Apparently the “fight back” component of Time Warner Cable’s campaign against the high cost of cable has not been a stunning success because the nation’s second largest cable operator continues to roll over its subscribers with some striking rate hikes, this time across upstate New York.

The usual promotional brochure began appearing in mailboxes across the state, filled with glowing words about all of the wonderful things Time Warner Cable did for you since your last rate increase, and promises for more wonderful things to come… along with fine print language at the bottom subtly labeled “2010 Rates.”  They don’t even call it a rate increase anymore, although it will cost most video and broadband subscribers in Rochester an additional $7.70 a month — $92.40 a year, effective February 1st.

After the company complained back in April it “needed” to engage in Internet Overcharging experiments to use that revenue to upgrade networks, the additional $3 a month/$36 a year they will get from millions of Road Runner subscribers in New York alone should be more than enough to do just that.  Those on lower speed economy tiers are also facing rate hikes: $3 a month for Road Runner Lite and $4 a month for Road Runner Basic, reaching $22.95 and $29.95 a month in Rochester, respectively.

As a concession to Rochester, one of the last remaining cities in New York still stuck with 384kbps upload speeds, the company will increase the upload speed for the division’s Standard Road Runner service customers to 1Mbps sometime in 2010.  Those with Road Runner Turbo will probably see upload speed increasing to 2Mbps, accordingly.  But Rochester still isn’t on the upgrade list for DOCSIS 3, bypassed because of the very limited competition Frontier offers the cable company locally.  Verizon FiOS fiber to the home service is being provided in most other large New York cities.

You probably didn’t ask for it, but you’re going to get it anyway: NBA TV HD and the Sundance Channel was added today to the Rochester-area’s digital cable tier.

Time Warner Cable's new rates for the Rochester/Finger Lakes region of western New York become effective February 1st.

Meanwhile in the state capital Albany, news of the rate increase was particularly unwelcome in the hard hit upstate economy.  The Albany Times-Union called the rate increase “an insult” on hard-hit New Yorkers:

Your neighbor lost his job, the housing market is in the tank, and the economic recovery is nowhere in sight.

And now to add insult to injury, as other household costs rise, your cable TV bill is going up next year too — in some cases by nearly 10 percent.

Time Warner Cable sent a flier to local customers this month with the new prices. Except for the most basic package, all the rates are going up. The “basic with standard” TV package, which includes dozens of mainstay cable channels such as CNN, ESPN and Comedy Central in addition to local broadcast channels, will rise 9.7 percent to $61.95 a month from $56.45 currently.

The company’s “All the Best” package that combines TV with Internet and phone service will go from $139.95 a month to $146.95 a month, an increase of 7 percent.

[flv]http://www.phillipdampier.com/video/WTEN Albany Time Warner Bill Increase 12-31-09.flv[/flv]

WTEN-TV Albany reports that Time Warner Cable’s latest rate increase will cause many upstate New York residents to drop premium channels in even greater numbers to economize. (2 minutes)

Verizon FiOS, for now anyway, will be cheaper than most of Time Warner Cable’s packages in Syracuse.  The Salt City faces rate increases averaging six to eight percent.  Time Warner Cable spokesman Jim Gordon blamed the rate hikes on the same things cable always blames rate hikes on — increased programming costs.  From the Syracuse Post-Standard:

Time Warner spokesman Jim Gordon said there are two major reasons for the increase: higher prices charges by the providers of programs and the rising cost of doing business. Customers are using more services more often, Gordon said, and cable is becoming more important in people’s lives.

In 2009, the number of channels on which the “start over” feature is available rose from 45 to 90, and customers used the feature 10 million times, he said. Customers also watched 85 million videos on demand, he said. “People are staying home more, and they’re hunkering down and they’re utilizing these services,” he said.

Cable operators are free to raise rates on everything except the basic service of broadcast and educational channels, for which operators need permission of regulators.

Below is a list of popular packages and corresponding rate increases:
• Talk ‘n’ View package, of telephone and cable television service, will rise from $100.50 to $108.95 – an increase of about 8 percent.
• Surf ‘n’ View, a combination of Internet and cable television, will increase from $105.50 to $111.95, an increase of 6 percent.
• All the Best, which combines cable, internet and phone, will rise from $135.50 to $144.95, or 7 percent.

Prices are slightly lower with Verizon Communications Inc.’s FiOS, which recently entered the Central New York market and offers a basic package of telephone, Internet and cable television for $109.99 to $129.99.

Further north in Watertown, rates are also increasing by 6 to 8 percent starting February 1st, the second increase in the past 11 months. Time Warner last raised its rates in March.

Time Warner Cable spokesman Jim Gordon said the current increases are due to price increases by programmers and an increase in the company’s cost of doing business. Gordon also cited an increase in the use of the company’s features including “Start Over” and video on demand.

“People are staying home more because of the current economic situation, and customers are finding value in these enhancements,” Gordon said.  The Watertown Daily Times notes Gordon doesn’t think subscribers will mind enough to leave.

“Our goal in doing this is to enhance the customer experience,” Mr. Gordon said.

Mr. Gordon said he doesn’t think the rate increases will prompt many Time Warner Cable customers to switch to another provider, because of the local customer service the company offers.

“We’re more than ready to compete,” Mr. Gordon said.

Customers can expect to see the following increases on their cable bills this year:

• A combination of standard and basic cable service costs will increase from $62.50 to $67.75, an increase of about 8 percent.
• The Surf ‘n’ View package will increase from $105.50 to $111.95, an increase of about 8 percent.
• The Talk ‘n’ View package will increase from $100.50 to $108.95, an increase of about 8 percent.
• The All the Best package, including cable, phone and Internet service, will rise from $135.50 to $144.95, an increase of about 7 percent.

Verizon FiOS, a new cable provider in the area, has a basic package that includes cable, telephone and Internet service for $109.99 to $129.99.

Satellite television provider DirecTV also has announced rate increases of 3 percent to 5 percent, which also will take effect Feb. 1.

Watertown residents noted the irony of the company’s “Roll Over or Get Tough” campaign in light of today’s rate increase.

“Imagine if you went to the supermarket and they told you that you had to buy 100 items you didn’t want and would never use for ever item you actually wanted. This is how Time Warner Cable operates,” one writes.

A Raymondville resident remarks, “Isn’t it strange after Time Warner solicits its customers to support their get tough effort to fight with the Fox networks in negotiations over price increases for programming that they can institute one of their own? Is this the real reason that they lobbied all of their customers? Is this the beginning of setting things up so that we end up paying for every channel that we watch? If enough people push to get rid of the junk they give us, that we never watch, so we get a package we will? It almost sounds like a shell game in which the pea is not under any of the shells, a no win situation for subscribers no matter how it shakes out. New businesses have been created here ones in which someone has figured out how to get money from consumers without really doing anything to get it. The New American Way. Welcome to the new Millennium.”

Cablevision serves communities surrounding the metropolitan New York region

Despite the tight economy for most Americans, executives at some of the nation’s largest cable players will enjoy millions from their contract extensions, bonuses, and eye-popping stock options that could net upwards of $10 million more for a select few.  And you thought your rate increase was due to “increased programming costs.”

Cablevision is where the real Money Party has just gotten started.  The top three executives alone could receive a combined $50,000,000 next year… that is fifty million dollars, just for running a regional cable company with just north of three million subscribers.

Here is the breakdown:

Dolan

Cablevision CEO James Dolan: Cablevision has always been under the control of the Dolan family, who own a controlling interest in the stock.  James Dolan gets a five-year extension in his contract, with a base salary of $1.5 million per year plus a bonus of up to four times that amount.  In 2010, Dolan is also entitled to an additional bonus package in cash and equity worth around $7 million.  He is also on track to get that same bonus each of the next five years, but only if the company does well.  Dolan is also CEO of Madison Square Garden/MSG/Radio City Music Hall.  For managing those assets, he’ll receive an extra $500,000 in salary, a bonus up to four times that amount, and an extra cash and equity bonus expected to be about $1.75 million per year.

Dolan founded Cablevision in 1973.

Ratner

Cablevision Vice Chairman Hank Ratner: Ratner gets a base salary of $500,000 a year, an annual bonus up to four times that salary, $1.2 million annually for his role with MSG, and extra cash and equity around $1.4 million annually.  And just because he’s a great guy — a one-time stock award worth $1.75 million due on March 31, 2010.  But wait, there’s more.  He also deserves extra cash and equity as MSG’s chief, targeted at $5.4 million in 2010 and each year thereafter.

Ratner joined Cablevision in 1987.  Ratner helps to set corporate direction and strategy, and is the primary executive overseeing major business partnerships and transactions.  Prior to being appointed Cablevision vice chairman, he served as vice chairman of Rainbow Media Holdings, the company’s programming subsidiary.

Rutledge

Tom Rutledge, Cablevision’s chief operating officer: He’ll get $1.63 million annually in salary, plus an annual bonus up to four times that amount.  He’s a special guy, so he also gets a “special payment” of $7.75 million within ten days of putting his ‘John Hancock’ on the new contract.  Call it a signing bonus.  But he also gets extra cash and equity compensation aiming at $6.8 million in 2010.

Cablevision isn’t alone is spreading around the walking around money.

Liberty Media, one of those programmers that keeps upping the rates charged to cable and satellite providers, who in turn pass those increases on to you, have a reason for doing so.  Their salary costs keep going up for the special few on the top floor.

Maffei

Greg Maffei, prexy-CEO of the company, just got his own five year contract renewal taking effect January 1st.  He’ll earn a base salary of $1.5 million per year, with a guaranteed 5 percent raise every year and an annual bonus amounting around $3 million.  But he’ll also get more than 10 million options of Liberty’s three stocks, most in the high-tech Liberty Interactive, which is developing online applications and services.

What do you get?  A rate increase and programming you don’t want but have to pay for, and now you know why.

Broadband Reports has obtained documents accidentally publicly posted outlining some significant changes to how Verizon markets and prices its fiber optic to the home FiOS service.

Most customers can “look forward to” price hikes of $10-20 for their FiOS bundled service package January 17th, if the leaked documents are accurate.  The company will also replace its “TV Essentials” package and bring back symmetrical broadband service options (same upload and download speeds), according to Broadband Reports.

More concerning is the introduction of a uniform $360 early termination fee for customers who sign up for broadband or television service from Verizon and decide to switch providers.  Although the fee will not apply if customers agree to stay with Verizon for their home phone service, the justification for such a high charge will be open for debate.  The company promises to pro-rate the fee for every month a customer does stay with FiOS, but according to the report will impose it against a consumer that finds themselves having to relocate to a non-Verizon service area.  For someone in western New York between Buffalo and Rochester, a move just down the street into Frontier Communications territory could result in a final Verizon bill several hundred dollars more than expected.

Currently, Verizon charges broadband customers on an annual contract a $99 early termination fee.  Television customers pay a $179 fee if they cancel before the year is up.

Some customers reacting to the cancellation fee suggest opting for the month-to-month service plan for an additional $20 a month if a move is imminent or if a customer isn’t sure they’ll keep the service.

Early termination fees are designed to capture and hold customers in place and are common in competitive markets where consumers bounce back and forth between new customer promotions.  Locking a customer in with a multi-year service agreement makes promotion-bouncing expensive, and gets customers to think twice before switching providers.

Verizon’s pricey exit charge could also reflect the company’s desire to recoup wiring expenses to bring fiber to and inside customer homes.

Most Verizon FiOS promotions we’ve seen lately expire January 16th.  That would suggest promotions starting the 17th will carry higher pricing.

A late December 2009 Verizon promotion. Note the expiration date.

Karl Bode notes the price hikes come even though costs are declining for major providers.

Keep in mind of course that these broadband hikes come as the cost of wholesale bandwidth and network hardware continues to drop. The television hikes, meanwhile, come despite the fact that Verizon and AT&T lobbied state lawmakers in dozens of states promising lower TV prices — if they were willing to reconfigure the video franchise system to make life easier on the baby bells.

It also appears that Verizon will be further expanding their free Wi-Fi offer to include customers on 15 Mbps tiers. The service previously was restricted to FiOS customers that subscribed to 20 Mbps service or faster. Like speed? It looks like Verizon’s symmetrical 35 Mbps tier, which is only available in select markets, will be showing up in all Verizon markets next year. The company’s 25/15 Mbps tier will officially become 25/25 (most customers report those speeds already).

AT&T last week announced it has increased its quarterly dividend by 2.40% to 42 cents per share, the 26th year the company has increased dividends quarter after quarter.

On February 1st, something else will increase by up to 10 percent: their U-verse rates.

Depending on the package selected, rates will increase $3-5 dollars a month for most cable-TV packages, $5 for many slower speed broadband products, and $5 a month for its unlimited calling package.  New customers will find some savings to offset the increases if they opt for faster broadband products: Max (12 Mbps) and Max Plus (18 Mbps) both decrease $10 per month, to $45 and $55 respectively, and the new 24Mbps Max Turbo service drops from $75 to $65.  Existing customers will not see price increases on broadband service, but they won’t enjoy any price decreases either.

Standard retail pricing as of February 1, 2010 will be: U-Basic- $19/mo., U-family-$54/mo., U-100-$54/mo., U200-$67/mo., U200 Latino-$77/mo., U300-$82/mo., U450-$112/mo.

New U-verse TV customers will now face a one-time service activation fee of $29.

AT&T said that the “modest price adjustments that we’re making are far outweighed by the additional value we’ve added to U-verse TV in the last year alone.”

Customers have expressed mixed reactions to the price increases and decreases on AT&T’s U-verse forums.  A far bigger problem for many of them are the company’s “bait and switch” tactics, alleged by several angry customers.  From rate quotes $30 less than what actually shows up on customer bills to referral rewards that never materialize to rebate nightmares, AT&T customers in several parts of the country report ongoing problems getting what they were promised.

While Time Warner Cable continues to ask customers if they should “get tough” with cable programmers’ price hikes, they are rolling over customers with more rate increases anyway.

The latest region facing higher cable bills is southern California.  Customers were notified rates were increasing an unspecified amount in January 2010.  Company spokesman Darryl Ryan told the Orange County Register that he can’t easily categorize the average increase since every bill will be different.

Readers managed:

• Margaret from Huntington Beach says that some price hike examples are: The All the Best goes to $122.99, from $119.95; the ‘Surf ‘n View’ increases $2.04; broadcast cable goes up $2; Internet only goes up $2.04; and DVR increases to $1.54. One decrease: the remote control drops $0.05.
• Dana from Anaheim Hills got a letter too and had to call customer service to figure out what it meant. Essentially, Dana found out basic service was going up $5 to $8 per month. To keep the existing price, customers must commit to a 2-year contract.

This price increase, with more likely to follow, comes because of programming costs according to the nation’s second largest cable operator.  The company has recently tried to engage consumers in an effort to “keep costs down” through its “Roll Over or Get Tough” campaign.  Time Warner Cable claims broadcasters and other cable programmers are demanding as much as 300% more for their programming in 2010.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TWC Holidays Ad.flv[/flv]

Time Warner Cable’s ‘Roll Over or Get Tough’ campaign is running this ad for the holidays.

The Parents Television Council called the marketing campaign “self serving,” said Tim Winter, the organization’s president.  The group said consumers are always put in the middle of pricing arguments, either from the cable company’s perspective or the network trying to get carriage or threatened with removal from cable lineups.  The PTC calls it posturing, and in the end prices typically get negotiated down a few pennies at most.

The PTC advocates consumers being able to pick and choose only those channels they want.  The group runs the website How Cable Should Be, which breaks down some of the estimated wholesale prices programmers charge cable companies for their programming.  Consumers can use the site to pick and choose their favorite channels and add up what their monthly bill could be if they weren’t paying for channels they don’t watch.

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p style=”text-align: center;”>[flv]http://www.phillipdampier.com/video/Bundling Bummer.flv[/flv]
The Parents Television Council’s “Bundling Bummer” message illustrates how consumers get stuck paying for channels they never wanted. (3 minutes)

Time Warner Cable claims that more than 400,000 visitors to their campaign website have been overwhelmingly positive towards the company’s “fight back” stance.

“We’re delighted with the results so far,” said Time Warner chairman, president and CEO Glenn Britt. “Over 150,000 people have left comments, and 95% of them voted for ‘Get Tough.’ Our customers clearly agree that the current programming business model is broken. One comment we’re hearing pretty consistently is that customers would like the choice to buy smaller packages of channels. As an industry, we need to listen to those kinds of concerns.”

But the company’s site doesn’t make it easy to “roll over.”  Those who try to choose “roll over” are prompted instead to choose “fight back.”

Industry observers suggest Time Warner’s campaign is an opening shot for upcoming contract extensions for a handful of programmers, most notably broadcasters.  In the very center?  News Corporation and the Fox family of cable and broadcast stations.

[flv]http://www.phillipdampier.com/video/TWC 300 Percent Pay Raise.flv[/flv]

Time Warner Cable asks if you are getting a 300% pay raise in this ad asking if customers want the company to fight back against programmer price increases.

Behind the scenes, Time Warner Cable has been taking shots at Fox over negotiations between Sinclair Broadcasting, which owns 20 Fox-affiliated TV stations, and Mediacom, a smaller cable operator.  In an ex parte comment filed December 8th, Time Warner Cable took direct aim at the network, suggesting they were demanding veto power over local negotiations with individual stations.  If the network doesn’t like the terms the local station and cable system settle on, Fox wants the right to object.  Time Warner Cable suggested that precedent is already in place based on negotiations between Sinclair and Time Warner which only resulted in one-year extensions.  The cable operator assumes Fox will be back a year from now demanding up to one dollar a month per subscriber for each Fox affiliate the cable system carries.

Why does Fox care so much?  Because they, like many other television networks, have begun asking for a percentage of the revenue earned from retransmission consent agreements.  With a weak ad market, every penny counts.

Fox called the cable operator’s tactics a “desperate campaign to mask its impressive profits and instead malign its program suppliers’ efforts to receive fair compensation.”

Regardless of who wins the fight, subscribers lose because they bear the brunt of the cable operator’s business model which forces customers to pay for dozens of channels they’ll never watch, and when prices for those networks increase, so shall the customer’s bill.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/Canada Retrans Consent Ad.flv[/flv]

Canadians are also going through a similar battle between cable systems and local broadcasters who demand payment for carriage.  The hardball campaign plays out on Canadian TV screens with ads like this.