All Time Warner Cable broadband customers in upstate New York, New England, Pennsylvania, and the Carolinas will begin paying $3.95 a month to rent the cable modem required to make your $54.99/month Time Warner Cable Internet service work.

The cable company confirmed the charge will apply to all customers in Buffalo, Rochester, Syracuse, Albany, Binghamton, and beyond effective Nov. 1, joining New York City already paying the modem rental fee as of this week. The fee is gradually being introduced in all Time Warner Cable service areas nationwide.

Signature Home customers and those participating in the company’s trial of discounted Internet for the disadvantaged are exempted.

The new fee represents a 7% rate increase for Internet service, unless customers pay for their own modem.

Time Warner Cable mailed notification postcards to all affected areas this week, so they should begin arriving in mailboxes as soon as today. Southern states including Texas may see the new modem fee in their area as early as December.

“It is strictly a fee for customers who choose to lease their Internet modem from us,” Joli Plucknette-Farmen, the communications manager for Time Warner Cable’s western New York division told the Buffalo News. “As we continue to deploy more and more cable modems, many of these modems need servicing or replacing, get damaged and some are not returned. The monthly lease charge will allow us to service or replace the equipment, provide a better user experience and further enhance our Internet services.”

Stop the Cap! notes Time Warner Cable already assesses a fee ranging from $24-150 for unreturned or damaged cable modem equipment, however.

Phone subscribers who do not have Internet service will escape the fee as long as they avoid signing up for broadband.

Many of the models on the company’s approved modem list are now out of stock at the handful of retailers selling them. Other sellers, particularly on eBay and Amazon Marketplace, have doubled prices to as much as $200 on some popular DOCSIS 3 modems to capitalize on the cable operator’s new fees.

Time Warner Cable has launched a pilot program in several cities offering disadvantaged families with school-age children access to the Internet for $9.95 a month.

Families with children in the selected pilot schools are eligible to apply for Starter Internet service, which operates at 1/1Mbps in most cities. The eligibility requirements:

• The family has a working computer that is Internet ready;
• The family has not subscribed to Time Warner Cable Internet service within the last 90 days;
• The family does not have an overdue Time Warner Cable bill or any unreturned equipment;
• The family must pay any past due balances.

Time Warner Cable says there is no activation or installation fee with Starter Internet, no price increases, and no equipment rental fees for the first two years. Additional information is available directly from Time Warner at 1-855-746-8704.

Most of the pilot schools are located in urban or exceptionally low income communities, with the largest number of participating city schools in California, New York, North Carolina, Texas and Wisconsin. Among the highlighted communities:

• Arizona: Gasden, San Luis
• California: Cathedral City, Los Angeles, Van Nuys, Desert Hot Springs, San Bernardino, Ventura, Lennox, Santa Ana, San Diego, Highland, El Centro, North Hollywood
• Hawaii: Captain Cook, Waianae, Pahoa, Kekaha, Honolulu, Mountain View, Naalehu
• Idaho: Coeur d’Alene
• New York: Buffalo, Syracuse, Rochester, Albany
• North Carolina: Charlotte, High Point, Wilmington, Winston-Salem, Greensboro, Durham, Salisbury, Fayetteville
• South Carolina: Columbia, Florence
• Texas: Dallas, San Antonio, Irving, Austin, Waco, Corpus Christi, Brownsville, San Juan
• Wisconsin: Milwaukee

The enrollment period started Oct. 1 and ends November 30, 2012. Each participating school has a unique offer code that is required to sign up.  Eligible families will receive this code from their school administration or in the starter Internet materials provided to families and students.

In order to be eligible for Starter Internet, the family must have an Internet-ready computer. To help bridge this gap, each family in the pilot program is eligible for one low-cost, refurbished computer through Redemtech’s GoodPC via www.GoodPC.com/TWC or by calling 1-800-975-5837.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/WSYR Syracuse Time Warner Cable to charge monthly Internet modem fee 10-2-12.mp4[/flv]

WSYR in Syracuse and WCPO in Cincinnati report Time Warner Cable and former Insight Cable customers are upset the cable company is introducing new modem rental charges on Nov. 1 in both areas, but the company has yet to directly notify customers the new fees are coming. WSYR covers the concerns of customers in central New York. (1 minute)

Time Warner Cable’s new $3.95 monthly cable modem fee applies to customers signed up for broadband service, but if you are a Time Warner “digital phone” customer and don’t subscribe to broadband, the fee does not apply even though the same equipment can sometimes be used for either service.

Time Warner Cable claims the new modem fee was needed to cover the cost of repairing and replacing cable modems over time. But New York City customers have been asking why Internet customers have to buy their own modem to avoid the fee while those using the same modem only for telephone service do not.

The New York Times reached out to Time Warner Cable’s director of public relations Justin Venech, who had to acknowledge the logic disconnect between “digital phone” and Internet customers, but could only offer this weak explanation:

“The way we have decided to charge this fee is, we’re charging it for use of the Internet portion of the modem,” Venech explained. “It’s a business decision. It’s a matter of starting to treat this equipment the same way we treat our other equipment.”

That explanation did not seem to fly… with Time Warner Cable’s own customer service representatives.

When Manhattan resident Tom Arana-Wolfe demanded an explanation for the inconsistent fees, the representative put his call on hold to transfer him to a supervisor, but forgot to hit the mute button.

“She was discussing our conversation with a co-worker and said that they have to come up with something better, because ‘He has a valid point,’” Arana-Wolfe said.

Arana-Wolfe is considering starting a class action lawsuit against the cable operator relating to the modem fee, but is also considering switching his service to Verizon FiOS, which charges no modem fees.

The Federal Cable-Protection Commission

Problem: Solved?

The Federal Communications Commission last Friday unanimously voted to free cable operators from their obligation to sell cable channels they own to rival satellite and phone companies.

In a bizarre justification, FCC chairman Julius Genachowski said ending the unambiguous rules would prevent anti-competitive activity in the market because the FCC would retain the right to review industry abuses on a case-by-case basis. Lawmakers called that an invitation for endless, time consuming litigation that will deprive consumers of competitive choice and favor the still-dominant cable television industry.

“The sunset of the program access rules could lead to a new dawn of less choice and higher prices for consumers,” said Rep. Ed Markey (D-Mass.), one of the original authors of the rules. “If we do not extend the program access rules, the largest cable companies could withhold popular sports and entertainment programming from their competitors, reducing the competition and choice that has benefited consumers. I urge Chairman Genachowski and the FCC commissioners to extend the program access rules that have helped to level the playing field in the paid television marketplace.”

The FCC’s decision could have profound implications on would-be competitors, particularly start-ups like Google Fiber that could find itself without access to popular cable networks at any price.

At a time when cable companies and programmers are constantly pitted against each other in contract/carriage disputes, the deregulatory spirit at the FCC is likely to irritate consumers even more.

Phillip “How nice of the FCC to think about poor cable companies” Dampier

The FCC claims it will continue to protect sports programming from exclusive carriage agreements — a potentially critical concession considering the history of “exclusive, only on cable” programming contracts was largely focused on regional sports channel PRISM.

Comcast successfully kept the popular Philadelphia-based network (today known as Comcast SportsNet Philadephia) off competing satellite services and cable operators by only distributing the network terrestrially. A controversial FCC rule (known as the “terrestrial exception”) states that a television channel does not have to make its shows available to satellite companies if it does not use satellites to transmit its programs. Cox Cable has its own implementation of that loophole running in San Diego.

Derek Chang, executive vice-president of DirecTV, says Comcast’s local market share dominance is a direct consequence of SportsNet. More importantly, Chang believes even if Comcast says it will sell the network to competitors, it is free to set prices for SportsNet as high as it wants.

“They win either way,” Chang said. “They’re either going to gouge our customers, or they’re going to withhold it from our customers.”

Verizon FiOS has secured the right to carry the channel on its system, but won’t say how much it pays.

The PRISM case is today’s best evidence that exclusive agreements do hamper competition — Philadelphia is hardly a hotbed of satellite dishes, with a 40-50% reduced satellite subscriber rate attributable to the lack of popular regional sports on satellite.

FCC Chairman Julius Genachowski’s cowardly lion act is back. Will anyone at the FCC stand up to Big Telecom companies while busy watering down pro-competitive policies?

Historically, satellite dish owners and wireless cable customers were the most likely victims of exclusive or predatory programming contracts, with some cable networks refusing to sell their programming to competing technologies at any price.  Others charged enormous, unjustified mark-ups that made the technology non-competitive. Today, wireless cable television is mostly defunct and home satellite dish service has largely been replaced with direct broadcast satellite providers DirecTV and Dish.

Today’s programming landscape is more complicated. The FCC would argue that unlike in the 1980s, most cable programmers are no longer directly controlled by yesteryear’s Tele-Communications, Inc. (TCI) and Time Warner (Time Warner Cable was spun off into an independent, unaffiliated entity in March, 2009), which collectively controlled dozens of popular cable networks. But programmers’ know their best customers remain cable operators which maintain a dominant market share in every major American city.

Friday’s ruling has implications for telco-TV providers and satellite dish companies that may find programming negotiations more complicated than ever. AT&T U-verse and Verizon FiOS may find access to cable-owned programming difficult or even impossible to obtain if cable operators decide their unwanted competition is harmful to their business interests.

But an even larger challenge looms for the next generation of video competition: Google Fiber TV and “over the top” online video.

Nobody is complaining about Google’s robust gigabit broadband offering, but Kansas City residents originally expressed concern about the company’s proposed television lineup. As originally announced, Google Fiber TV was missing HBO and ESPN.

A competing cable system without ESPN is dead in the water for sports enthusiasts.

Google has since managed to sign agreements that expand their channel lineup (although it is still missing HBO). But nothing prevents channel owners from dramatically raising the price at renewal. That is a concern for smaller cable operators as well, who want protection from discriminatory pricing that awards the best prices to giant multi-system operators like Comcast and Time Warner Cable.

The most important impact of the FCC’s decision may be for those waiting to launch virtual cable systems delivering online programming to customers who want to pick and choose from a list of networks.

The FCC’s “new rules” give programmers who depend on tens of millions of cable subscribers even more ammunition to kill competing distribution models like over the top video. Start-up providers who cannot obtain reasonable and fair access to cable programming will have to depend on the vague policies the FCC claims it will enforce to prevent egregious abuse. But the FCC is not known for its speed and start-up companies may face enormous legal fees fighting for fair access that is now open to subjective interpretation.