Next generation cable or a spray-on solution to a really bad quarter?

Time Warner Cable has a plan for multi-gigabit broadband speeds over a state of the art network that, for the first time, might include fiber to the home service.

TWC Max is Time Warner Cable’s code name for selected markets where customers will be given first class treatment and provided what incoming CEO Rob Marcus calls “best-in-class reliability and service.”

Marcus made it clear in a conference call to investors this morning that TWC Max will only be available in specially chosen markets, most likely those facing intense competition from Google Fiber (Austin, Kansas City), Verizon FiOS (New York, parts of Dallas, etc.) or upgraded AT&T U-verse.

TWC Max might also be offered in cities where community-owned fiber-to-the-home providers best TWC’s broadband speeds and prices. North Carolina, in particular, would be a logical choice as Time Warner Cable recently acquired DukeNet, a major commercial fiber broadband provider headquarted in Charlotte, also a major hub for Time Warner Cable’s data services. Wilson, Salisbury, Mooresville, Davidson and Cornelius are all served by publicly-owned broadband providers.

Beginning next year and over the next several years, those chosen will get major broadband speed upgrades — up to several gigabits, totally new customer equipment, and an all-digital experience.

“We will replace modems with state-of-the-art DOCSIS 3 modems and advanced wireless gateways, so we can meaningfully increase broadband speeds,” said Marcus. “And by the way, we’re not talking about tweaks here but rather quantum changes to our speed tiers. We’ll also replace standard definition and older HD set-top boxes and roll out new DVRs, better user interfaces and more advanced versions of our TWC TV apps to fundamentally improve the video experience.”

If the competition is DSL, you may have a really long wait to be considered a TWC Max city.

Marcus added that in some mixed business/residential areas, fiber to the home service is increasingly possible because of declining costs and pre-existing fiber infrastructure already serving commercial customers and cell towers.

But Marcus was quick to stress that his philosophy about upgrades is to provide them in focused markets, not share them with every city where Time Warner Cable provides service.

“The goal here is, really, to fundamentally change the customer experience in a given market, said Marcus. “So rather than spread our efforts like peanut butter throughout the footprint, I’m very anxious to deliver a complete experience.”

“That means not only going all-digital but also ensuring that we have state-of-the-art modems in every customer’s home, ensuring that they have the best video and that the overall experience is really optimal,” Marcus added.

“So we’re going to concentrate market by market rather than take individual components and run them through the entire footprint.”

So what are the chances your city will be designated a TWC Max target area?

After reviewing the transcript for this morning’s conference call,  Stop the Cap! has created this handy-dandy, simple to use guide:

• If your community has or was chosen for Google Fiber: A VIRTUAL CERTAINTY!
• If your community is served by Verizon FiOS or AT&T’s Next Generation U-verse: EXCELLENT
• If your community has a fiber to the home provider competing with Time Warner Cable: VERY GOOD
• If your community is served by copper-based DSL from the phone company with no prospect of getting U-verse or FiOS: WHEN PIGS FLY!

Time Warner Cable believes it has room to raise broadband prices and get away with it without much customer backlash.

The cable company’s chief financial officer, Arthur Minson, raised the prospect of more price hikes at Tuesday’s Goldman Sachs 22nd Annual Communacopia Conference.

“Look, the modem [fee] was really just a form of a High Speed Data rate increase,” Minson said, referring to the company’s introduction of a $4 cable modem rental fee last fall and a later increase to around $6 a month introduced this summer. “I do see an ability for us to continue to have ARPU increases on that product.”

“ARPU” refers to the Average Revenue Per User — a term that reflects what companies earn in revenue divided by the number of customers. In most cases, an ARPU increase comes from price hikes or customers subscribing to additional value-added services.

Minson

Minson suggested that the company’s gradual rollout of optional usage-based pricing tiers provides an alternative for price-sensitive customers that cannot afford rate increases on flat-rate service or are seeking a price reduction.

“I think we’re very pleased with where we are in the usage-based pricing front and I think that’s something we will continue,” Minson concluded. “I think over time it will be interesting to see how many people ultimately take the usage-based pricing, or will people say I just want to have unlimited and I think the market will speak on that.”

Time Warner Cable has focused investment on several fronts this year, and plans continued investments to expand offerings in these key areas:

1. Business broadband expansion. Some of the company’s biggest investments target wiring businesses and office parks for cable service, primarily to expand commercial broadband. “Commercial services is success-based capital that we see real meaningful returns on,” Minson said.
2. Wi-Fi expansion. Time Warner Cable will continue expanding Wi-Fi hotspots in select cities. Customers with Standard (15/1Mbps) service or above can use the service for free. Minson said that the company was very happy to offer customers subscribed to unlimited use tiers free access to Wi-Fi. Not so for those choosing usage-based pricing plans. They will have to upgrade to an unlimited plan to get free access. “That’s a real incentive to drive people into the higher tiers,” Minson noted.
3. DOCSIS 3.1. Time Warner plans to adopt and invest in DOCSIS 3.1 cable modem technology when it is officially released. DOCSIS 3.1 will offer more efficient broadband transport and will let companies offer even faster speeds. Minson noted that broadband is increasingly the company’s anchor product, so it will continue investments accordingly.

Customers looking for aggressive pricing won’t find much at Time Warner Cable. Minson noted the company will continue its year-long pullback on low-priced promotions.

“We have a $79 bundle out in the marketplace and you would say okay, that sounds similar to the offer in the marketplace last year,” Minson said. “It may be similar but in terms of what you get for that $79 it is very different from what we gave a year ago and what we have now is the ability to meaningfully up sell the customers from the beacon price.”

A year ago, Time Warner Cable didn’t have a modem rental fee and typically bundled its Standard tier Internet service in its promotional packages. A traditional triple-play package of phone, cable TV and Internet service starts at $89 today, but only includes 3Mbps broadband, doesn’t bundle DVR service, and doesn’t include a mandatory set-top box which now costs a minimum of $8.99 a month each. Combining the modem fee with the mandatory box charge raises the promotional price to $104.97 a month.

• Upgrading to Standard 15/1Mbps service costs an extra $10 a month.
• Adding a DVR? That costs an additional $21.94 a month.
• The “whole house” DVR package is now priced at $37.47 a month.
• Time Warner Cable has also recently increased the price of premium movie channels to a uniform $15.95 each for HBO, Cinemax, Showtime, and Starz.

Taking into account these popular upsold add-ons, the promotional price of $79-89 might be seen as bait and switch by some customers. The true cost for most choosing a triple play package including cable TV with DVR service, one set-top box, a Time Warner-supplied cable modem, and a speed upgrade to 15/1Mbps service is $127.92 a month before taxes and fees.

Customers unhappy with their cable bill who call to complain are now routed to specially trained retention operators, Minson said.

“We’ve taken about a 1,000 dedicated employees and focused them on retention and even within those centers there are areas of expertise,” Minson said. “For our Spanish language customers we have retention centers set-up to help them when they call in. For people who are coming off a promotional offer, we have dedicated reps who can deal with that group of customers. So it’s having a deeper set of expertise in those areas and the returns so far are well within our expectations and we are really pleased with how it’s going.”

Verizon’s moratorium on further expansion of its fiber to the home service will continue for “the next couple of years.”

Verizon FiOS won’t be coming soon to a home near you, unless that home is inside a community with a standing agreement with the phone company.

Verizon CEO Lowell McAdam made it clear to attendees at Tuesday’s Goldman Sachs 22^nd Annual Communacopia Conference his priority continues to be investing in the company’s highly profitable wireless business, while the company’s wired infrastructure is being targeted for more cost cutting, especially in areas designated to see existing copper infrastructure decommissioned. As for expanding FiOS into new communities, McAdam said he instead preferred to concentrate on improving market share and profits for the next few years in areas already getting the fiber optic service.

McAdam noted John Stratton, president of Verizon Enterprise Solutions, has been hard at work pruning Verizon’s wireline products and services targeted to business and government customers.

“I think [he] killed about 2,000 products this year, and we have taken 350 systems offline last year,” McAdam noted. “I think we are already at 250 this year. That sort of discipline gives you the ability to streamline your infrastructure.”

For residential customers, Verizon has two sets of offerings: one for customers served by FiOS fiber optics, the other for customers unlikely to see fiber upgrades indefinitely.

Inside Existing FiOS Service Areas

“We are doing some major technology shifts within FiOS to make it more efficient,” McAdam said. “We’re going to concentrate there for the next couple of years.”

McAdam’s signals to Wall Street were loud and clear: no more FiOS expansion into new communities for now.

McAdam

Instead, Verizon will focus on improving existing service in several key areas:

• Verizon has almost two million optical terminals that McAdam says were active at one point and are now sitting idle, suggesting FiOS has won and lost nearly two million customers since launching, either because the customer switched providers or moved away. McAdam said he wants to improve Verizon FiOS’ product set enough to attract those customers back. He noted with the terminals and cables already in place, the capital costs to win back a former customer are near zero;
• Verizon is introducing a new terminal this fall. Verizon’s FiOS Media Server “eliminates the requirement for coax, once you get into the optical terminal in the basement or wherever in the house,” McAdam said. “That slashes the installation time, and therefore makes the product a lot more profitable for us going forward. It eliminates set-top boxes, it is all IP-based going forward.”
• Verizon will continue to expand Verizon FiOS, particularly in New York City where it has a commitment to offer service.

Verizon FiOS has managed to build a much larger market share than its nearest neighbor, AT&T U-verse. McAdam claimed Verizon FiOS has achieved a 39 percent market share in broadband and around 34 percent on its television service so far. McAdam’s goal is to boost that to 45 percent. In areas of Texas where Verizon first introduced its FiOS fiber optic service, the company already has a penetration rate above 50 percent for broadband and 50 percent for television, demonstrating room to grow market share. AT&T’s U-verse TV penetration rate is 20.1 percent.

For Those Unserved by FiOS

Verizon’s 4G LTE Broadband Router with Voice

Except for Fire Island, N.Y., there are no significant announcements of FiOS expansion. Instead, Verizon has focused on investing to improve its wireless 4G LTE cell networks with the hope existing landline customers will consider switching to higher-profit wireless service. An attempted trial of Verizon Voice Link, intended to be an entry-level wireless replacement of landline service, failed badly on Fire Island due to an avalanche of complaints about poor quality reception, dropped and incomplete calls, and lack of support for data.

Now Verizon is back with a new offering, its 4G LTE Broadband Router with Voice ($49.99 2-yr contract with $175 early termination fee/$199.99 month-to-month).

“Securely connect wired and wireless devices to the 4G LTE network, and connect your landline phone to make calls,” Verizon’s website says. “Combine voice and data on a Share Everything Plan for added savings.”

The device can function as both a wireless landline replacement and router for data. The unit includes three Ethernet ports and Wi-Fi to share your connection. A landline phone or cordless phone base station can be plugged in as well.

Verizon charges an extra $20 a month for Home Service Monthly Line Access on Share Everything Plans, which covers your telephone service. Customers get unlimited local, long distance, call forwarding, call waiting, three-way calling, and voice mail. 911 is available, but Verizon disclaims any responsibility if you cannot reach an operator. The device also supports TTY-TTD calling.

Verizon claims users can expect 5-12Mbps downloading and 2-5Mbps uploading on Verizon’s 4G network, assuming there is solid coverage where you use the device. Usage caps apply. A backup battery keeps the service running for up to four hours of voice calling in the event of a power outage.

McAdam admitted the thing that keeps him up most at night are regulatory issues. He particularly called out Europe, which he believes is hostile for investment. But Europeans pay considerably less for wireless service than North Americans pay, and often have more choices due to competition and regulatory oversight.

“I think the beauty of the ’96 Telecom Act was that it was such a light touch on broadband and mobile,” said McAdam. “And that is — and I sit in Europe talking to investors all the time — that is the biggest difference between the U.S. and Europe.”

To head the FCC off from pursuing any additional regulatory oversight, McAdam claims he reluctantly approved Verizon’s lawsuit against the government on Net Neutrality.

“We have had to take some positions, frankly, that we didn’t want to take,” McAdam said of the lawsuit. “It opened the door for them to get into price regulation of broadband. And I think that is not their charter, and I think it would be a mistake for the U.S. economy and certainly the telecommunications ecosystem.”

[flv width=”488″ height=”300″]http://www.phillipdampier.com/video/Verizon 4G LTE Broadband Router with Voice 9-25-13.flv[/flv]

Verizon Wireless’ latest 4G LTE router supports wireless landline service and 4G data.  (1 minute)

TiVo Roamio DVR

The newest entry in the should-be-more-competitive world of Digital Video Recorders (DVRs) might have gotten five stars from reviewers willing to play down the device’s asking price, but the biggest hurdle of all isn’t its cost, it is the complexity of getting it to work properly with your cable provider.

TiVo’s new Roamio was designed to declutter your viewing experience. It’s a DVR that can record shows you missed, an online video device that can stream content from Netflix, Hulu Plus, Amazon Instant Video, Spotify, Pandora and YouTube right on your television, and perhaps most powerful of all — it will soon stream it all to you on any mobile device located anywhere there is an Internet connection.

That puts TiVo’s Roamio well ahead of the behind-the-times set-top boxes and DVRs rented out by the cable company. Customers have clamored for a device that can properly record scheduled programs and allow those recordings to be viewed anywhere the customer wants to watch. Comcast’s box doesn’t work that way. Neither do boxes from Time Warner Cable, Cox, Bright House, and the rest.

Cue the lawyers.

The reason these common sense portability features are not available on the box you rent in perpetuity from the cable company is that programmers won’t allow it and many pay television providers don’t consider it a priority. Time Warner Cable only recently filed a patent to deliver customer-recorded content to portable devices. The patent application is an exercise to placate litigious programmers that cannot sleep nights knowing someone is offering a service they failed to monetize for themselves through licensing agreements. Feel the legal fees piling up:

“Because of the increasing popularity of home networking, there is a growing need for a strategy that enables a user to perform authorized transfer of protected content, e.g., transferring content from an STT [set-top terminal] to a second device in a home network, and at the same time prevents unauthorized distribution of the protected content,” Time Warner writes in its patent application.

While TiVo is selling a device that allows consumers to record programming for private viewing purposes, a cable operator with deep pockets that only rents DVRs cannot do likewise.

The Roamio comes in three versions, none of which are compatible with satellite television services:

• Roamio Pro ($600): Six tuners allow customers to record up to six shows at one time and has storage capacity for 450 hours of HD programming. Includes built-in Wi-Fi. Stream TV to mobile iOS devices coming soon (as is Android support);
• Roamio Plus ($400): Same as above except storage capacity is 150 hours of HD programming;
  Roamio ($200): Four tuner basic version omits built-in streaming to mobile devices but can record four shows at once and store 75 hours of HD programming. A good choice for cord-cutters as it includes an over-the-air broadcast television antenna input.
• All Roamio devices require TiVo service, which costs $15 a month or $500 for a lifetime subscription. All boxes support external hard drives with an eSATA interface to backup or store more recordings. All Roamio devices support 1080p and Dolby Digital 5.1 sound.

This Comcast DVR is only available for rent.

In contrast, cable operator-provided DVR service can often add $20 a month to your cable bill… forever. But is there real value for money paying TiVo $15 a month (or a $500 payment for the life of the device) for “service” on top of hardware that can cost up to $600?

TiVo thinks so: “Once you bring together all your favorite shows, movies and music into one place, you’ll wonder how you ever lived without it.”

Unfortunately, getting there is one heck of a battle according to Bloomberg’s Rich Jaroslovsky, who got his hands on a test unit that simply refused to get along well with Comcast.

“The cable industry is standing in the way,” Jaroslovsky writes.

That may not be surprising, considering the lucrative business of renting DVR equipment to customers eager for time-shifting and commercial-skipping. The cable company’s concept of DVR service includes a set-top box, decoder, and recording unit into one, relatively simple integrated device.

TiVo’s persistent monthly “service fee” as well as a steep purchase price made marketing the cable company’s “no-purchase-required” DVR easy, and the cable industry quickly won the lion’s share of the DVR business. Another strong argument in favor of the cable company’s DVR is the lack of a complicated set up procedure to get competing devices to reliably work with the cable company’s set-top box.

Motorola’s M CableCARD

Thanks to Comcast and other cable companies, setting up Roamio managed to confound even a tech reporter like Jaroslovsky, and Comcast was not much help.

The Roamio requires a CableCARD, a plug-in card-sized version of the cable company’s set-top box, to unlock digital cable channels.

The CableCARD was Congress’ attempt in the 1996 Telecom Act to give consumers an option to avoid costly and unsightly set-top boxes. Originally envisioned as a plug-in device that would offer “cable-ready” service without a set-top box in future generations of televisions, the CableCARD never really took off. The cable industry opposed the devices and dragged its feet, preferring to support its own set-top boxes. The CableCARD that eventually did emerge was initially often difficult to obtain and had huge limitations, such as one-way-only access which meant no electronic program guide, no video-on-demand, and no access to anything that required two-way communications between the card and the cable company. Newer CableCARDs do offer two-way communications and support today’s advanced cable services.

The only place most cable operators mention the availability of the CableCARD in detail is in a federally mandated disclosure of pricing, services, and a consumer’s rights and responsibilities — usually provided in a rice-paper-thin, tiny-print leaflet included with your bill once a year, if you still get one in the mail.

Roamio is likely to frighten technophobes right from the start with this important notification:

CableCARDs are made by one of four manufacturers: Motorola, Scientific Atlanta/Cisco, NDS, or Conax. You need one multi-stream CableCARD (M-card). Single-stream CableCARDs (S-cards) are not compatible.

“That costs an extra $1.50 a month from Comcast, and in my case, required three trips to its nearest office because the first card didn’t work,” Jaroslovsky writes.

On the second trip, Comcast handed him two cards in the hope at least one would work, requiring one last trip to return the card that didn’t.

Time Warner Cable and certain other cable operators use Switched Digital Video, incompatible with the Roamio without a Digital Tuning Adapter, available from the cable company.

The second hurdle was to get Comcast to recognize and authorize that CableCARD. Comcast’s technical customer support staff was lacking. Jaroslovsky found his call bounced from department to department attempting to authorize the card and diagnose why it simply refused to work at first.

After finally overcoming those problems, Jaroslovsky discovered he was out of luck getting Roamio to stream premium movie channels like HBO and Cinemax. The encryption system Comcast supports prohibits streaming the movie networks outside of the home. The Slingbox works around the issue by bypassing the encryption system’s permission settings with extra cables between it and your cable box.

Time Warner Cable subscribers will need still another piece of equipment — a Tuning Adapter compatible with Switched Digital Video (SDV). To conserve bandwidth, cable companies like Time Warner limit certain digital channels being sent to each neighborhood unless someone is actively watching.

Before you can view or record a program on an SDV channel, your box must be able to send channel requests back to the cable headend. Roamio is a one-way device and cannot send the required channel requests. Cable providers who have deployed SDV technology will provide a Tuning Adapter to customers who have HD TiVo boxes. A Tuning Adapter is a set top box that provides two-way capabilities, so your box can request SDV channels. There are two Tuning Adapter brands: Motorola and Cisco. Motorola CableCARDs work with Motorola Tuning Adapters. Scientific Atlanta and NDS CableCARD work with Cisco Tuning Adapters. Without the Tuning Adapter, a Roamio user will find error messages on several digital channels indicating they are “temporarily unavailable.”

Other cable operators offer varying support for Roamio. Cablevision has been learning how to support the device along with customers. Prior customer experiences make it clear front-line service representatives are not going to be very helpful managing the technical process to properly configure, update, and authorize CableCARD technology for the new TiVo device, so prepare to have your call transferred to one or more representatives.

After all this, Jaroslovsky was finally watching his Comcast cable channels, able to access on-demand services, and found TiVo’s interface and program guide more satisfying than the one offered on Comcast’s DVR.

Roamio Plus and Pro have built-in support for video streaming away from home that will be fully enabled this fall.

Jaroslovsky found in-home streaming smooth and satisfying. Programs launched quickly and looked terrific on an iPad with Apple’s high-resolution Retina display, with none of the blockiness or stuttering sometimes associated with streaming video.

His review unit allowed him to test streamed programming outside of the home and video quality on the go was much more variable. The current software prohibits video streaming on AT&T’s 4G LTE network, a problem with a resolution now in the works. Public Wi-Fi hotspots often delivered poor performance, even when they could supply up to 2Mbps. Blurred pictures and pixel blocks often broke up the video on slow Internet connections. A faster connection supporting more than 10Mbps is capable of delivering a better viewing experience, especially if that connection comes without usage caps.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/TiVo Roamio DVR Demo Video 8-19-13.flv[/flv]

An introduction and demo of the TiVo Roamio DVR, produced by TiVo. (3 minutes)

This article was updated with a clarification about Tuning Adapters, required by some cable operators using Switched Digital Video. Thanks to reader Dave Hancock for helping clear things up.

Cox Communications has found a new way to target cord-cutters and sell television service to its broadband-only customers reluctant to sign up for traditional cable television.

flareWatch is a new IPTV service delivered over Cox’s broadband service. For $34.99 a month, customers participating in a market trial in Orange County, Calif. receive 97 channels.  About one-third are local over the air stations from the Los Angeles area, one-third top cable networks, and the rest a mixture of ethnic, home shopping, and public service networks. Expensive sports channels like ESPN are included, but most secondary cable networks typically found only on digital tiers are not. Premium movie channels like HBO are also not available.

The service is powered by Fanhattan’s IPTV set-top box. Cox offers up to three “Fan TV” devices to customers for $99.99 each.

flareWatch’s channel lineup in Orange County, Calif.

The service is only sold to customers with Preferred tier (or higher) broadband service and is being marketed to customers who have already turned down Cox cable television.

What Cox reserves for the fine print is an admission the use of the service counts against your monthly broadband usage allowance. Preferred customers are now capped at 250GB of usage per month. While occasional viewing may not put many customers over Cox’s usage caps, forgetting to switch off the Fan TV set-top box(es) when done watching certainly might. flareWatch also includes another usage eater — a cloud-based DVR service. Cox does not strictly enforce its usage caps and does not currently impose any overlimit fees, but could do so in the future.

[flv width=”480″ height=”292″]http://www.phillipdampier.com/video/Cox FlareWatch 7-13.mp4[/flv]

Cox’s brief promotional video introducing flareWatch. (1 minute)

Cool… usage capped.

Cox spokesman Todd Smith described the introduction of flareWatch as a “small trial,” and that “customer feedback will determine if we proceed with future plans.”

The service is clearly intended to target young adults that are turning down traditional cable television packages. Most of those are avid broadband subscribers, so introducing a “lite” cable television package could be a way Cox can boost the average revenue received from this type of customer. It may also serve as a retention tool when customers call to disconnect cable television service.

The MSO is selling flareWatch at five Cox Solutions stores in Irvine, Lake Forest, Rancho Santa Margarita, and Laguna Niguel.

Customers (and those who might be) can share their thoughts with Cox about flareWatch by e-mailing [email protected] and/or [email protected]. Stop the Cap! encourages readers to tell Cox to ditch its usage cap, and point out the current cap on your Cox broadband usage is a great reason not to even consider the service.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/The Verge Fan TV revealed is this the set-top box weve been waiting for 5-30-13.flv[/flv]

The Verge got a closer look at the technology powering flareWatch back in May. Fan TV could be among the first set-top boxes to achieve “cool” status. Unfortunately, technical innovation collides with old school cable company usage caps, which might deter a lot of Cox’s broadband customers from using the service.  (4 minutes)