Time Warner Cable is probably changing your channel lineup, or already has — removing several analog channels you used to receive as part of your Standard Service subscription and moving them to digital.

For customers with digital set top boxes, the change happens without most noticing the difference.  The formerly analog signal still shows up in the same place, only the transmission format has changed.

But customers without set top boxes will notice as channels disappear forever from their lineups, replaced with… nothing.  But their cable bills will remain exactly the same, despite the loss of channels.

For Stop the Cap! readers like Bev, today spelled the end of Animal Planet and The Travel Channel, among others.  For those in Rochester, N.Y., last night was the last chance to watch C-SPAN 2, The Travel Channel, TruTV, Discovery Health, and Shop NBC in analog.  In Buffalo, it was bye-bye to The Travel Channel, C-SPAN 2, TV Guide Channel, and CMT.

It some states, particularly Texas, Time Warner Cable is sticking it to Public Access, Educational, and Government channels, moving them all to digital.  In some cases, cable companies and AT&T U-verse have managed to forever bury these PEG channels in Digital Channel Siberia with channel numbers in the high hundreds or even thousands.  For many subscribers, a search and rescue team couldn’t find their new channel positions.

It’s all a part of a larger plan to slowly erode away analog channels in favor of digital service, which takes up far less bandwidth on Time Warner Cable systems.

As cable systems are nearing capacity and do not wish to spend millions to commit to further upgrades, switching out analog service in favor of digital can provide enormous new capacity to accommodate HD channels and forthcoming DOCSIS 3 cable modem service upgrades.

Unfortunately, these channel changes will irritate subscribers who do not want to pay for set top boxes and do not want them on their televisions.  If you are among this group of box-haters, Time Warner Cable will continue to slowly drop more and more of the channels you used to watch without bothering to reduce your bill for the channels you no longer get.  Eventually, virtually all analog channels will probably disappear, replaced by digital versions you will need a set top box to view.

In many areas of upstate New York, Time Warner is trying to placate angry subscribers by offering one set top box at no charge for one year.  But here comes the tricks and traps — Stop the Cap! confirmed with Time Warner Cable this evening that only those customers without any set top boxes in their home can take advantage of this free offer.  If you already have a box, you’ll continue to pay for it even though your neighbor is getting one free for a year.  After the year is up, pony up — each box costs $7.80 a month ($7.50 for the box, $0.30 for the remote).

At least Texans are getting a better deal from Time Warner Cable — Broadcast Basic subscribers will get their boxes free for five years, Standard Service customers will get them for one year.  But beware — if Time Warner needs to roll a truck to install your box in the San Antonio area, be prepared to cough up $39 for the service call.

For broadband customers, there is some good news.  Virtually all major Time Warner Cable service areas facing channel changes like this will receive DOCSIS 3 upgrades and the chance to obtain faster Internet service by the end of 2010, even those communities bypassed for earlier upgrades.  You will also get additional HD channels.  In western New York, for example, Time Warner Cable plans to add a large number of HD cable channels by mid-fall:

On or About September 2, 2010:
Style HD
BBC America HD

On or About September 9, 2010:
National Geographic Wild HD
MTV HD
Comedy Central HD
Nickelodeon HD
Spike HD

On or About September 16, 2010:
History Channel International HD
CMT HD
Hallmark HD
VH-1 HD
Cooking Channel HD
DIY HD
TWCSN HD
YNN HD

On or About October 1, 2010:
Womans Max HD
HBO Latino HD

Tim Conway's "Old Man" character from the Carol Burnett Show would be right at home using the Internet in these areas.

Nick Saint at the Business Insider has been sifting through some of the raw data released last week by the Federal Communications Commission regarding broadband service in the United States.  He’s managed to identify the 10 worst counties in America for broadband service based on statistics from 2008.  But two of those probably should have never been on the list.  More on that later.

Harrison County, Mississippi — A single pond in Harrison County is the only known habitat of the critically endangered dusky gopher frog.  It doesn’t have broadband, and neither do most of the residents of this beleaguered part of southern Mississippi.  The cities of Gulfport and Biloxi are in Harrison County, an area torn up by hurricanes from Camille to Katrina.  Now, the beaches are coated in BP oil.  Harrison County can’t get a break. Cable One and AT&T are the primary providers.  Cable One’s dreadful service only reaches well-populated areas and AT&T has taken its sweet time expanding DSL service in the area.

Imperial County, California — The nation’s lettuce basket, Imperial County communities live on a very low fiber-optic diet.  While the soil is rich for crops, the people who plant and harvest them are not.  El Centro, the biggest city, has some broadband available, but with the city having the nation’s highest unemployment rate (27.3 percent), many can’t afford it.  Once in farm country, cable doesn’t offer service and DSL is hard to come by.

Corson County, South Dakota — Representative of the pervasive problem of broadband unavailability on Native American lands, a large part of Corson County includes the Standing Rock Indian Reservation.  Saint notes the FCC found just 12.5 percent of Native Americans subscribe to broadband service, compared to 56 percent of the rest of us.

Ector County, Texas — Odessa’s hometown America-charm was put on display for all to see on NBC’s Friday Night Lights, which celebrated small town high school football.  The reality is less exciting.  Like Harrison County, Ector residents are stuck with Cable One, which loves Internet Overcharging schemes and spied on its Alabama broadband customers.  Good ole AT&T grudgingly provided DSL, if you could get it, until mid-2009 when U-verse finally started to show up.  Now large parts of the county outside of Odessa can’t get that either.

San Juan, Puerto Rico — Usually considered an afterthought by American telecommunications companies, Puerto Rico has long suffered with low quality service.  Caribbean Net News: “Puerto Rico’s broadband penetration rate is unacceptable, with less than 40% of households subscribing to broadband services”, said Carlo Marazzi, President of Critical Hub Networks. “While there are many factors at play, broadband in Puerto Rico is simply too expensive and too slow, when compared to the rest of the nation.  Broadband Internet service in Puerto Rico is 60% more expensive and 78% slower than the United States national median. In a report published this year by the Communication Workers of America (CWA) which ranked broadband speeds in the 50 states, Puerto Rico and the District of Columbia, Puerto Rico was ranked in last place (52nd place).

Jasper County, Missouri — Saint noted 18 percent of Jasper County lives below the poverty line, which is not exactly attractive to broadband investment.  Jasper County’s broadband needs are barely met by a cable provider, AT&T, and for some, an electric utility operating a Wireless ISP, providing service where cable and DSL don’t go.  For Jasper County residents, the challenge can be cost as much as access.

Appomattox County, Virginia — Every student known Appomattox was the last stand of Confederate leader Robert E. Lee during the Civil War.  Today, residents there are worked to their last nerve because they can’t easily obtain high speed Internet.  There is no DSL service from the phone company and only limited cable service.  But at least the county is trying.  Let’s let John Spencer, assistant county administrator, tell you in his own words what Appomattox County is doing to deliver broadband for its 14,000 residents:

Bristol Bay Borough, Alaska — The epitome of rural America, large swaths of Alaska are dependent on subsidies paid from the Universal Service Fund for basic telephone service.  Outside of large cities, cable television is a theory.  Telephone company DSL service and wireless are the predominate broadband technologies in rural, expansive Alaska.  For many areas, both are awful.  Bristol Bay Borough is known as the “Red Salmon Capital of the World,” if only because there are far more salmon than there are fishermen to catch them.  Internet access for many of the area’s 953 residents means a trip to the Martin Monsen Library, which offers free Wi-Fi for limited access. If you want Internet at home, it will cost you plenty:

In the financially difficult world of landline service, there has been one bright spot for Verizon — its state-of-the-art fiber optic service FiOS.  The cost of replacing obsolete copper phone with 21st century fiber optics has proved to be an expensive, but successful endeavor, at least in the eyes of customers.  Hated by Wall Street for its costs but loved by those who enjoy the service, FiOS has successfully proven traditional phone companies can earn money by providing the kinds of services consumers want, just so long as investors are willing to hang in there while the investment pays off over time.  But many investors aren’t.

Some of Verizon’s critics in the investment community complain the company is n0t earning enough from FiOS — in fact, for some critics who didn’t want Verizon spending money on a fiber-to-the-home network in the first place, financial returns provide the evidence used to claim they were right all along.

Despite the naysayers, revenue for Verizon FiOS is up by almost one-third each year, with average revenue per user now reaching $145 a month.  That’s well above the money Verizon earns on its legacy copper network phone customers keep leaving, especially outside of major cities where DSL service is spotty.  There is plenty of room for Verizon FiOS to grow in the limited communities it reaches.  Unfortunately, Verizon has stopped expanding its FiOS network to new communities, in part from pressure from investors who want to see cost cutting from the telecommunications giant.

Despite the positive reviews (subscription required) FiOS earns from consumer publications like Consumer Reports, Verizon slashed marketing and promotion expenses, resulting in second-quarter net additions for FiOS TV coming in at 174,000, compared with 300,000 a year earlier.

With Verizon now deploying service to communities on a reduced schedule, the results have been underwhelming according to the Wall Street Journal:

Verizon Communications may want to tweak the ad slogan for its TV and ultrafast Internet service to “This is FIOS. This is pretty small.”

Not catchy, but it would be more accurate than the current “This is Big” line.

[…]It eventually became clear that Verizon had slowed the time frame of the buildup, originally scheduled to be mostly done this year. Instead, it now expects to meet its target of passing 18 million homes with the network by 2012.

The slower timetable allows Verizon to trim capital spending this year. The problem is that FiOS’s expansion could stall with a less aggressive approach to growth. Already, Verizon has retreated from its target of adding one million subscribers a year, in favor of boosting penetration to 40% of homes passed. At June 30, its 3.2 million TV subscribers was about 20% of homes passed.

[…]And that can only reinforce questions about long-term returns on the $23 billion FIOS investment.

Evidence that Verizon is looking for more customers in its existing FiOS markets can be found in the news the company dropped its contract commitment for new customers.  The term contracts may have held some potential customers back out of fear of a lengthy term commitment with a $360 early cancellation fee.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Verizon FiOS goes contract free ad.flv[/flv]

Verizon started running this ad several weeks ago touting its new “no contract” FiOS service.  (15 seconds)

But a change in strategy isn’t enough for investors who demand immediate results through further cost cutting measures.

In Verizon’s second quarter earnings reports, company executives speak to this perception, proudly noting they have slashed costs through job-cutting and reduced spending on infrastructure and services.  Some of those services include DSL expansion for rural Verizon customers, many who are now left on hold waiting for broadband from Verizon indefinitely.

In many states, Verizon’s DSL expansion was incremental at best, with the company issuing press releases touting new service for literally hundreds of potential customers.

Verizon’s traditional landline business continues to lose customers year after year, and is abandoning millions of others through sell-off deals with companies like Frontier Communications.  Light Reading notes Verizon eliminated 11,000 jobs in its Mid-Atlantic and Eastern regions through early retirement incentive programs, an idea soon to spread to other regions, particularly California and Texas in the coming months.  This kind of cost cutting saves cash and allows companies to report positive financial results in quarterly reports.

According to John Killian, executive vice president and CFO of Verizon, the job cuts are just getting started.  As Verizon further alienates its non-FiOS landline customers who can find better service and lower prices elsewhere, the company expects “further force reductions” in the coming months.  Verizon is also slashing costs by selling off real estate, consolidating operations and vacating buildings.

The impact can become a vicious circle of deteriorating service, customer defections, and additional cost cutting, which starts the circle all over again.  In West Virginia, deteriorating Verizon phone lines reached the point of serious service outages whenever major storms hit the state.  Then Verizon simply sold off its network in West Virginia.  Those customers are now served by Frontier Communications.

Verizon previously declared the era of the landline dead, and is now seeking to prove its point, even as it demonstrates it can make money by spending money on FiOS, if only investors would give them the chance.

[flv width=”576″ height=”344″]http://www.phillipdampier.com/video/CNN Behind the scenes at Verizon Fios 3-15-10.flv[/flv]

CNN took a behind the scenes tour of Verizon’s FiOS network in New York City, from the central offices to individual apartments.  (4 minutes)

Connected Texas is well-connected -- to AT&T and Verizon, charge critics.

Texas Agriculture Commissioner Todd Staples in under fire for choosing Connected Nation, a telecom industry-financed mapping group, to draw broadband availability maps for Texas.  Connected Nation has close financial and organizational ties to the nation’s largest telecommunications companies, several of which have also contributed heavily to Staples re-election campaign.

Critics contend Staples should have never chosen Connected Nation for the project, especially when two of its biggest backers — AT&T and Verizon, both made substantial campaign contributions towards his re-election.  Staples also owns small amounts of stock in both companies, according to a report published yesterday in the Dallas Morning News.

The Texas mapping project has been condemned by smaller Internet service providers for leaving them off the map altogether while providing plenty of details about large phone and cable company offerings.  For consumers shopping for broadband service, who is on the map may have a considerable influence over which provider they pick.

“They hit the big guys,” James Breeden, founder of LiveAir Networks, which covers rural parts of Central Texas told the Morning News. “I didn’t even know they were putting together a broadband map until I saw it on the news and went ‘Oh.’ Then I logged in and went, ‘Oh, really!’ ”

Staples

He said he couldn’t find his company or two nearby providers on the map. Some areas didn’t show the correct distributor. Others named one when none existed. “The map is just off. It’s not technically accurate,” he said.

As Stop the Cap! reported earlier, maps produced by Connected Nation are notorious for favoring the telecommunications companies that back the mapping group, in addition to being just plain inaccurate. But more importantly, their maps downplay broadband availability problems and conveniently serve the industry’s position that America doesn’t have a broadband problem.  Connected Nation maintains tight control over the raw data, citing provider confidentiality agreements.  That makes reviewing the data for accuracy impossible.

“It’s a scandal, a total scandal,” Art Brodsky, communications director of Public Knowledge, a public interest group that follows digital culture said in the Morning News piece. A longtime critic of Connected Nation, Brodsky has tracked the nonprofit since Kentucky officials accused it of overestimating broadband availability several years ago. The agency that grew into Connection Nation started there in 2001.

Brodsky said nondisclosure agreements make it difficult to see who really benefits from the mapping process.

The controversy has become campaign fodder for Democratic Ag Commissioner candidate Hank Gilbert, who has been bashing Staples in the press for spending taxpayer money to produce maps that benefit his campaign more than the people of Texas.

“Staples and … [the Agriculture Department] are willing to let a bid go to a company with such close ties to the telecom industry,” said Vince Leibowitz, Gilbert’s campaign manager. “That means they’re not doing their job as a consumer protection agency.”

Other groups given the opportunity to apply either were not given enough advance warning, or simply never heard anything back from the state.

Five other organizations responded to the Agriculture Department’s request for proposals. Luisa Handem of the Austin nonprofit Rural Mobile & Broadband Alliance said her group never heard back.

“We didn’t think the process was transparent,” she said. “We’re not even sure they looked at our application.”

The Agriculture Department restricted the opportunity to nonprofits, based on its interpretation of federal law. The agency told the University of Texas at Austin it could apply, but officials didn’t think they could complete the proposal in a month. The Agriculture Department said the federal government set the timeline.

A major owner of apartment complexes in 13 states in the southeast and south-central United States has a deal for you, whether you like it or not.

Mid America Apartment Communities, which maintains a portfolio of 42,252 apartments, is requiring its residents to purchase cable television from providers like Comcast or they’ll find the $40 month cable fee tacked on their rent, water, or refuse collection bill.  They call it a wonderful savings opportunity for their residents.  But a Stop the Cap! investigation followed the money and discovered the real benefits are in kickbacks paid to Mid America by participating cable companies.

Mid America is extending the policy to all of its apartment complexes over the coming months, notifying residents about its new CableSaver program through flyers.  Enrollment in the program is automatic for new residents, and will take effect for existing residents upon the renewal of their annual lease agreement.

Known as “bulk buying,” apartment complexes can receive preferential discounts for their residents if they commit to mandatory cable service for each apartment.  In Chattanooga, residents of Mid America’s Hamilton Pointe, Hidden Creek, Steeplechase, and Windridge Apartments were notified this month they’ll be compelled to spend $40 a month for Comcast’s Digital Starter Package.

Mid America owns apartment complexes in 13 states. All of them will find the CableSaver program coming their way sooner or later.

The mandating of cable service is not going down well with every resident, particularly those who purchased satellite TV equipment or who have service with other providers like AT&T’s U-verse or Verizon FiOS.  While Mid America isn’t banning competing cable services from serving its complexes, residents will still be forced to pay for cable service in addition to whatever their current provider charges.

Lydia Ramirez of Chattanooga lives in a Mid America Apartment Communities property.  She told WDEF-TV News, “We told them that we are not interested in this but they say it’s mandatory. And so here we are.”

Ramirez just had Dish Network installed but says she’s been told she will have to pay for Comcast cable, too, if she renews her lease.  She said, “We don’t want Comcast and we feel that should be our choice instead of them making it mandatory.”

Instead of being allowed to choose satellite or other cable providers, Ramirez says being forced to go with Comcast is kind of like being told you can only grocery shop at Food Lion.  Ramirez adds, “I don’t see how they can do that. I think we as tenants have an option to choose what cable company we want to go with.”

Some renters in Houston, Texas have been there and done that.  Late last year, KPRC-TV reported residents at The Reserve at Woodwind Lakes got a deal they couldn’t refuse.  A letter from the front office promoted an exciting new offer: It reads the complex “has teamed up with a cable company to bring you an exclusive offer that will allow you to enjoy expanded basic service at a greatly reduced rate.”  Sounds great until you get to the second line of the letter, which uses language only a credit card company could love:

“If you have not yet chosen to opt in, the reduced rate of $40 will be added to your water and trash bill once your renewal takes effect.”

Text of a flyer delivered to Houston-area renters at a Mid America complex

In other words, your “choice” to “opt in” is neither.

Mid America is selling this mandatory cable program as a real money-saver.  But we discovered it’s actually a real moneymaker for Mid America, who earns compensation from kickbacks paid by cable companies in return for cramming cable service down renters’ throats.

Kickbacks for cable is nothing new in the rental business.  Complex owners used to routinely make exclusive deals with providers to deliver service to residents, often through contracts that kept competitors out.  But a 2007 FCC ruling made such exclusive arrangements illegal.  A Federal Court of Appeals agreed: cable companies cannot have exclusive rights to provide service in apartment buildings that they wire.  But complex owners and cable operators discovered an enormous loophole — complex owners can force residents to pay mandatory cable fees as part of their rent so long as they did not bar would-be competitors from also providing service.  But given that renters would already be paying for service, it is unlikely they’d choose another and pay double or more for duplicated cable service.

Cable companies like Comcast enter into these agreements because they provide guaranteed revenue for minimal cost, thanks to “install it once” cable wiring and bulk billing.  Since many renters are also young — renting their first apartment after leaving home — establishing a relationship with those customers may make them customers for life.  Cable companies can also use the program as an opportunity to sell add-on services to renters, such as broadband, digital phone, and premium channel packages.

But why would a company like Mid America want to alienate at least some of their renters who do not want to be forced to pay for cable service?  The answer is easily found in Mid America’s publicly disclosed financial reports — Mid America makes a healthy profit from the CableSaver program.

Mid America owns apartment complexes in these states

Mid America’s quarterly 10-K filing with the Securities and Exchange Commission shows the company is earning so much money from cable companies like Comcast, it has broken the revenue out into a new section of its financial report.

In the first quarter of 2010, as Mid America introduced its CableSaver program, the company reported earning $1.3 million dollars in revenue from cable kickbacks.  The company tells investors its new mandatory cable program will become an important source of new revenue for the complex owner:

“We continue to develop improved products, operating systems and procedures that enable us to capture more revenues. The continued roll-out of ancillary services (such as re-selling cable television), improved collections, and utility reimbursements enable us to capture increased revenue dollars.”

It’s all a part of a profit-making strategy to increase shareholder value and stick residents with increasing costs to deliver fatter profits.  Renters might be interested to know the company has more in store for them in the coming months:

Our goal is to maximize our return on investment collectively and in each apartment community by increasing revenues, tightly controlling operating expenses, maintaining high occupancy levels and reinvesting as appropriate. The steps taken to meet these objectives include:

• […] developing new ancillary income programs aimed at offering new services to residents, including telephone, cable, and internet access, on which we generate revenue;
• implementing programs to control expenses through investment in cost-saving initiatives, including measuring and passing on to residents the cost of various expenses, including water and other utility costs.

Unfortunately for residents, short of moving, there is no escaping these fees. Some residents have contacted their member of Congress or the FCC to complain about the loophole that allows a complex owner to charge for cable service residents don’t always want. Another way to send a message is to tell Mid America you will not do business with them until they make the CableSaver program truly optional. If the company stands to lose more money than it receives from cable company kickbacks, it may choose to amend its policies.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Mandatory Cable 7-19-10.flv[/flv]

We have four reports on this story, courtesy of WDEF-TV Chattanooga, Tenn., and KPRC-TV in Houston, Texas  (10 minutes):

1. The FCC bans exclusive cable contracts forcing renters to buy service from one provider.  (KPRC-TV 10/31/2007)
2. Can Complex Choose Your Cable Company? In Houston, Mid America Forcing Renters to Buy Comcast Cable.  (KPRC-TV 1/7/2010)
3. Four Chattanooga Area Apartment Complexes Make Comcast Cable Mandatory for Renters. (WDEF-TV 7/12/2010)
4. AT&T U-verse Arrives in Chattanooga (But Won’t Be Too Attractive to Mid America Residents). (WDEF-TV 4/30/2010)