Time Warner Cable this week announced it signed up its’ nine-millionth Road Runner customer, making the company the third largest Internet Service Provider in the United States.

Broadband service continues to grab an increasing share of business for the nation’s cable operators, even as they continue to lose video subscribers.  During the last quarter of 2009, Time Warner lost 105,000 video subscribers  but added 120,000 residential high-speed Internet subscriptions.

Nine million subscribers paying even a promotional rate of $30 a month earns the company $270 million dollars a month — $3.24 billion dollars a year.

Hobbs

“This is a great milestone for Time Warner Cable, and it further proves that our customers enjoy the speed and content our HSD products deliver, as well as the value seen when bundling this service with our video and phone offerings,” said Landel Hobbs, COO of Time Warner Cable. “High Speed Data continues to be a growing part of our business and we look to keep adding new features and further enhance speeds as we move through 2010.”

The company claims it has not lost a significant amount of business to its most-feared potential competitor, Verizon’s fiber to the home network FiOS.  But the company is installing DOCSIS 3 upgrades to increase speeds in markets where FiOS competes for broadband customers.  Cable industry experts suggest broadband is becoming a mature industry, and growth from customers new to the high speed experience are fewer in number.  A strong percentage of new Time Warner Cable broadband customers come from landline customers defecting from relatively slower DSL service from phone companies.

As interest in high bandwidth applications like streaming video increase, DSL service can prove a frustrating experience for those stuck with lower speeds.  Despite claims by some phone companies that consumers don’t care about broadband speed, Time Warner Cable will offer increased speed tiers and upgrades in most of its competitive markets in 2010 based on the assumption many customers do.

The considerable annoyance among subscribers facing rate increases from Time Warner Cable notwithstanding, the Wall Street press is celebrating the company’s increased earnings power for 2010, with the stock now being rated as a “compelling bet” by Barron’s.

Despite producing “copious amounts of cash,” Time Warner Cable stock is rated underpriced, and set to move higher in the new year as the company improves its earnings with price increases for its 14.6 million subscribers nationwide.

Price increases could help to power a sharp recovery in Time Warner Cable’s earnings, which probably slumped 15% in 2009, to $1.1 billion, or $3.03 a share. This year, net income could rise 21%, to $1.3 billion, or $3.60 a share, due to higher revenue and improving operating margins. The company earned $1.2 billion, or $3.57 a share, in 2008, on revenue of $17 billion.

Subscriber growth has slowed at Time Warner and other cable concerns, mainly because of the housing recession. The company lost 84,000 basic-video subscribers in last year’s third quarter, reducing the total to just under 13 million, and analysts see basic subs dropping 2.5% this year, to around 12.5 million. Still, revenue rose 3.6% in the third quarter, to $4.5 billion, putting Time Warner Cable on track to generate $18 billion of revenue for the full year, and $19 billion in 2010. Analysts expect some recovery in advertising revenue, and additional growth from the further penetration of bundled residential high-speed data and digital phone products.

Barron’s points out Time Warner Cable’s capital spending has continued to decline dramatically, falling 13 percent in the third quarter.  The company had free cash flow of $465 million in the period.

Despite the company’s falling broadband costs, falling capital spending, and increasing prices, some Time Warner Cable executives still approve of taking earnings to an even higher level with Internet Overcharging schemes that would change the “pricing model” for broadband service.  Despite company claims such changes would save customers’ money, relentless price increases in many communities — even higher for those on Road Runner’s economy tiers, prove otherwise.

What is Time Warner Cable doing with all of the money?  Paying down some debt and returning cash to shareholders, perhaps via an ordinary dividend or share buyback, according to Barron’s.

What allows for a company to increase pricing on broadband service and subject customers to a potential Internet Overcharging scheme down the road?

“At a time when demand for broadband is going through the roof, Time Warner is the only game in town in a lot of its footprint,” says Craig Moffett, an analyst at Bernstein Research.

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.”

OnLive puts the processing power to render and play games on their end, and streams the result to you over your broadband connection (click to enlarge)

OnLive, the cloud-based videogame streaming service, was on display during a live dem0 of the service at Columbia University.  The service, which literally streams game play across fast broadband networks, could seriously challenge the videogame console marketplace.  Instead of using an expensive piece of hardware at home to play videogames such as w88, OnLive puts the hardware at their end and streams the results to any computer or television.  If it works, it means consumers won’t need the highest performance videocards or latest new CPU.  They’ll just need a fast broadband connection to let OnLive’s own servers do all of the processing.

The founder and CEO of OnLive, Steve Perlman, shows considerable enthusiasm for the concept, and several major investors including AT&T and Time Warner have backed the venture, which could help guarantee smooth passage on their broadband networks.

Still, a product that requires a minimum of a 5Mbps broadband connection for HD-quality streamed game play could consume an enormous amount of data — up to 2.25 GB per hour of gaming.  Although cable and fiber-based broadband connections will suffice, many DSL customers don’t have service fast enough to support OnLive.  Among those that do, any usage caps or allowances will significantly reduce the value of the service to potential subscribers.  Frontier Communications’ infamous 5GB “acceptable use” per month, for instance, would allow just over two hours of use per month, assuming you did nothing else with your DSL service.

Even Comcast’s 250GB usage allowance cuts game play to a little over 100 hours per month.  That’s a ludicrous amount of gaming for most of us, but not for some gaming addicts who may have tried games like 핑카지노.  Besides, it also assumes you don’t use your Comcast broadband service to watch video or other bandwidth-intensive online services.

Time Warner Cable’s proposed 40GB usage limit, shelved indefinitely in April after consumer protests, would permit less than an hour of play per day, assuming your Road Runner service was for nothing but OnLive.

In short, assuming OnLive works as promoted, its biggest threat to success will come from external factors mostly outside of its control — namely cap-happy ISPs that could quickly make streamed cloud computing untenable for all but the wealthiest among us.

What could OnLive do to reduce its risk from caps?  Partner with ISPs in a non-Net Neutral broadband world, of course.  That investment from AT&T, for example, could theoretically pave the way for AT&T to exempt OnLive from any usage limits that come from its own Internet Overcharging experiments in Beaumont, Texas and Reno, Nevada.  That would be a clear violation of Net Neutrality, if enacted into law.

Scenarios like this should drive consumers to support Net Neutrality policies.  ISPs forming “preferred partnerships” with innovative services like OnLive might seem consumer-friendly at first, but not in the long-term because it spells the death of would-be “non-preferred” start-ups, and helps pave the way even faster to Internet Overcharging schemes letting broadband providers pick the winners and losers of the future.

[flv width=”484″ height=”292″]http://www.phillipdampier.com/video/OnLive Columbia University Demo.flv[/flv]

OnLive founder and CEO Steve Perlman demonstrates OnLive and talks about cloud-based, streaming game play at this gathering at Columbia University in New York. (49 minutes)
(If stream stops for buffering, pause it for a few minutes to let a significant amount of the file pre-load, which should reduce re-buffering problems.)

Leveraging their investment in Clearwire, a WiMax provider, Time Warner Cable on Monday announced it will officially launch the Time Warner Cable 4G Mobile Network in Dallas on December 1st. The first product to launch is Road Runner Mobile, which will essentially resell access to Clearwire for as low as $44.99 per month for Time Warner Cable customers. North Texas customers using the service can expect speeds up to 6Mbps.

“With Time Warner Cable’s 4G Mobile Network, we now offer the fastest mobile data service available,” said Barry Rosenblum, executive vice president of the Texas Region for Time Warner Cable. “We’re extending our reach outside of the home and giving our customers the convenience of mobility and the speed of 4G. Road Runner Mobile lets customers take their favorite Internet service wherever they go. This is an important part of our strategy to give our customers any content, on any device, anytime, anywhere.”

The launch literally echoes that planned in the Triad region of North Carolina, right down to the nearly word for word identical introductory quotes.

Customers face equipment fees, contracts typically extending two years, and usage caps on lower tier service.  Actual speeds vary considerably.  Consumers using Clearwire’s WiMax service have experienced problems using the service indoors, particularly in homes equipped with energy efficient windows.  It seems window coatings can block or reduce reception in certain cases.

On December 9, Time Warner Cable will host an exclusive event in Dallas at the House of Blues in celebration of the launch of Road Runner Mobile. The “Life in the 4G Fast Lane” event will feature an appearance by “The Fastest Woman in the World,” Indy Race Car superstar Danica Patrick. Along with being able to sample the service, guests will enjoy musical performances by Eagles tribute band, 7 Bridges, and Dallas’ own The King Bucks. A limited number of tickets will be available to the public leading up to the event.

North Texas residents can register to win $4,000 in the Life in the 4G Fast Lane Sweepstakes. One grand prize of $4,000 plus an HP Mini 311 Notebook will be awarded on December 9. An additional ten (10) HP Mini 311 Notebooks will be given away to 10 first prize winners.

Residents of Austin and San Antonio are expected to get access to Road Runner Mobile in early 2010.

Time Warner Cable also announced it would utilize the services of Brightpoint, a fulfillment house, to support the launch of Road Runner Mobile nationwide including wireless data card, accessory and collateral fulfillment and returns, triage and repairs.

Customers ordering products for Road Runner Mobile are likely to receive them shipped directly from Brightpoint, which will also manage customer returns and repairs.  Brightpoint is also known for supporting rebate programs and supplying retail locations with products from a variety of wireless equipment manufacturers.