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.

HBO Go is currently only available directly to Verizon FiOS customers. Comcast customers have access through Fancast, and Time Warner Cable indicated it wasn't interested in participating in HBO Go, for now.

HBO subscribers who are also Verizon FiOS TV customers are the first to get access to the premium channel’s new online video portal — HBO Go, launched Wednesday with over 600 hours of HBO programming, available free to authenticated HBO and FiOS subscribers.

HBO Go is another project spawned from the cable and pay television industry’s TV Everywhere project — putting television programming online for anytime viewing, for free, as long as you maintain a cable or pay television subscription.

Ironically, the service launched Wednesday on Verizon’s telco-TV service FiOS, leaving lots of cable subscribers waiting for access.  If you subscribe to HBO through cable, satellite, or U-verse, the service remains unavailable to you, for now.  Comcast subscribers already had access to HBO’s programming through the Fancast Xfinity TV website.  If you don’t pay for television, the service remains unavailable to you indefinitely — they won’t sell it to you at any price.

“Ultimately this is about extending the subscriber lifecycle,” HBO co-president Eric Kessler said. “It’s more about subscriber retention.”

Subscriber retention through incumbent providers, he means.  HBO doesn’t want to risk selling direct to online consumers who might want to cut ties with their cable or other pay television provider.

Stop the Cap! reader Jared has FiOS and HBO and let us sample the service through his FiOS connection (his 25Mbps/25Mbps connection with remote access maxed out our Road Runner Turbo connection and still left him plenty of leftover speed).

Let’s start with the viewing experience.

It’s a big improvement over HBO’s Wisconsin trial in 2008 with Time Warner Cable, which required viewers to download Windows Media-encoded video files protected with Microsoft’s annoying digital rights management scheme.  It was cumbersome for trial participants, and dealing with Microsoft’s player and DRM cut Mac owners out of the trial.

HBO Go is Flash-based, using Adobe’s Real-Time Messaging Protocol to keep viewers from saving permanent copies for themselves (and potentially their friends.)  Using Verizon FiOS, viewers should rarely encounter any artifacts or speed-related viewing problems.  The picture was fine, even for me using remote access software. Of course, if your Internet connection is considerably slower than FiOS or your neighborhood suffers from online congestion, you could experience issues streaming HD content, but HBO Go is designed to buffer when encountering slower connections.  The files are encoded in MPEG-4 at 1.2Mbps and 2.6Mbps, which theoretically should be fine for the majority of viewers.  Comcast subscribers – remember watching counts against your usage cap.

Wandering around the HBO Go library was simple  — easier to navigate and less cluttered than Hulu.  The site was intuitive and should be easy to use for just about everyone.

Up to three members of your household can each watch programming from the service at the same time, even away from home, anywhere in the country.

HBO Go claims to be a work in progress — about 25% of the content will be refreshed by HBO every week, with new episodes available on the service immediately following their TV premiere.

But the service hardly offers a comprehensive viewing experience.  It’s much closer to Hulu or your cable company’s HBO on Demand service.

For example, rights issues limit virtually all of HBO’s original series to a handful of recent episodes or seasons.  Only The Wire has a complete library to watch from its premiere forward.  Curb Your Enthusiasm, aptly named when considering HBO Go, is missing completely.  So is Real Time with Bill Maher, although four of his earlier specials are archived on the site.

As for movies, there are gaping holes there as well.  Available titles resemble Cinemax’s selection of movies you’ve already seen.  There are gaps between what you can watch on HBO itself and what is available on HBO Go.  Babe is online, for instance, but anything Harry Potter isn’t.

In other words, what could have been a compelling addition for HBO subscribers feels redundant.  I would never pay anything extra for HBO Go, nor will it be a factor in keeping HBO.

Online viewers need not apply.

HBO could have used the opportunity to sell the service to non-cable subscribers for a monthly fee and pick up some additional revenue, but that wouldn’t sit well with the pay television cartel that is behind the TV Everywhere concept.  They don’t want you cord cutting — those that have are locked out of the HBO Go Clubhouse.  For now, I suspect few were clamoring to get in.

America’s established cable and telephone companies are pulling out every stop to impede the Obama Administration’s broadband stimulus program.

Comcast alone, the nation’s largest cable company, has filed thousands of objections to proposed broadband projects in communities large and small, claiming those projects have the potential of introducing competition in their service areas, whether or not actual broadband service is being provided to residents in those communities.

Most large providers like Time Warner Cable, Comcast, and many national phone companies have steered clear of applying for broadband stimulus money.  They don’t like requirements that could force them to adhere to Net Neutrality provisions, sharing equal access to their networks.  But they don’t want anyone else on their turf getting funding either, and they’re spending enormous amounts of time and money objecting to anything and everything that seeks funding in their respective service areas.

It’s nothing short of a Broadband Blockade, and it is dramatically slowing the government’s ability to pour over thousands of applications.

Settles

Dan Hays, from consulting firm PRTM, told USA Today as a result of the delays, there’s significant doubt as to whether the monies can be awarded before the end of September when the funding authorization expires.

Could that be part of the plan all along?

“They aren’t leading, they aren’t following, and they won’t get out of the way,” said Craig Settles, a municipal broadband expert. “They’re not going to put proposals on the table because they don’t like the rules. Yet they’re not going to cooperate with the entities that are going after the money.”

“There are 11,000 public comments (about the funding applications), and I’m willing to bet that 9,000, at least, were a challenge or protest of one sort or another,” says Settles.

“We’re at a point where it’s the general public’s interest vs. the entrenched incumbents,” Settles added.

When giant telecommunications providers are threatened, they run to lawmakers for special protection, and they’re getting it.

National Public Radio ran this report about the problems awarding broadband stimulus grants. (5 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Coming next…

FairPoint – Bankrupt And Soaking in Failure – But Still Has Enough for Lobbyists, Attorneys to Fight Broadband Projects On Its Turf

Some communities are luckier than others.  When your cable company boosts rates, some consumers have another provider available, letting them take their business elsewhere.  That’s especially true if there is another provider in town that doesn’t require you to attach a satellite dish to your roof.

For those who have no other alternative, it’s time for the family meeting to discuss what action, if any, will be taken to deal with a bill that relentlessly increases year after year.  The solutions usually come down to “grin and bear it” when paying the higher price, start dropping channels, or go cold turkey and get rid of cable altogether.

In economically troubled western New York, just accepting a higher bill isn’t always an option.  For residents of Buffalo, many have the choice of switching from Time Warner Cable to Verizon FiOS.  Many Queen City residents have threatened to do just that, often extracting concessions from Time Warner Cable when they call to cancel.

Stop the Cap! reader Marion, who lives in Amherst, wrote she was outraged to receive word of yet another rate hike from Time Warner Cable.

“Our family had been pestered by Verizon ever since FiOS came around our area, but having the phone company tear up your house to rewire everything and change your e-mail address was a real hassle, so we just kept Time Warner,” she writes.  “I’m fed up paying for all these filthy channels I never watch and I frankly can’t afford to keep paying them more and more every year whenever they have one of their programmer disputes.”

Marion called to cancel service and was transferred to a “retention specialist” who is trained to rescue departing customers before they cut the cord or show up at the cable office with their set top boxes in hand, waiting to turn them in.

“They always want to argue what a great value they are and how messy and time-consuming FiOS is to install, and you have to pay extra for HD channels I’m too old to appreciate anyway, but I just kept saying ‘cancel’ and said the only thing I cared about was the price,” Marion adds. “In the end they offered to cut the bill twenty dollars a month and give me a discount only new customers would get if I agreed to stay with a term plan.  I decided I would, for now.  I’m on a fixed income and with no Social Security increase this year, the price is very important to me.”

Alan Pergament is the TV Critic for the Buffalo News

Time Warner Cable is well aware when customers leave.  The company’s “churn” rate, measuring departing customers, has been on the increase in highly competitive service areas.  Consumers have learned to use new customer promotional offers from the competition against their current provider, threatening to cancel if they refuse to match them.  The costs of getting those customers back can be higher than just handing over a temporary discount, so many providers relent and give customers the lower price they want.

In Buffalo, convincing customers the local cable company is a better value and offers better service than the fiber-based FiOS competition might keep customers from thinking about switching in the first place.  That’s the idea, anyway.

The Buffalo News Tuesday published an interview with Time Warner’s Jeff Unaitis on the recently-announced rate hike and what changes the company is making to try and hold onto their customers.

Unaitis started with a range of new and upcoming improvements the cable operator is planning to make across upstate New York:

• The 24-hour news channel YNN —or Your News Now—will be the title of all TWC news channels across the state shortly to give it a “seamless news presence across the state.”

“You are beginning to see more shared coverage across the state,” said Unaitis.

Additionally, viewers in Western New York will get an upconverted HD version of YNN on Channel 709 by April or so. In other words, it isn’t shot in HD but it is HD quality. It already has been done on TWC’s news channel in Syracuse. “The reality is when you are accustomed to see HD content going back to something that is standard digital, let alone analog, is more difficult viewing,” Unaitis said.

• A new interactive, user-friendly, online programming guide will be available soon. One bonus: It will be easier to order On Demand titles.

In the next few months, the satellite feature celebrated in the ads with “Pysch” star Dule Hill that allows subscribers to program their DVRs remotely while they are away from home will soon be available to TWC subscribers with this guide.

• TWC is looking at the possibility of expanding “significantly more” HD channels that the public has requested. BBCAmerica, Lifetime and all the Viacom channels (VH1, MTV, Comedy Central and Nickelodeon among them) are among the most requested. “Some of them are contingent on carriage deals,” said Unaitis. “Others we do have the rights to carry, we just haven’t done the engineering required to have them yet.”

• The popular Start Over feature — which is up to 90 channels here and allows viewers to start shows from the beginning during the time window it airs — will be augmented some time this year by a new “Look Back” feature. “Look Back” enables viewers to watch shows for up to 72 hours after they air rather than just the window in which they air.

Unaitis added that viewers may not realize that the Free on HD Demand channel offers subscribers many of the same programs that are available on Prime Time On Demand, but in HD.

YNN provides 24/7 local news coverage on individual channels in Buffalo, Rochester, Syracuse, and Albany

The newspaper’s TV critic, Alan Pergament, noted the service changes, but immediately pelted Unaitis with the concerns local residents actually have about their Time Warner Cable service.  To save time, and because of complaints I’ve had about my verbosity, I’ve boiled it all down for you:

Q. Why isn’t Time Warner Sports-Net, the local sports channel, in HD?

A. Because it costs too much, but Unaitis claimed the channel will be upconverted to HD, which will “give it an HD-quality signal.”  Not really.

Q. Buffalo gets Canadian networks from Toronto-area stations on their lineup.  Why aren’t they available in HD?

A. Who knows.

Q. Why can’t people pay for only the channels they want?

A. Because programmers won’t allow it, and the cable company would end up charging you the same price you pay for 75 channels today that you’ll pay for 20 channels tomorrow. Plus, you’ll need a box on every TV in the house and that also increases your bill.

Q. How much do western New Yorker’s pay for YNN?

A. None of your business.

Q. How many subscribers does Time Warner Cable have in western New York?

A. None of your business.

Q. Why do those in western NY pay a higher price for cable service than elsewhere?

A. Unaitis didn’t know if that was true or not, but then explained it was because of the weather, labor costs, high state taxes and the difficulty building and maintaining the cable lines.

Okay, then.

Frontier's headquarters in Rochester, N.Y.

Frontier Communications has dismissed the proposition of Google constructing a 1Gbps fiber-to-the-home network, telling readers of the Rochester Democrat & Chronicle that most users don’t need ultra-fast Internet access.

Ann Burr, chairman and general manager of Frontier Communications of Rochester made the remark in response to news that citizens and business leaders are excited about promoting Monroe County as a potential test location for Google’s fiber network experiment.

Frontier, which serves Rochester and most of the 585 area code, accused Google of having “a poor track record of following through on such proposals and that creating a fiber-optic network from scratch would be enormously expensive.”

Pot to kettle.  Frontier’s illusory promises for fiber optic connectivity in states like West Virginia, where it seeks to take over the majority of the state’s phone customers from Verizon, never seem to include specific assurances such projects will reach customer homes.

“If Google built its own network, we estimate it would cost $5,000 per household,” Burr told the newspaper.

That’s as exaggerated as Frontier’s DSL speed claims.

Verizon Communications, which is in the business of providing fiber connectivity to the home, disclosed the true costs are far lower than that, and continue to decline.  In the summer of 2008, Verizon’s Policy Blog noted:

Capital Costs
– We said our target per home passed was $700 by 2010, and we are ahead of plan to achieve that objective. In fact, we’ve already beaten the target.
– We said our target per home connected was $650 by 2010, and we’re on plan to hit that target.

No wonder Frontier doesn’t contemplate providing fiber service to customers.  It created its own sticker shock.

Still, the local phone company didn’t want to slam the door entirely on Google’s foot, suggesting it would be willing to talk about leasing space on Google’s network if it launched in the Flower City.

Frontier’s claim that customers don’t believe fast broadband service is important is a remarkable admission, particularly for a company that increasingly depends on broadband service to stop revenue loss from customers dropping traditional phone lines.  That philosophy should be carefully considered by state officials and utility commissions reviewing Frontier’s proposal to take over Verizon phone lines in several states.  Do communities want to receive broadband from a company that dismisses faster broadband speed as irrelevant for the majority of its customers?

Perhaps the remarks came with the understanding Frontier isn’t capable of delivering 21st century broadband speeds over its antique network of copper telephone wire anyway.

That’s the point Time Warner Cable has made repeatedly, especially in the Rochester metro area.  The cable operator routinely promotes its Road Runner cable modem service’s speed advantages over Frontier’s DSL product.  Frontier promises up to 10Mbps, but often manages far less (3.1Mbps was my personal experience with Frontier DSL last April.)  Time Warner Cable promises up to 15Mbps, and often exceeds that with its “PowerBoost” feature.  In rural areas, the phone company tops out at “up to 3Mbps.”  Time Warner Cable notes most of its new broadband customers come at the expense of phone companies like Frontier.  DSL customers switch because they do care about broadband speed.

Judging from the excitement in Rochester over Google’s proposal, Frontier’s dismissal of a fiber optic future seems out of touch, and potentially a drag on the local community’s economic future.

Rochester increasingly will become a broadband backwater because of anemic broadband competition from Frontier Communications.  Its reliance on ADSL technology, more than a decade old, to deliver distance-sensitive broadband service looks out of place compared with the rest of New York State.  Major cities throughout New York are being wired with fiber optic service by Verizon Communications.  Verizon FiOS delivers up to 50Mbps service.  Frontier maxes out at far lower speeds and defines an acceptable amount of broadband usage on its DSL service at just 5GB per month. Using Verizon’s FiOS fiber network, you’d exceed Frontier’s entire month’s ‘allowance’ in less than 15 minutes at Verizon’s speeds.

Rochester is one of many communities challenged by the transition away from a manufacturing economy towards a high technology future.  A world class fiber optic network doesn’t just benefit big business.  It spurs revolutionary growth in medicine, education, software development, telecommunications, and more.  That means good paying jobs.  For consumers with fiber to the home, it opens the door to telecommuting on a whole new level, distance learning opportunities, new ways to access information and entertainment, and allows home-based entrepreneurs to develop new businesses.

With Verizon FiOS unavailable to Rochester indefinitely, and Frontier unwilling to make appropriate investments to keep this city competitive with the rest of upstate New York, those jobs and economic benefits can go to Buffalo, Syracuse, Albany, Westchester County, and metropolitan New York City.  We’ll be held back on the frontier with Frontier and its ideas of rationed broadband service.

[flv width=”360″ height=”260″]http://www.phillipdampier.com/video/WROC Ontario County Makes Bid for Super Fast Internet 2-11-2010.flv[/flv]

WROC-TV in Rochester reports that Ontario County, to the southeast of Rochester, may have a built-in advantage with an already-installed fiber loop covering much of the county.  The county has a team working on a formal application to Google to provide service in communities like Geneva and Canandaigua.  Frontier’s claims that consumers don’t care about fast broadband speed are belied by the excitement of residents of both counties. (2 minutes)