When Time Warner Cable introduced its SignatureHome service, the company claimed it wanted to deliver a comprehensive experience to its most premium-customers.  But oddly, the best broadband speeds, phone service, and digital cable TV lineup from the cable company didn’t include any premium movie channels.

“I was ready to sign up for SignatureHome, but I assumed it included major premium channels, and it didn’t,” says Stop the Cap! reader Liam in Los Angeles.  “I thought it would be a real money-saver but I would rather have the premium channels than their phone service, which I don’t actually use as I depend on my cellphone.”

Scott elected for a cheaper promotional bundle foregoing phone service and the fastest Internet speeds, choosing to stick with Road Runner Turbo service.

“Powerboost on their Turbo product is more than enough for me and I don’t need faster upload speed — if SignatureHome included the premiums I would have taken it,” he says.

Now Time Warner has introduced an addition to their super-deluxe package — SignatureHome Premium View, which bundles HBO, Showtime, Cinemax, The Movie Channel and Moviepass with everything else on offer for $30 more a month — $229.99.  The package excludes Starz!, a premium movie channel Time Warner has barely promoted over the years.

With many markets increasing prices to as high as $15 for channels like HBO, getting five premium networks for just under $30 isn’t a bad deal, assuming you watch them and benefit from SignatureHome‘s other features.

“When my promotion expires, I’ll consider this new option,” Scott says.  “Yes, I realize $230 for cable service should really be an outrage, but the way the company is pricing services these days, the more you bundle, the less you ultimately pay compared to trying to build your own package of services.”

That may be exactly the point.  For customers who rely on Time Warner for phone, broadband, and cable-TV, SignatureHome can be a reasonable value if you crave the company’s highest 50/5Mbps broadband speeds.  Building a comparable bundle on your own is much more expensive.  Now the same is true for premium movie channels, which run between $11-15 a month each a-la-carte.

[flv width=”534″ height=”320″]http://www.phillipdampier.com/video/NY1 Signature Home Arrives 12-9-10.mp4[/flv]

NY1, Time Warner Cable’s 24 hour news channel in New York City, talked about the introduction of SignatureHome last December.  (2 minutes)

Cornell University students pay an average of $37,000 a year (before housing, student fees, and other expenses) to attend one of America’s most prestigious universities.  When they arrive on-campus, it doesn’t take long to learn the college has one of the nastiest Internet Overcharging schemes around for students deemed to be using “too much Internet.”

For years, Cornell limited students to less than 20 gigabytes of Internet usage per month, only recently increasing the monthly allowance to 50GB this summer.  Cornell’s overlimit fee starts at $1.50 per gigabyte, billed in megabyte increments.  Now some students are pushing back, launching a petition drive to banish the usage limits that curtail usage and punish the 10 percent of students who exceed their allowance.

Christina Lara, originally from Fair Lawn, N.J., started the petition which has attracted nearly 300 signatures over the past few weeks.

“Cornell students, along with students across the world, rely on the Internet to pursue their academics, independent research, and leisure activity,” Lara writes. “We should not be subjected to charges for our Internet usage, particularly because our curriculums mandate we use the Internet. Despite this, Cornell University continues to adopt NUBB (Network Usage-Based Billing), which charges students for exceeding the 50 gigabyte per month ‘allowance.'”

Lara incurred bills as high as $90 a month in overlimit fees last year, thanks to regular use of Netflix and Skype for online video chats with friends and family back home.

Internet fees for on-campus housing are included in the mandatory student services fee.  Although Time Warner Cable has a presence on campus, most residence halls don’t appear to be able to obtain service from the potential competitor, which sells unlimited Internet access in the southern tier region of New York where Cornell is located.  Instead, Cornell students on campus rely on the university’s wireless and Ethernet broadband network, and DirecTV or the university’s own cable TV system for television.

Lara

The apparent lack of competition makes charging excess-use fees for Internet usage easy, critics of the fees charge.

“It’s much easier if you live off-campus or in one of the apartment complexes students favor,” says Neal, one of our readers in the Ithaca area who used to attend Cornell.  “The only complication is getting access to the University’s Intranet, which is much easier if you are using their network.”

Neal says Verizon delivers landline DSL to off-campus housing, but not on-campus.  Because the service maxes out at 7Mbps, most who have other options sign up for Time Warner Cable’s broadband service instead.

“It’s cheaper on a promotion and much faster, and it’s still unlimited,” Neal says. “Hasbrouck, Maplewood and Thurston Court were the only residential buildings that offered the chance for Time Warner Cable on-campus, and only if the wiring was already in place.”

Neal notes many apartment complexes off campus have contracts with Time Warner Cable, which means cable TV and basic broadband are included in your monthly rent.  Some Cornell students who live on or near campus try to make do with a slower, but generally free option — the Red Rover Wi-Fi network administered by the University.  Others reserve the highest usage activities for computers inside university academic buildings, where the limits come off.

Lara complains Ithaca, and the southern tier in general, is hardly an entertainment hotbed, making the Internet more important than ever for leisure activities.

Time Warner Cable provides the rest of Ithaca with unlimited Internet.

“If Cornell was situated in a major metropolitan area with a vast nightlife that could accommodate the interests of most, if not all, our undergraduates, then many Cornellians wouldn’t be so inclined to stay in their rooms and get on the Internet,” Lara says. “But that’s not the case. Cornell’s Greek life dominates the social scene, making ‘nightlife’ a dividing factor in the community.”

Tracy Mitrano, Cornell’s director of information-technology policy, told The Chronicle the vast majority of students will never hit the cap, and those that do cannot be charged more than $1,000 a month in overlimit fees, regardless of use.  Those that do exceed the limit typically find a monthly bill for “overuse” amounting to $30.

“The approach that Cornell uses offers transparency and choice,” said Mitrano. She noted that Cornell provides students with clear information regarding their network usage by alerting them by e-mail when they are about to hit the limit and by setting specific rates for overuse fees.

“The choice seems to be using the university network or moving off-campus to buy Verizon or Time Warner Cable broadband to avoid the usage cap,” counters Neal. “I am not sure their ‘choice’ argument flies if students don’t have the option of signing up for Road Runner in their rooms on their own, bypassing the Internet Overcharging altogether.”

Both Neal and Gregory A. Jackson, vice president of Educause, seem to be reaching consensus on whether or not universities should be charging students for Internet separately from room and board.  Jackson notes it is a discussion being held at an increasing number of universities.  Neal thinks having a wide open access policy to deliver competition could solve this problem in short order, and students should make the decision where to spend their broadband funds themselves.

“If Cornell’s IT bureaucracy faced unlimited-access competition from Verizon and Time Warner Cable, do you think they’d still have a 50GB usage cap, considering only a small percentage of their captive customers exceeded it,” Neal asks.  “Of course not.”

[Thanks to PreventCAPS for the story idea.]

Slingbox PRO-HD

In a shot across the bow to programmers demanding compensation for the cable company’s TV Everywhere project, Time Warner Cable has announced it will give away a free Slingbox PRO-HD device to every customer signing up for its top-tier 50/5Mbps Road Runner ‘Wideband’ broadband service.

The Slingbox, which allows customers to watch live streams of cable television programming and other video over a broadband connection, retails for $300 and that is what Time Warner will rebate to new “Wideband” customers who are willing to pay $99 a month for the fastest possible Internet service from the cable operator.

By handing out a free Slingbox, which customers can use to watch whatever channels they want, Time Warner is sending a message to intransigent programmers, particularly Viacom. which has been particularly hard-nosed in its negotiations for streaming rights of popular Viacom networks like Comedy Central and MTV.  Time Warner found its efforts to stream those networks on its free iPad app stymied when Viacom went to court to stop the streams pending compensation negotiations.

With the Slingbox, customers can bypass messy business debates and watch whatever channels they choose to subscribe to, although Time Warner Cable won’t officially declare that as their intention for the new promotion.

Instead, Jeffrey Hirsch, Time Warner’s executive vice-president and chief marketing officer, claims the Slingbox offer is an attempt to drive subscriptions for its DOCSIS 3-based Wideband service.

“Over time we’re really trying to emphasize Wideband as a mainstream product,” Hirsch told the New York Times.

Currently, only a small percentage of customers subscribe to the company’s 50/5Mbps service, most through Time Warner’s super-premium SignatureHome service, which includes the speedy tier as part of its triple-play bundle of phone, Internet, and cable service.  The company sells SignatureHome in most markets for around $200 a month.

The Slingbox promotion is planned for launch this September.  Customers are expected to pay upfront for the device and receive a $300 prepaid debit card as part of the rebate offer.  No word on whether the promotion will extend to new SignatureHome customers, or only to those choosing Wideband service a-la-carte.

Ironically, Slingbox use promotes a major increase in broadband traffic, thanks to high bandwidth HD streaming video.  Time Warner’s Slingbox promotion will drive increased traffic on their broadband networks once customers start watching shows outside of their home.

Gone

After more than a decade of “beep, beep,” Time Warner Cable is retiring Geococcyx californianus, the ground foraging cuckoo better known as the Greater Roadrunner.

It’s all part of a “brand refresh,” Time Warner’s Jeannette Castaneda tells Fortune.  The idea is to “create excitement around the eye-ear symbol.”  For now, the “Road Runner” name will remain — just the mascot disappears.

When Road Runner was first introduced in 1995 in Elmira, N.Y., it was designed to be a localized high-speed online portal, originally called the “Southern Tier On-Line Community.” Portals were all the rage in the 1990s, designed to serve as a unified home page to help users find content more easily.  When the cable modem broadband service finally spread to other markets, it was branded ‘LineRunner.’

But Time Warner’s marketing people decided the company’s best strategy to convince users that paying at least double the price they were paying for dial-up was worth the investment when you considered how fast cable broadband service was, and how it would outperform any dial-up connection.  The cable company spent months negotiating with Warner Bros. to license the use of the roadrunner in the old Wile E. Coyote cartoons.  The company even changed the name of their broadband product to Road Runner to drive home the speed message.

The "eye-ear" branding that replaces it.

Over the years, Time Warner has blanketed customers in postcard mailers, advertising, and billboards showcasing their broadband mascot, but no more.  While Time Warner Cable would not provide exact reasons for the brand change, we suspect there are several factors involved:

1. The cost to license the roadrunner character from Warner Bros.  In 1998, regional Time Warner representatives shared that the licensing agreement with Warner Bros. was costly and complicated.  Warner Bros. maintains strict control over their licensed characters and how they are used.
2. In the past, emphasizing speed was essential in convincing consumers to drop their old provider for the cable company’s alternative.  But broadband penetration in most of Time Warner’s markets has already reached a high level and most of those still refusing to take the service are not going to be convinced by speed arguments.  For these holdouts, lack of interest and the cost of the service are the most important factors, and the roadrunner character does not speak to these concerns.
3. 

   Canis usagecapus

   The telecom industry, notably cable, has spent years trying to retire the phrases “Internet access” and “Internet Service Provider.”  They don’t even like the word “broadband.”  For them – it’s High Speed Internet (HSI) or “High Speed Online.”  They have put the words “high speed” in the very term they use to describe Internet access.

4. Time Warner Cable believes in their unified bundling of services.  They aggressively pitch all of them together at a discounted price and have de-emphasized the branding that used to be associated with individual package components.  For example, Time Warner didn’t retire the name “LineRunner” when they rebranded their cable modem service Road Runner.  They simply re-used the name for their telephone service.  Time Warner tested LineRunner in the Rochester, N.Y. market before ditching the product for a Voice Over IP service they now like to call “digital phone.”  Today, most of Time Warner Cable’s most visible ancillary branding is done for their triple-play packages.  Remember “All the Best?”

Fortune thinks the retirement of the roadrunner may also have something to do with the company’s desire to implement an Internet Overcharging scheme:

TWC, like other big ISPs, is a leading proponent of imposing bandwidth caps on its Internet users. Imagine the possibilities for illustrating articles about this topic – Wile E Coyote (perhaps wearing a TWC ballcap) tripping up the Road Runner with piano wire, or finally getting his revenge and hurling the obnoxious bird off a cliff.

Despite the loss of more than 128,000 video subscribers, Time Warner Cable more than made up the difference with rate increases on equipment, programming, and broadband to score a 23 percent increase in earnings in the second quarter of 2011.  For the period of April-June, Time Warner earned a profit of $420 million, nearly $80 million more than the same quarter last year.

Cable Television

Time Warner CEO Glenn Britt continued to blame the loss of video subscribers on the housing crisis and economy, suggesting the cable operator’s prices have gotten too high for some customers to handle, and they’ve disconnected cable television service as a result.  Britt also continues to downplay the impact of online video allowing for consumer cord-cutting, suggesting instead that increased competition from phone companies and satellite providers are creating a problem online video isn’t.

As a result, Time Warner is refocusing its efforts on marketing packages to three segments it particularly wants to attract — the very well-to-do, the Latino community, and the income-challenged.

Time Warner officials noted that many of their customers have continued to pare back their packages to cushion against the company’s rate increases.  For the last few years, consumers have cut premium movie channels and extra tier add-ons.  Now customers are targeting Time Warner’s DVR service as a route to a lower cable bill.  Many are returning their DVR boxes to save money, or are not keeping the service as a promotion expires.  Time Warner often bundles DVR service into new customer promotions for no additional charge.

For these income-challenged consumers, Time Warner is promising to develop new packages of services at reduced prices.  That likely means the expansion of the company’s “budget tier” — a package of selected basic cable networks, excluding expensive sports programming, currently testing in two markets for around $50 a month.

But the company is also reporting success with its wealthier customers, many who are adopting Time Warner’s super premium Signature Home service, from which the company collects an average of $220 per month per customer.  Time Warner is also ramping up promotion of its cable services to Spanish-speaking audiences in the Latino community — customers it may have under-served in the past.

The company also reported declines in video-on-demand revenue, principally adult pornography pay-per-view content consumers are now watching on the Internet for free.

Broadband

Among the brightest stars for Time Warner Cable continues to be broadband service, which is increasingly important… and profitable for the nation’s second largest cable operator.  With “pricing strength,” Time Warner has successfully adopted a series of rate increases for Road Runner service, increasing revenues along the way.  The company also reports success with its DOCSIS 3 rollouts, now reaching 60 percent of its cable subscribers.  CEO Britt says the cable company expects to complete DOCSIS 3 upgrades nationwide by the end of 2012.  A noticeable percentage of customers are upgrading to premium-priced, faster speed tiers as a result.

Despite the investment in DOCSIS 3, Time Warner Cable continues to slash the amount of capital it is investing in its network.  So far this year, capital expenditures are down 7.4 percent to $1.36 billion.  Chief Operating Officer Rob Marcus predicts Time Warner will spend no more than $3 billion on its systems in 2011, despite plans to continue broadband upgrades and convert their cable systems to all-digital operations.  So far this year, Time Warner has earned over $2.2 billion from its broadband division alone, up 9 percent from last year.  The company attributes most of that growth to rate increases and customers upgrading their service.

Other facts:

• Time Warner’s wireless mobile broadband has failed to spark much interest from consumers, perhaps because they realize it comes from Clearwire, a company Time Warner CEO Glenn Britt seemed unimpressed with in today’s conference call.  He made a point of telling investors the cable company is under no obligation to invest anything else in the venture;
• Time Warner Cable is taking a new interest in Wi-Fi, deploying networks in New York and Los Angeles, in the hope the company can boost interest in a “quad-play” of cable, phone, Internet, and wireless broadband/Wi-Fi that consumers have taken a pass on thus far;
• The company’s new super data center in Charlotte, N.C., will provide a national “head-end” for IPTV video, currently supplied from a facility in Denver.  This will principally benefit iPad users using the company’s app to stream online video.  The company hopes to eliminate regional and local distribution efforts as a cost-savings measure, consolidating national distribution through Colorado and North Carolina;
• The company’s next version of TWCable TV — the aforementioned iPad app, is due out in a few weeks and will include text searching for individual shows.  Whether it corrects the ludicrous inability for the app to consistently stream video is another question;
• Competition for new customers has been responsible for a number of disconnects.  One satellite provider is pitching Time Warner customers on a $30 a month video package that includes the NFL Sunday Ticket for free.  Verizon FiOS has increased its marketing of Time Warner customers, offering its own triple-play package for $99 a month.  AT&T U-verse has their own triple play packages as low as $89 a month, with a substantial mail-in rebate offer good for over $100.  But Britt warns the lack of change in the “average revenue per subscriber”-numbers from competitors probably means consumers are paying substantially more thanks to fine print-surcharges and fees;
• Time Warner is still trying to sign agreements for its TV Everywhere project, particularly for HBO Go, but the terms are evidently still not acceptable to the cable company.

Our earlier coverage, seen below, covers Britt’s remarkable comments about usage-based pricing.  He was certainly off the usual industry playbook today, even going as far as telling investors what we knew all along: bandwidth costs bear almost no relationship to the prices charged for broadband service.  That’s one we’ll tuck away and remember.

Time Warner Cable CEO Glenn Britt highlights the results from the second quarter, covering cable-TV, broadband, and other products. July 28, 2011. (6 minutes)
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