Mediacom is announcing broad price increases for many of its customers scheduled to take effect on Dec. 15.  Most cable-TV subscribers will pay $2-3 more a month for basic cable, an additional $2 a month for Cinemax and Showtime, and $2 extra a month for “Digital Plus” cable service.  To add insult, the paperless bill credit that used to knock $1 off your bill if you chose not to receive a mailed billing statement is also being eliminated.

Lee Grassley, Mediacom’s chief lobbyist, delivered the company line about the rate increase in letters mailed to subscribers.  In essence, he blamed everyone but Mediacom for the rate hikes, and in poetic language one normally doesn’t get from a cable company rate increase notification:

As our nation struggles to pull itself out of what has been called the Great Recession, we recognize that these are challenging times for the hardworking men and women living in the communities that we serve.

[…] Over the past few years, many broadcasters have used their monopoly powers to demand 100%, 200% and even 300% rate increases during contract negotiations.  This has driven up cable and satellite rates and forced American consumers to pay billions of dollars for “free” over-the-air television.

The problems with sports programming are equally alarming.  One look at the skyrocketing rights fees announced with recent deals and it is easy to see that the marketplace for live televised sports is out of control.

[…] Contrary to public perception, cable companies are reluctant to raise video prices because when we do, we lose subscribers.  Mediacom does not make money when we raise video rates, since we remit virtually every penny of the increase on to programmers.  In fact, over the last three years, our programming cost increases were more than double our video revenue increases.

Since the programming community has been unwilling to exercise even the slightest measure of self-restraint when it comes to reigning in their spending or increasing their price demands, Mediacom has taken the fight to Washington.

Mediacom as new-found-friend fighting for lower cable rates comes across as ironic, at best, to Stop the Cap! reader Noel, who lives in Mediacom’s Iowa footprint.

“This is the same cable company who pocketed rate increases annually for as long as I’ve been a subscriber, and if they can’t raise the price of the television service, they’ll just make it up on the broadband side,” Noel writes.  “They have their nerve complaining about monopolies.”

Noel points out the local station retransmission consent fees are a more recent phenomenon, and Mediacom rate increases in prior years were the same or higher.

“I think they are realizing there is an absolute maximum people in Iowa can afford for cable, and years of rate increases have allowed all of the players to assume they can slice a bigger piece from that pie for themselves, and we’re tapped out,” Noel adds.

Noel called Mediacom and threatened to cancel service and received a nice consolation price: customer retention pricing normally reserved for new customers.

“I have a year reprieve, but rest assured I will start dropping things after the deal expires at these prices.”

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KCCI Des Moines Mediacom Rate Increases 11-28-11.flv[/flv]

KCCI in Des Moines covers Mediacom’s rate increases and the reaction from local residents who will have to pay more for cable service.  (2 minutes)

Esteves

Time Warner Cable wants to introduce usage-based broadband pricing for its residential customers, according to the company’s chief financial officer.

Irene Esteves told investors attending a UBS media investor conference the cable company sees broadband usage as a “complement to our TV offering,” but reassured Wall Street Time Warner has a “wonderful hedge” against the cord-cutting customer: usage-based pricing.

Esteves believes usage-based pricing for Time Warner Cable broadband will become a reality sooner or later.  Charging “heavy users” more would already be familiar to consumers used to paying higher prices for heavy use of other services, and she claimed light users would have the option of paying less.

But despite favorable reception to the idea of usage pricing by Wall Street, Esteves acknowledged the company’s past experiments in usage pricing didn’t go as planned, and she suggested the company will introduce usage pricing “the right way rather than quickly.”

Esteves’ view of broadband pricing echoes that of Time Warner Cable CEO Glenn Britt, who in 2009 approved an experimental pricing scheme that raised the price for flat-rate broadband to a whopping $150 a month.  The plan was shelved by Britt less than two weeks after it was announced because of consumer backlash and political pressure.

Time Warner Cable was the loudest proponent of usage pricing at the investor event.  Comcast CFO Michael Angelakis told the same conference while the company wasn’t opposed to the concept of charging customers for usage, he saw no immediate need to “nickel and dime customers” for broadband service.

Critics of usage pricing point to the enormous profits cable companies earn from existing flat-rate broadband service.  One Wall Street analyst says cable operators already collect a 95% profit margin on unlimited service, and Comcast pays costs of around $8 a month for broadband it sells for $40-50.

Esteves’ comments come the closest yet to admitting what Internet Overcharging critics have claimed all along — usage-limiting pricing schemes are about protecting revenue from cable television packages, and boosting profits that have waned on the television side of the business.  In the 2009 experiment, light users would have faced usage limits as little as 1GB per month, with a steep overlimit penalty, so critics doubt light users would realize any significant savings, and “heavy users” would face overlimit penalties that represent almost pure profit for the cable operator.

Time Warner Cable’s progression towards all-digital cable continues to spread across Maine as customers in Albion, Augusta, Belgrade, Benton, China, Clinton, Farmingdale, Gardiner, Hallowell, Litchfield, Manchester, Monmouth, Mount Vernon, North Vassalboro, Readfield, Richmond, Rome, Sidney, Vassalboro, West Gardiner and Winthrop lost many of their analog channels last week.

But customers losing AMC, Animal Planet, Cartoon Network, CKSH, CHLT, CNBC, E!, EWTN, GAC, Hallmark Channel, HGTV, History, HSN, INSP, NECN, Ovation, QVC, SyFy, Shop NBC, TCM, TNT, and USA also provoked the loss of something else: patience.

“Cable TV is the only service I pay for that increases my bill and frustration at the same time,” says Augusta Stop the Cap! reader Jeff E. Smith.  “The digital adapter Time Warner sent me was defective right out of the box, and two of my neighbors were also sent defective units that never powered on,” Smith writes.

Time Warner Cable is dramatically reducing the analog cable lineup to make additional room for new digital HD channels and faster broadband speeds.  The company is supplying palm-sized digital adapters for subscribers who don’t have a digital set top box on every television.  Although free until 2014, the boxes will carry a monthly fee of $0.99 each after that.

“The upgrade gives them the chance to cram on more channels we don’t want and more expensive broadband, and yet we have to eventually pay for the equipment,” Smith says. “And it doesn’t even work right.”

Smith’s neighbors have discovered patience-testing lines at some Augusta-area cable stores as customers rushed to obtain the equipment they assumed they didn’t need.

“The neighbor’s mother-in-law doesn’t understand how to use OnStar in her car, so it was no surprise she found out she needed the equipment when most of her favorite channels disappeared,” he adds.  “Time Warner really overestimated the level of understanding customers would have about this after buying new digital-TV’s a few years ago.”

Jim has several suggestions for Time Warner to adopt before the digital upgrade begins its progression across the country:

1. The equipment should be free of charge and included with your regular monthly service.  You can’t realistically expect to buy Time Warner Cable service without a box for every set after the digital conversion is complete, so just include the equipment;
2. A better and less intrusive way to manage this would be to install a single digital converter on the outside of the home or in a closet which could provide analog service to every TV not already equipped with a set top box.  That would mean no annoying box on every set in the home and would probably cost less (in time, money, and aggravation);
3. People assume they are ready for digital cable because they bought digital-ready TV’s after analog television service ceased. Most customers will not read generic letters carefully.  It would be better to send people customized letters telling them they specifically will need the equipment because records indicate additional outlets were installed in the home without corresponding cable set top boxes attached to them.  What are the chances customers are using CableCARD units these days?  Chances are, they’ll need the DTA adapters, so make this clearer.
4. Don’t you dare put customers through this, increase broadband speeds, and then slap usage caps or usage billing on us!

Watch these shows online, if you want to risk some uninvited guests.

There is nothing new about news outlets promoting tips and tricks to lower your monthly cable bill.  We publish similar stories ourselves here on Stop the Cap!  But some newspapers take things further, openly advocating you disconnect your cable service for good and watch everything online.  This week, we found one even willing to publish website addresses that skirt copyright laws and take online video underground.

The State Press encourages Arizona State students to thumb their noses at Cox Communications’ latest offer — cable television for $29.99 a month, good for six months (regular price $70).  Instead, they encourage, take your viewing online to Netflix and Hulu — the former for movies, the latter for television series.  But with cable companies and Hollywood studios conspiring to tackle the growing problem of cord-cutting, new restrictions are finding their way to fans of both websites, including waiting periods, limited series runs, and higher subscription fees.  This means war to the State Press:

There is a dark side to these two corporate entities, however. In their attempt to slowly weasel their way into your pockets a bit more, Hulu has gone Plus and Netflix has divided their packages, limiting your viewing. Hulu has seemingly said, “You can pay a little more to watch it the day after, right? No? Well, then I guess you’re waiting five more days for that recent episode,” while Netflix has exclaimed, “Unlimited to our choosing! You’re going to have to pay up if you want every movie out there.” So we must retaliate and go a little dark ourselves.

The author advises readers there is a way around the roadblocks — visiting a website already shut down once by copyright enforcement action (but has since resurfaced with a Chinese web address), providing a list of links to other websites that host copyright-infringing videos you can’t watch on Hulu or Netflix.

While the author of the State Press story may not realize it, a brief test visit to the “pirate-streamed site” opened the door to some nefarious extras.  With the help of Malwarebytes’ Anti-Malware, we stopped unwanted browser toolbars, various intrusion attempts, and even a few pieces of actual malware that wanted in on the party.  Without the most robust security software, visits to websites with underground video content can wreak havoc, and there are not that many TV shows worth watching to make that headache worthwhile.

The website owner disclaims responsibility from just about everything:

“[This website] does not host, provide, archive, store, or distribute media of any kind, and acts merely as an index (or directory) of media posted by other webmasters on the internet, which is completely outside of our control. Whereas we do not filter such references, we cannot and do not attempt to control, censor, or block any indexed material that may be considered offensive, abusive, libellous, obnoxious, inaccurate, deceptive, unlawful or otherwise distressing neither do we accept responsibility for this content or the consequences of such content being made available.”

We encourage you to exercise caution visiting websites that are willing to skirt copyright laws.  Up-to-date antivirus and spyware detection software when visiting is a must at all times.  Many of these sites stay in business selling ad space to anyone, and those ads can come with unwanted malware that can find its way onto your computer long after the viewing is over.  Be careful.

Tiny Ringgold Telephone, which serves 122 square miles of northwestern Georgia, has pulled the plug on the company’s own video IPTV package and is encouraging customers to watch all of their television shows online or through a satellite TV package offered by DISH Network.

Ringgold was in the IPTV business long before AT&T began offering U-verse, having launched video over phone lines back in 2003.  The phone company invested heavily in producing local programming for their customers, including local sports, issues in the news, health and fitness, and educational shows for and about the region.  The hope was that the phone company would give cable subscribers enough reasons to cut the cable cord for good.  They’ve invested heavily to remain on the cutting edge, something uncommon for traditional wireline phone companies.

In 2000, Ringgold announced they would deliver a High Speed Internet connection to every single customer who wanted it throughout their entire service area.  The company has continuously upgraded their facilities, offering traditional copper wire customers bonded DSL service up to 25Mbps and their growing number of fiber customers speeds up to 50/50Mbps.  That’s an enormous difference over other nearby providers, including AT&T, Frontier Communications, and CenturyLink which deliver customers 1-3Mbps DSL with no fiber in sight.  The other alternative is service from Charter Cable, among the worst-rated cable companies in the country.

But that level of innovation isn’t unusual for Ringgold, which has outpaced traditional Bell System phone companies since it was first founded in 1912 with just eight telephone lines.

In 1950, Ringgold was among the first independent companies in Georgia to switch from manual to dial telephones.  By the 1990s, Ringgold realized the future was in fiber optics, and planned to replace a significant amount of copper wiring that had been on phone poles for decades.  The phone company thought it had mastered the ultimate triple-play fiber-optics package of voice, broadband, and television, until their small size got in the way.

Ringgold discovered that “bigger is better” in the pay television business.  The largest cable operators enjoy the best bargaining power for just about everything.  Companies like Comcast and Time Warner Cable can use their enormous customer base to negotiate cut rate pricing on programming and equipment and stand-up to greedy programmers that demand excessive payments for programming.  Ringgold discovered they can’t.

Light Reading highlighted the challenges Phil Erli, executive vice president of Ringgold, spoke about recently:

• Ringgold could not cut a deal with equipment vendors that would deliver DVR and HD functionality at a level above that of the local cable company.  Large set top box manufacturers deal in volume, and smaller players like Ringgold are often left with inferior technology at prices higher than large cable companies pay for the most advanced equipment available.  Erli tried to innovate a new approach using Microsoft’s Mediaroom, but discovered that required a large number of servers too costly for a small phone company to consider;
• Programming costs were completely out of line.  Volume discounting delivers enormous savings, if you are a large-sized national provider.  Large cable companies pay a fraction of the prices independent providers pay for programming, and local broadcast stations held the company hostage on retransmission consent agreements.  Erli noted the local NBC station, presumably in nearby Chattanooga, demanded an incredible $5.25 a month per subscriber.  That rate was so high, it would turn the company’s video venture unprofitable.  Even worse, Erli relates, “these weren’t negotiations, they told me what we would pay.”  Erli realized that just one programmer could make or break Ringgold’s video service profits;
• The company’s video lineup, due to wholesale costs, was inferior to that offered by the local cable company.

Ringgold's broadband network is superior to anything the competition offers in northwestern Georgia.

With these challenges, the phone company decided enough was enough and dropped its video package, redirecting customers to DISH Network for satellite-TV, and more recently to online Internet video as an alternative to pay television.

Something you won't likely see from your cable company.

While most broadband providers treat online video as a parasite, Ringgold sees it as the ultimate business opportunity to reinvent themselves through their broadband service — selling super high speed access to content that someone else provides and has to worry about.

They’re considering a new customer promotion that includes a Roku, Apple TV, or Clearleap-powered set-top box to integrate broadband connections with television sets.  The company is even educating customers about the growing number of programs available for free (or with a low cost subscription) online with an interactive web tool.

Ringgold’s new solution for online video also includes some small revenge on high programming costs, giving subscribers an integrated over-the-air antenna system that can pick up nearly a dozen HD channels, including that NBC station, for free.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Internet TV.flv[/flv]

Here is something you don’t see every day: Ringgold Telephone encourages its customers to get online and watch TV shows for free.  (1 minute)