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The Downside to Modem Fees: Customers Hold On to Legacy Owned Modems Forever

Arris/Motorola’s SB6121 SURFboard DOCSIS 3.0 Cable Modem used to be considered “eXtreme,” but now most cable companies consider it obsolete.

The legacy of the hated modem rental fee is coming back to bite providers that charge $10 a month or more for a device that likely cost the company well under $100.

To opt out of the fee, a growing percentage of customers buy their own equipment, but now many of those modems are becoming functionally obsolete and customers are wary of efforts by providers to convince them to accept a newer, company-supplied modem.

With the arrival of DOCSIS 3.1 and faster speeds, the problem is only getting worse for companies like Comcast, Charter Spectrum, and Cox. With an installed base of hundreds of thousands of obsolete modems, customers frequently can no longer get the internet speed they pay for, and the equipment’s limitations can cause congestion on cable broadband networks, because older modems cannot take advantage of the exponential increase in available “channels” that help share the load on the neighborhood network.

“Some customers have cable modems that are incompatible (such as DOCSIS 2.0 and DOCSIS 3.0 4×4 modems) with the current class of service or internet speed that they’re receiving. As a result, these customers may not be experiencing the full range of available bandwidth that they’re paying for,” Comcast informs their customers. “If a device is no longer supported by Comcast or has reached its end-of-life (EOL), this essentially means that we will no longer install the device, either as a new or replacement device. In addition, we will no longer recommend that customers purchase the device, whether new or used.”

But many Comcast customers do not realize their equipment is effectively obsolete until they visit mydeviceinfo.xfinity.com and sign in to their account or enter a device make and model in the search bar on the homepage or hear directly from the company. Comcast will send online alerts to customers verified to still be using outdated equipment and occasionally send notifications through the mail. Customers can order new equipment online or swap out old equipment in a cable store. Comcast prefers its customers rent its Xfinity xFi Wireless Gateway ($13/mo) or xFi Advanced Gateway ($15/mo). As an incentive, Comcast is testing offering free unlimited data in some central U.S. markets to those choosing its more costly Advanced Gateway.

Charter Spectrum sold its merger with Time Warner Cable and Bright House Networks partly on its argument that modem fees would no longer be charged. Despite that, many former Time Warner Cable and Bright House customers still use their own modems, which has been a problem for a company that raised the standard internet speed available to residential customers from 15 Mbps to 100 Mbps (200 Mbps in some markets, mostly those also served by AT&T). Older modems often cannot achieve those speeds. Spectrum notifies affected customers in periodic campaigns, offering to replace their obsolete equipment, but many customers suspect hidden fees may be lurking in such offers and discard them.

“Some modems that were issued years ago have become outdated. If you have a modem that was issued by us and hasn’t been swapped in the last six years, it might need to be replaced,” Spectrum tells customers. “To get a replacement modem, contact us or visit a Spectrum store. Please recycle your old modem or bring it to a Spectrum store for proper disposal. If you do a modem swap with us, you’ll receive a mail return label in your package, which can be used to return your old modem.”

Cox is also in a similar predicament. It runs seasonal checks on its network to identify customers using older DOCSIS modems, often DOCSIS 3.0 4×4 modems, which can only support four download channels. When it finds customers eligible for an upgrade, it mails postcards offering a “free modem upgrade,” usually supplying a SB6183 or SB8200 modem that can arrive in 24-48 hours. But many Cox customers suspect trickery from Cox as well, or run into poorly trained customer service representatives that reject the postcards, claiming the customer is ineligible.

“DOCSIS 3.0 8×4 or higher (or a DOCSIS 3.1) devices are required for all new Cox High Speed Internet customers,” Cox tells their internet customers. “Current Cox customers should ensure they have a minimum of a DOCSIS 3.0 device in order to consistently receive optimal speeds. Additionally, Ultimate customers are required to have a minimum of a DOCSIS 3.0 device with a minimum of 16×4 or higher channel bonding to achieve package speeds.”

In fact, most modem upgrade offers from your provider are likely genuine, but customers need to pay attention to any fine print.

Customers can also purchase their own upgraded modem if they want to avoid Comcast’s Gateway fee. Cox does not charge customers for modems sent as part of a free upgrade offer, but watch for erroneous charges on your bill and report them at once if they do appear. Charter Spectrum has recently introduced a $9.99 modem activation fee, applicable to new customer-owned or company-supplied cable modems. We do not know if that fee would apply in cases of an obsolete modem upgrade. Be sure to ask, and if the answer is no, make a note of the representative’s name in case a dispute arises later on.

Take It Or Leave It Pricing: No, You May Not Have a Better Deal!

GIVE us more money and TAKE what we offer you.

Bloomberg News is reporting what many of you already know — it is getting tougher to get a better deal from your cable or phone company.

As Stop the Cap! has documented since the completion of the Time Warner Cable/Bright House/Charter Spectrum merger in 2016, companies are pulling back on promotions, taking advantage of a lack of competition and offering best pricing only to new customers.

Charter Spectrum and Cable One (soon to be Sparklight) are the most notorious for implementing “take it or leave it” pricing. In fact, one of Charter CEO Thomas Rutledge’s chief complaints about Time Warner Cable was its “Turkish Bazaar” mentality about pricing. Rutledge claimed Time Warner Cable had as many as 90,000 different promotions running at the same time, typically targeted on what other companies were theoretically providing service and how serious the representative felt you were about canceling service. Time Warner Cable had basic retention plans available for regular representatives to offer, better plans for retention specialists to pitch, and the best plans of all to customers complaining on the “executive customer service” line or after filing complaints with the Better Business Bureau. There were plans for complaining over the phone and different plans for complaining at the cable store. Rutledge was horrified, because customers were now well-trained on how to extract a better deal every year when promotions ran out.

Last month, Rutledge said he was indifferent about cash-strapped consumers that cannot afford a runaway cable TV bill on a retired/fixed income or the urban poor who can’t imagine paying $65 a month for basic broadband service. To those customers, pointing to the exit is now perfectly acceptable. In fact, companies make more profit than ever when you drop cable television service and upgrade your broadband connection to a faster speed. That is because there is up to a 90% margin on internet service — provisioned over a network paid off decades ago and designed for much less space efficient analog television. Charging you $20 more for faster internet service is nearly 100% profit and costs most companies next to nothing to offer, and Time Warner Cable executives once laughed off the financial impact of so-called “heavy users,” calling data transport costs mere “rounding errors.” 

Even with a much tougher attitude about discounting service, Charter and Comcast are still adding new broadband customers every month, usually at the expense of phone companies still peddling DSL. So if you cancel, there are probably two new customers ready to replace you, at least for now.

Cable One redefines rapacious pricing. The company specializes in markets where the incumbent phone company is likely to offer low-speed DSL, if anything at all. As a result, they have a comfortable monopoly in many areas and price their service accordingly. Cable One’s basic 200 Mbps plan, with a 600 GB data cap, costs $65 a month, not including the $10.50/mo modem fee, and $2.75 monthly internet service surcharge. To ditch the cap, you will pay another $40 a month — $118.25 total for unlimited internet.

In fact, Cable One charges so much money for internet, they even have Wall Street concerned they are overcharging!

When Joshua May tried calling Spectrum to deal with the 29% more it wanted (around $40 a month) after his promotion expired, the customer service representative told him to go pound salt.

“I expected they’d at least offer free HBO or Showtime,” May, 34, of Springfield, Ohio, told Bloomberg News. “They did nothing.”

He did something. He cut the cord. The representative could have cared less.

The product mix cable and phone companies offer has not really changed, but the era of shoving a triple play bundle of internet, TV, and phone service sure has. Charter and Comcast now treat cable television as a nice extra, not the start of a bundle offer. Broadband is the key item, and the most profitable element, of today’s cable package. Beleaguered phone service gets no respect either. Time Warner Cable used to sell its triple play bundle including a phone line for less money than their double play bundle that omitted it. Today, it’s a simple $9.99/mo extra, given as much attention as a menu offering premium movie channels.

Comcast differs from Charter by offering a plethora of options to their customers. If you don’t want to spend a lot for high speed internet, spend a little less for low speed internet. Their television packages also vary in price and channel selection, often maddeningly including a “must-have” channel in a higher-priced package. Like Spectrum, their phone line is now an afterthought.

AT&T and Verizon have their own approaches to deal with reluctant customers. Verizon FiOS customers face steep price hikes when their promotions expire, but the opportunity to score a better deal is still there, if Verizon is in the mood that quarter. Verizon remains sensitive about their subscriber numbers and growth, so when a quarter looks like it will be difficult, the promotions turn up. AT&T prefers to play a shell game with their customers. Most recently, the company has given a cold shoulder to its U-verse product, treating it like yesterday’s news and best forgotten. AT&T literally markets its own customers to abandon U-verse in favor of AT&T Fiber. Verizon and AT&T treat their DSL customers like they are doing them a favor just by offering any service. All the best deals go to their fiber customers.

AT&T Randall Stephenson is a recent convert to the “who cares about video customers” movement. Services like DirecTV Now were originally channel-rich bargains, but now they are a place for rate hikes and channel deletions. Over a half-million streaming customers have already canceled after the most recent price hikes, but Stephenson claims he does not mind, because those bargain-chasers are low-quality customers worthy of purging. AT&T’s dream customer is one who appreciates whatever AT&T gives them and does not mind a parade of rate hikes.

Comcast’s chief financial officer Mike Cavanagh said it more succinctly: seeking subscribers that “really value video and our bundle despite the increases in prices,” and has “the wallet for a fuller video experience.”

Customers who decide to take their business to a streaming competitor are already learning the industry still has the last laugh. As package prices head north of $50/month, that is not too far off from the pricing offered by cable and phone companies for base video packages. In fact, Spectrum has begun undercutting most streaming providers, offering $15-25 packages of local and/or popular cable channels with a Cloud DVR option for around $5 more a month.

White House Refuses to Turn Over Documents on AT&T-Time Warner Merger

Phillip Dampier April 16, 2019 AT&T, Public Policy & Gov't, Reuters No Comments

(Reuters) – The White House has told two U.S. House Democrats it will not turn over documents that could show whether Republican President Donald Trump sought to intervene in the regulatory review of AT&T Inc’s $85 billion acquisition of Time Warner Inc.

In March, House Judiciary Committee Chairman Jerrold Nadler and Representative David Cicilline, who chairs a panel overseeing antitrust issues, asked the White House and Justice Department to turn over records after The New Yorker magazine reported Trump directed then-National Economic Council Director Gary Cohn to use the Justice Department to block the deal.

The pair wrote that if accurate, Trump’s involvement would “constitute a grave abuse of power.” In February, a federal appeals court upheld a lower-court ruling rejecting a Justice Department challenge to the deal filed in November 2017.

Trump criticized the deal as a candidate in late 2016, saying it would concentrate too much media power in the hands of one owner, and later saying it would raise prices. He has also frequently attacked CNN, a Time Warner property now owned by AT&T, for what he sees as negative coverage of his campaign and administration.

In a letter dated Monday and released on Tuesday by Cicilline, White House counsel Pat Cipollone declined to release any documents, saying he would not provide “protected communications between the president and his senior advisers that are the very core of the executive branch’s confidentiality interests.”

Cipollone added that the Justice Department would be responding “in due course.”

The two Democrats responded in a joint statement that “the White House Counsel has made a blanket claim that all White House communications — regardless of whether they contain evidence of improper or even unlawful activities — are protected by a cone of secrecy,” adding they would “pursue this matter.”

Makan Delrahim, the head of the Justice Department’s antitrust division, said in a 2018 declaration he had never received “orders, instructions, or directions relating” to the AT&T-Time Warner deal from Trump, Justice Department officials or White House officials.

The Justice Department said in February it would not seek further appeals to block the merger.

In February 2018, U.S. District Judge Richard Leon rejected AT&T’s request to see White House communications that might shed light on whether Trump pressured the Justice Department to try to block the deal.

AT&T lawyers said last year the deal may have been singled out for enforcement, citing as evidence statements by Trump as a candidate and as president that the deal was bad for consumers and the country. AT&T declined comment on Tuesday.

Reporting by David Shepardson; Editing by Peter Cooney

Spectrum Charging $9.99 Self-Install Fee for a Cable Modem You Pick Up Yourself

Phillip Dampier April 16, 2019 Charter Spectrum, Consumer News 5 Comments

Modem fees are back for some customers.

Spectrum appears to be sneaking modem fees back into the equation three years after telling regulators one of the benefits of Charter Communications’ acquisition of Bright House Networks and Time Warner Cable was that Spectrum customers don’t pay modem fees.

Effective April 1st, new Spectrum customers are being charged a one-time fee of $9.99 to either pick up or have shipped a cable modem for self-installation. If a technician installs it for you, the fee is $49.99.

“The one where you’re essentially paying them to go to the store, wait in line, get the modem, and then go home to install it all by yourself is especially nifty,” writes ‘rseiler,’ a forum participant on DSL Reports.

“Just wait for the ‘Bring your own modem’ $9.99 one-time activation fee, since that will be next,” predicted user ‘Techguru30.’

For now, however, the only way to avoid this fee is to activate your own customer-owned modem.

Merger Complete: Appeals Court Rejects Bid to Throw Out AT&T-Time Warner Merger

The merger of AT&T and Time Warner (Entertainment) is safe.

A federal appeals court in Washington handed the U.S. Department of Justice its worst defeat in 40 years as federal regulators fought to oppose a huge “vertical” merger among two unrelated companies.

In a one page, two-sentence ruling, a three judge panel affirmed the lower District of Columbia Circuit Court decision that approved the $80 billion merger without conditions. In the lower court, Judge Richard Leon ruled there was no evidence AT&T would use the merger to unfairly restrict competition, a decision that was scorned by Justice Department lawyers and consumer groups, both claiming the merger would allow AT&T to raise prices and restrict or impede competitors’ access to AT&T-owned networks.

In this short one-page ruling, a three judge panel of the D.C. Court of Appeals sustained a lower court’s decision to allow the merger of AT&T and Time Warner, Inc. without any deal conditions.

The Justice Department and its legal team seemed to repeatedly irritate Judge Leon in the lower court during arguments in 2018, making it an increasingly uphill battle for the anti-merger side to win.

Judge Leon

Unsealed transcripts of confidential bench conferences with the attorneys arguing the case, made public in August 2018, showed Department of Justice lawyers repeatedly losing rulings:

  • Judge Leon complained that the Justice Department used younger lawyers to question top company executives, leading to this remarkable concession by DoJ Attorney Craig Conrath: “I want to tell you that we’ve listened very carefully and appreciate your comments, and over the course of this week and really the rest of the trial, you’ll be seeing more very gray hair, your honor.”
  • Leon grew bored with testimony from Cox Communications that suggested Cox would be forced to pay more for access to Turner Networks. Leon told the Cox executive to leave the stand and demanded to know “why is this witness here?”
  • Leon limited what Justice lawyers could question AT&T CEO Randall Stephenson about regarding AT&T’s submissions to the FCC.
  • Justice Department lawyer Eric Walsh received especially harsh treatment by Judge Leon after the Justice lawyer tried to question a Turner executive about remarks made in an on-air interview with CNBC in 2016. Leon told Walsh he already ruled that question out of order and warned, “don’t pull that kind of crap again in this courtroom.”

During the trial, AT&T managed to slip in the fact one of its lawyers was making a generous contribution towards the unveiling of an official portrait of Judge Leon, while oddly suggesting the contribution was totally anonymous.

“One of our lawyers on our team was asked to make an anonymous contribution to a fund for the unveiling of your portrait,” AT&T lawyer Daniel Petrocelli told the judge. “He would like to do so and I cleared it with Mr. Conrath, but it’s totally anonymous.”

Leon responded he had no problem with that, claiming “I don’t even know who gives anything.”

AT&T also attempted to argue that the Justice Department case against the merger was prompted by public objections to the merger by President Trump, who promised to block the deal if he won the presidency. That clearly will not happen any longer, and it is unlikely the Justice Department will make any further efforts to block the deal.

AT&T received initial approval of its merger back in June and almost immediately proceeded integrating the two companies as if the Justice Department appeal did not exist. The Justice Department can still attempt to appeal today’s decision to the U.S. Supreme Court, something AT&T hopes the DoJ will not attempt.

“While we respect the important role that the U.S. Department of Justice plays in the merger review process, we trust that today’s unanimous decision from the D.C. Circuit will end this litigation,” AT&T said in a statement.

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  • Thomas: Thank you SOOOO much for the advice! I was in a similar situation as Tom B above. I had a great promotion for 24 months - $55 for the Choice packag...
  • Ian Littman: The Cox thing doesn't sound like LLD at all. It instead sounds like something similar to the WTFast service that Asus bundles with some of their route...
  • Suzanne: Jane, I did that same thing, so very fed up with Spectrum and their rates, and their (lack of any) customer service to keep a customer. It's going fi...
  • Alison: I just got offered 85 for choice for 12 months. Set up disconnect date. Hoping to get a better offer before then so I don’t have to switch to streamin...
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