for free, told the newspaper. “They jack up the rate by a pretty egregious amount … because if people leave, well, where are they going? AT&T mobile phone service in at least half the cases. So they’re happy to have them leave or happy to have them stay.”

AT&T defends the increases by suggesting rates were artificially restrained by rate regulators under the old system, and the new higher prices reflect economic reality and the deregulated marketplace. But AT&T’s rate increases have blown past other service providers in the state. Verizon’s flat rate service only increased 18 percent since deregulation. Independent providers SureWest and Frontier Communications have only raised prices by about six percent.

With these kinds of rate increases, customers like Steve are making hard choices about whether to keep or ditch their landline service. Ironically, AT&T’s argument to decommission traditional landline service is based on the premise customers are abandoning landline service. AT&T advocates moving customers to its deregulated U-verse platform in urban areas and switch rural customers to wireless-only service.

Chong paid a personal price for her erroneous predictions of consumer savings. In December 2009, the Democratically controlled State Senate refused to hold hearings on Chong’s reappointment to the CPUC, ending her term. AT&T and Verizon strongly backed Chong and lobbied hard for her confirmation. AT&T even turned out its notorious “dollar-a-holler” sock puppet brigade of non-profit groups that showered the legislature with letters supporting her reappointment, without bothering to disclose AT&T had made substantial direct or indirect contributions to the groups in the past.

Murray Bass, head of a small nonprofit in Northern California, initially wrote lawmakers saying Chong was a strong voice for low-income seniors. But in an interview, he admitted he’d endorsed her at the suggestion of executives at AT&T, which had given his group money.

“There’s an essential conflict of interest when a regulated — or supposedly regulated — entity is intervening on behalf of a regulator that’s friendly to them,” said Mark Toney, executive director of the Utility Reform Network, a group that opposed Chong.

SUPPORTERS OF COMMISSIONER CHONG WITH TIES TO AT&T

 Notes

• 1.  CUDC – The California Utilities Diversity Council is a collaboration between the CPUC , the utility companies and other industry participants  to promote diversity in the utility industry.  AT&T is a gold sponsor of CUDC’s annual convention.
•  2.  CETF – CETF is a private non-profit corporation created by the California Public Utilities Commission (CPUC) and funded entirely by AT&T and Verizon.  Commissioner Chong is Chair of the CETF Board of Expert Advisors and its Accessibility Committee.  CPUC President Michael Peevey is Chairman of the CETF Board of Directors. The CETF board is appointed by the CPUC, AT&T and Verizon.

Sources:

• AT&T Foundation IRS form 990
• The Utility Reform Network

Verizon is notifying some of its FiOS TV customers they will be paying $8 more a month “within 1-3 billing cycles” and a dollar more a month for the Regional Sports Network Fee, applicable in some areas.

(Courtesy: andrade6503)

Cable operators are increasingly breaking out high cost programming, including sports and local broadcast stations, from the basic cable tier and adding surcharges on the customer’s bill, often with no option to cancel the offending programming. Many operators also leave the price of their basic cable packages the same, creating a surcharge-driven, hidden rate increase.

Pay television providers have argued that some of the biggest rate increases occur after programmers raise prices during contract renewal talks. Breaking the fees out on the bill can re-target blame for rate increases on programmers instead of the cable, satellite, or telephone company, assuming customers scrutinize their bill.

It’s happy days at Comcast’s marketing and public relations department. How does a cable company pocket an extra $1.50 a month from 21.6 million cable TV customers without facing the wrath of the masses? Blame it on greedy broadcasters and quietly bank up to $32.4 million a month in new revenue.

Comcast wants to break out the cost of some of its programming disputes with local stations from your monthly cable bill and add an extra $1.50 monthly surcharge the company is calling a “Broadcast TV Fee” starting in the new year.

Comcast isn’t promising this $1.50 fee covers the total cost of licensing local stations for cable carriage, and they have no plans for similar surcharges for cable networks that have also been known to ask for a lot at contract renewal time. Customers may not realize that in some cases, the local NBC station just so happens to be owned by Comcast-NBC, offering easy opportunities to boost the asking price without too much trouble from co-workers at Comcast Cable.

Broadband Reports notes that isn’t the only new fee coming soon to a Comcast bill near you, starting Jan. 1. The company is also raising prices for cable television by $1-2 for many tiers, increasing the modem rental fee another dollar to an unprecedented $8 a month, and jacking up rates by $2 a month on almost all levels of broadband service.