Around the beginning of July, Time Warner Cable invited customers facing the imminent arrival of their 5GB-usage capped “Internet Essentials” plan the opportunity to participate in “conversations” with the cable operator on a special website.

As we near the end of the month, despite readers sending a number of comments to Time Warner about the plan, the company has chosen to publish just one, which has nothing to do with the issue:

Ann McGarity
I am very upset at the loss of channel 9. We were without it before when we had Dish for a while and one of the reasons we returned to TWC was to get it back. Now we have to put up with Maine news and will have no idea about important NH issues. This is very disturbing, particularly in this political season. Can anything be done?

Apparently Time Warner isn’t too interested in what customers have to say, even on a website that was supposed to be all about dialogue.

Time Warner Cable is facing possible prosecution for vandalism over sidewalk graffiti the company used in Redondo Beach, Calif. to advertise its Wi-Fi network — a service the city claims the company has no authorization to provide.

Redondo Beach officials immediately began receiving complaints the morning of July 5 when Time Warner Cable’s blue chalk advertising messages began appearing all over the city’s sidewalks.

City councilman Steve Aspel told the cable operator’s director of government relations that constituents were upset about the large promotional messages.

“It really pissed me off and everybody in the neighborhood too,” Aspel told Time Warner’s Steven Sawyer. “Please have your company never do that again.”

Aspel told Sawyer nobody knew the messages were written in chalk, which will likely dissipate in a few days or sooner in any significant rain storm. The thought the cable company might have used blue paint on public sidewalks enraged several local residents.

But city officials were even more concerned about the fact Time Warner Cable has a Wi-Fi service up and running in Redondo Beach, without any permission from city officials to either install or operate it.

Assistant City Manager Marissa Christiansen told the council Time Warner was not allowed to operate any Wi-Fi network inside the city without explicit permission from the council. The city had been negotiating with the cable operator to grant permission to install the necessary Wi-Fi hotspots in the city’s right of way, but the cable company went ahead and installed them anyway, according to city manager Bill Workman.

“When we actually saw the markings on the sidewalk and put two and two together that it had all gone on without all the things we had discussed in those meetings, we, too, were very upset,” Workman said. “Very clearly, this is outside of their state franchise.”

Cable operators also require a building permit to install new equipment on public property.

Sawyer told the city council Time Warner apologized for the sidewalk markings, and the company moved quickly to remove them.

“We’ve done these markings in other cities and have never had an issue,” Sawyer said.

City attorney Mike Webb said there is an active criminal investigation underway to determine if the sidewalk messages are criminal graffiti, and was not in a position to elaborate as to if or when the cable operator would be prosecuted for violating the city’s municipal code.

Discussions about the Wi-Fi service itself are reportedly ongoing.

Time Warner Cable is planning major expansion of its network of Wi-Fi hotspots across southern California and into other service areas nationwide in the coming years.

A Stop the Cap! reader working for a Kansas City non-profit group dropped us a note this morning indicating she has received an invitation from Google to join the company at a special event Thursday, July 26 which will be Google Fiber’s formal launch announcement.

“There is buzz all over town about Google launching the fiber service on a limited basis in certain Kansas City neighborhoods next week,” Cathy writes us. “The local media has definitely been invited and encouraged to attend and several non-profit groups are going together in a group to also informally meet with some Google officials at the conclusion of the event regarding access and pricing issues. We have already been told this will be a formal launch event.”

Google has kept its pricing and exact service availability information tightly under wraps, but the company is inviting local residents to sign up for e-mail invitations and additional information as it is released.

The anticipated launch has not been missed by Time Warner Cable, which has taken to placing signs around the workplace offering $50 “rewards” for insider tips about Google Fiber’s launch and marketing plans. Although some in the tech press have characterized this as “fear” of Google Fiber, a Time Warner employee tells Stop the Cap! the “reward” program is not unprecedented and the cable company has occasionally offered goodies to employees who can deliver tips about competitors like Verizon FiOS and community fiber broadband networks for years.

Kansas City residents will certainly have a choice when Google Fiber launches its gigabit network. In addition to fiber broadband from the search engine giant, customers in different parts of the area can also get cable from Time Warner Cable or Charter and U-verse from AT&T.

Google will join Chattanooga’s EPB Fiber as America’s gigabit residential broadband providers. Cable operators and phone companies are expected to downplay Google’s fiber introduction — likely telling customers they do not need gigabit speeds and chastising its likely monthly cost.

Google’s competitors may have to prepare to deliver that message beyond Kansas City, however.

Dow Drukker, senior vice president of CapStone Investments, believes Google is in the mood to grow:

Initial Indications Google Fiber Is Likely Expanding Beyond Kansas City.

We saw an ad for an Inside Sales position in Mountain View, CA for selling Google Fiber to small businesses. The ad said the position would be tasked to build a team to sell a national broadband network indicating Google likely plans to build a fiber-optic network in additional cities.

This was the ad Drukker saw, which can be vaguely interpreted to indicate the company has plans to place Google Fiber in more cities (underlining ours), although we see nothing that specifically mentions a “national” broadband network:

The area: New Business Development

At Google, we set ourselves goals we know we can’t reach yet. Our New Business Development team works on game-changing ideas, from technological experiments to the expansion of existing businesses into new territories. We’re a team of technologists, entrepreneurs and leaders with an eye for what’s next, working across Google to develop products and ideas that revolutionize the way people connect with information.

The role: Sales Manager, Inside Sales, Google Fiber

Does winning new business get your adrenaline pumping? Drive growth for Google’s Online Sales Group as part of the Inside Sales Organization, the sole acquisition engine at Google. You collaborate with our Account Management teams to devise strategies to acquire specific segments of your market. Work independently, travel to trade shows, visit large prospective clients–it’s all part of this role. Be rewarded for being an overachiever while driving incremental growth in your market. You prescribe the right marketing mix based on Google’s core advertising products through acquisition of predefined mid-and up-market clients. You are product-and industry-savvy, and your energetic drive propels you toward new acquisitions and building and managing your own book of business.

If you want the opportunity to work on a state-of-the-art high-profile program, look no further than the opportunity to frame the future of broadband. The Fiber Sales Manager will build a team to evangelizes Google Fiber services to small and medium business and multi unit dwellings. Fiber Sales manager will develop a plan for our approach in the market including multi unit dwellings, small business, restaurants, and hotels. Inside Sales Representative, you reach out proactively to both small businesses, while articulating how Google Fiber Solutions can help make their work more productive. (And then, you seal the deal!) You excel at product pitching, cultivating a strong base of new clients and working with fellow technical Googlers to devise solutions and support for your clients.

One of the most potentially valuable lessons Google may teach with its new gigabit broadband network is one for Washington lawmakers. To date, cable and telephone companies have portrayed gigabit fiber broadband as unnecessary, unwanted, and too difficult and expensive to offer residential customers. Google’s performance in Kansas City could prove those arguments wrong.

Verizon CEO Lowell McAdam wants you to spend more with the phone company, and if his vision of Verizon’s future comes true, you will.

The company’s newest CEO spoke on a wide-ranging number of topics for the benefit of Wall Street investors at the Guggenheim Securities Symposium. A transcript of the event delivers several newsworthy revelations on the company’s future plans.

McAdam rose through the ranks of Verizon Communications with a specialty in the company’s immensely profitable wireless business. His predecessor, Ivan Seidenberg, spent his career at Verizon Communications working with the company’s legacy wireline (landline) network. While Seidenberg envisioned a new future for Verizon’s landline business with an upgraded fiber optic network called FiOS, McAdam maintained a different vision having run Verizon Wireless as a profit-making machine since 2006. McAdam believes Verizon’s future earnings and focus should be primarily on the wireless side of the business, because that is where there is serious money to be made.

“The first thing I did when Ivan sort of named me as the Chief Operating Officer was we had a very well-defined credo in the wireless side,” McAdam said. “We created it when we first came together in ’99 because we had seven different companies and we knew we had seven different cultures and we needed to tell people what it was we were really looking for. So we created that document. We spent a lot of time on it. We do a lot of reward and recognition as a result of it and that culture really took root in wireless.”

McAdam’s leadership also aggressively challenged the long-standing telephone company philosophy of earning a stable, predictable profit as Verizon did when it was a regulated monopoly. Instead, McAdam shifted the work culture towards an obsession with shareholder value.

“We took the top 2000 leaders through what we call ‘Leading for Shareholder Value’ and that was really a cultural shift for us because, if you think about it, the wireline side of the business has come out of the defined rate of return culture and we left that competitively a while ago. I am not sure we left it culturally,” McAdam said. “So we have been far more pushing why do you make that investment, what is the return on it, what is the priority of that investment versus another investment.”

Verizon’s Plans to Abandon Rural Landline Customers – Sign Up for Our Expensive LTE 4G Wireless Broadband With a 10GB Usage Cap Instead

Some of the most revealing commentary from McAdam came in response to questions about what Verizon plans to do with its enormous landline phone network, dominant in the northeastern United States.

In comments sure to alarm rural Verizon customers from Massachusetts to Virginia, McAdam clearly signaled the company is laying the groundwork to abandon its rural phone network (and DSL broadband) as soon as regulators allow. Dave Burstein at DSL Prime estimates that could impact as many as 18 million Verizon customers across the country.

“In […] areas that are more rural and more sparsely populated, we have got [a wireless 4G] LTE built that will handle all of those services and so we are going to cut the copper off there,” McAdam said. “We are going to do it over wireless. So I am going to be really shrinking the amount of copper we have out there and then I can focus the investment on that to improve the performance of it.”

Elsewhere, in more urban and suburban areas, McAdam also wants Verizon to purge its network of copper.

“The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper,” McAdam said. “We are going to just take it out of service and we are going to move those services onto FiOS. We have got parallel networks in way too many places now, so that is a pot of gold in my view.”

In other words, McAdam would shift money spent maintaining and upgrading rural landline service into the company’s wireless network in rural America and its FiOS network in more urban environments, both of which will improve profits. FiOS allows Verizon to pitch television, broadband, and phone service in one profitable triple-play package, while also discontinuing standalone DSL service. Rural customers pushed to wireless LTE for broadband will face onerous usage limits and more expensive service for phone calls and broadband. Using Verizon’s LTE network for video would be prohibitively expensive.

McAdam hints the company has used its lobbyist force to make preparations to abandon rural customers first in Florida, Virginia, and Texas where state regulators approved legislation that eliminates the requirement Verizon serve as “the carrier of last resort.” That law required Verizon to deliver landline phone service to any customer in its service area on request. With that provision stricken in those three states, Verizon can abandon any landline customer it chooses after serving written notice.

McAdam said he intends to continue lobbying other states to adopt similar deregulation, and chided legislatures in both New York and New Jersey for “being backward” because they have repeatedly refused to allow Verizon to walk away from its rural customer obligations.

Burstein thinks the changes in progress at Verizon will be a disaster for affordable rural broadband.

“This makes a mockery of ‘affordable broadband,’ especially when Verizon and AT&T are boycotting the plan for discounts for poor schoolchildren,” Burstein says. “The detente between telcos and cable companies means the prices of modest Internet speeds (3-15 megabits down) are typically going up from $30-45 to $55-70.”

Burstein also notes the change spells disaster for competitors who sell DSL service over existing phone networks.

“Nationwide, alternatives to the telco/cablecos have less than 5% of the residential market but in some areas they remain important,” Burstein says. “The most interesting, Sonic.net in California, offers unlimited calls and Internet up to 20 meg for $50/month, 20-50% cheaper than AT&T.”

“High prices, unacceptable service choices and further rural depopulation are bad policy,” he adds.

Verizon still earns enormous revenue from its remaining landline customers, revenue McAdam hopes will be replaced by selling business-focused services instead.

“Cloud [service] is continuing to pick up for us. Security is I think going to be an even more important play for us as we go forward,” McAdam noted. “I think these large enterprise accounts, offering them kind of a global service with those up the stack […and…] applications on top of it drive it as well. So there is a number of pieces in the portfolio that I think will take us up and more than compensate for some of the falling off of copper-based services like DSL and voice and that sort of thing.”

Verizon’s Unionized Employees Are Wrong-Headed Defending Verizon’s Landline Network

McAdam also blamed the company’s unionized employees for remaining loyal to the company’s traditional role in the landline business.  Unions like the Communications Workers of America continue to push Verizon to expand its FiOS fiber optic network in more places, but the company has left its FiOS expansion on hold, diverting investment into its wireless business. Both McAdam and the union agree the days of copper wire networks are numbered, but McAdam hints that union concessions (and fewer unionized employees) are required before the company will again expand FiOS.

“Our employees see that it is not sustainable to keep having copper plant out there. You really can’t invest in it; it is difficult to maintain it; and they want to see us improve on FiOS,” McAdam said. “And when I am out in the field, the techs and the reps will be the first to point out kind of some of the dumb policies I call them that we have around the business. Well, a lot of those are based on rules that were negotiated with the union back in the ’60s and ’70s.”

“So we have to get the union leadership to understand that if the company is able to be more flexible in meeting customer needs then we can grow things like FiOS, which will provide good long-term jobs,” McAdam added. “Will it be the same number as what we had in the past? No.”

Verizon’s Enormous Offshore Bank Accounts: Waiting for a ‘Business-Friendly’ Administration to Let Them Bring the Money Back, Tax-Free

McAdam also signaled investors that the phone company’s profits massed in overseas bank accounts are going to remain in place until they know who wins the next election. Verizon wants to repatriate some of that offshore money, but they want to do it tax-free.

“Everybody is kind of waiting to see who controls the Senate and who controls the White House and they are waiting to make those — you have got to understand what the tax situation is going to look like, so we are all waiting to make those investments,” McAdam said.

‘Share Everything’ Lays the Foundation to Monetize Your Data Usage… Forever

McAdam is a big supporter of the company’s new Share Everything wireless plan, which charges smartphone owners $90 a month for unlimited voice calling, texting, and a small 1GB bucket of data that he is convinced customers will be prepared to spend more to enlarge.

“If I know that I have an intelligent home that I can get to any number of ways. If I know that I can do everything I want in my car that I can do in front of my TV set or my PC or on my tablet, I think it just takes away a lot of the restraints,” McAdam said. “Is it going to cost them more money? Yes, but it will probably shift their wallet spend from other things that they do individually into this sort of a bucket of gigabytes. And so I think it will be a significant [revenue] stream for us.”

FitchRatings, a credit ratings agency, agrees in a new report.

“The new pricing structure taken by the industry leader is a disciplined pricing action that could create more cash flow stability longer term within the wireless industry,” the credit ratings agency said last week.

Fitch notes data services are increasingly becoming a larger source of revenue for wireless phone companies. In the first quarter alone, data revenues at Verizon Wireless, AT&T, and T-Mobile USA — all carriers that abandoned flat rate wireless data plans, grew 19% year over to year to $14.2 billion. That represents 41 percent of the companies’ service revenues.

Despite assertions from Verizon that the new plans deliver convenience and better value for subscribers, Fitch found they actually represent a substantial price increase for many customers.

“These increases are sometimes material, depending on whether the legacy rate plans have low recurring charges for text messaging or calling minutes. As a result, prices have generally increased for new subscribers,” Fitch reports.

Fitch warns investors Verizon is likely to lose customers over its new pricing strategy, and experience a slowdown in new customer growth as well, at least until competing carriers realign their pricing and plans to be similar (or match) those Verizon introduced last month.

The Days of Your Subsidized Android/iPhone May Be Numbered

McAdam’s vision also includes a re-examination of device subsidies as customers increasingly depend on wireless devices. McAdam previously indicated the wireless device subsidy was designed to get customers to adopt and embrace new technologies, and as adoption rates have soared, the need to keep discounting technology that customers depend on diminishes.

He echoed that sentiment at the Guggenheim Securities Symposium, noting that Verizon this month abandoned subsidies on tablet devices. For McAdam, discounting wireless technology serves one purpose: to quickly establish a new business relationship with a customer that probably would not buy their first device at full price.

But McAdam recognizes changing the company’s subsidy that customers expect to receive must happen gradually. It has already started, first by eliminating early upgrade discounts, then by dropping the company’s loyalty discount “New Every Two” plan. Now, the company will only allow grandfathered unlimited data plan customers to keep those plans if they agree to forego any subsidy on their next smartphone.

“If you look at the telematics industry today [services like OnStar], the car companies subsidize a device that goes into the car. So I think that we have a tendency over the years to sort of look and say, oh, something is going to happen very quickly,” McAdam said. “Things have a tendency to evolve over a long period of time, so I think you will have some devices, like the tablet today, that [are] not subsidized and you’ll probably still have certain devices that are because you want to establish that relationship with a customer and that is the easiest way to get there.”

Verizon Wants You to Use the Cable Industry’s Growing Wi-Fi Network

McAdam’s vision also offloads as much of Verizon’s 3G and 4G traffic to other networks as possible. Ironically, one of the biggest networks he hopes customers will use instead of his are the growing number of Wi-Fi services offered by his competitors in the cable industry.

“It is interesting that a lot of people have said, well, I can’t believe you’re going to partner with [cable companies],” McAdam said. “You are not going to use their Wi-Fi are you? Well, of course, we are. I mean we want to shift as much onto FiOS or onto the fixed network where we can and then provide — use that capacity to provide those higher demand services like video.”

McAdam added he does not want customers sitting in their homes watching video over his LTE 4G network. He also wants that traffic shifted to Wi-Fi.

“So our thinking going forward as we talk about kind of the ‘One Verizon’ approach is we want to use every network asset we have and if that means jumping onto FiOS or using the cloud services for mobile as well as fixed line, using security across all of our different access technologies, we want that network to be seamless and that is what our CTO, Tony Melone, is driving hard on in the business right now,” McAdam said.

One preview of that thinking at work can be found on Verizon Wireless’ hottest new device — the Samsung Galaxy S3. Verizon’s version of the phone browbeats customers with prominent menus that encourage Wi-Fi use wherever possible. The phone’s persistent reminder has become a pest according to many of the phone’s owners, who consider both the message and the difficulty keeping Wi-Fi shut off obtrusive.

Verizon’s partnership with large cable companies including Comcast, Time Warner Cable, Cox, and Bright House Networks originally involved the acquisition of excess wireless spectrum cable companies originally intended to use to compete with the mobile phone industry. With the cable industry abandoning those plans, the proposed collaboration involving Verizon Wireless grew to include cross-marketing each other’s products and services, and now apparently includes sharing the cable companies’ growing Wi-Fi networks.

Verizon Believes The Future of Telecommunications Needs to Be In the Hands of Two Companies — Verizon and AT&T

A point of shared belief between market leaders Verizon CEO Lowell McAdam and AT&T CEO Randall Stephenson is that excessive competition just does not make sense. Both believe federal regulators have it all wrong when they push to maintain the level of competition that still exists in the telecommunications business. When the Department of Justice effectively pulled the plug on a merger between AT&T and T-Mobile, Stephenson was outraged and, in one investor conference call, launched a tirade against regulators and suggested that AT&T would throw in the towel on expanding rural broadband in a retaliatory move.

McAdam and Stephenson both believe that competition in telecommunications represents wasted investment, inefficiency, and value destruction.

“I think the fundamental problem here, and it is sort of like fighting gravity I think, is that it is so expensive to build these networks that you are not going to support seven or eight carriers,” McAdam told investors. “I don’t — frankly, I think you’ll be lucky if you can support three in a healthy environment.”

But McAdam recognizes that if it achieves a wireless duopoly with AT&T, it must be a benevolent one, or else the marketplace abuses the wireless industry has a track record engaging in will invite regulatory scrutiny.

“We have a tendency to create a great club and hand it to our detractors and say please beat me with this because we do some dumb things like fighting some of the number portability and trying to push a direct wireless directory,” McAdam said. “I mean there are things that have really upset customers and that invites regulation. So I think the industry has the responsibility to act in the best interests of the customer as part of the mix with a shareholder, but I think there is always going to be the battle with regulation.”

McAdam admits he is uncomfortable with the fact the Obama Administration has allowed the regulation pendulum to swing more towards enforced competition and checking the power of dominant carriers in the marketplace. He prefers the Bush Administration’s “hands-off” approach that allowed both Verizon and AT&T to snap up smaller competitors with scant regulatory review.

McAdam believes the Obama Administration’s FCC and Justice Department is slowing down wireless investment, innovation, and the industry’s ability to earn profits at a time when unemployment in sky high and increased investment will help drive the economy forward.

Customers sitting down to watch the local news in Louisville, Ky. on Time Warner Cable (formerly Insight) now get to see stories about ongoing bankruptcy woes at Eastman Kodak, house fires in Irondequoit, road work in Greece, and Scott Hetsko’s local forecast… for Rochester, N.Y.

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WLKY in Louisville is no longer seen on former Insight cable systems (now owned by Time Warner Cable). In its place, Louisville viewers are watching WROC-TV in Rochester, N.Y.  Here is why. (3 minutes)

No, it is not some weird sunspot reception and nobody transported you from Kentucky to western New York while you were sleeping. It’s simply another epic battle waged in:

RETRANSMISSION CARRIAGE CONSENT WARS: 2012

“Not getting the channels you are paying for does not necessarily entitle you to a refund, but does require you to pay more when a deal is eventually struck.”

These skirmishes used to be commonplace around the end of the year, when carriage agreements between cable, satellite, and telephone companies with cable networks and local stations came up for renewal. When the programmer passed a figure written on a folded up piece of paper across the table to your pay television provider, the shock and awe of that number, occasionally 100-300 percent more than the year before, was the opening shot in a battle that now increasingly leads to favorite local stations or cable channels being stripped from your lineup.

In Louisville, that is precisely what happened to WLKY-TV, one of 15 stations owned by Hearst Television, taken off the lineup when Time Warner Cable/Insight/Bright House Networks could not successfully negotiate a renewal agreement. Time Warner complained Hearst wanted 300% more for each of the affected stations, an increase sure to be passed along to cable customers already long weary of endless annual rate increases. That was the same story told in other cities affected by what is now a week-long blackout. In Greensboro/Winston-Salem, N.C., Time Warner customers are doing without WXII-TV. Kansas City customers lost two local stations owned by Hearst — KMBC and KCWE. Two stations are also missing from Bright House’s lineup in Orlando: WESH and WKCF.

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Hearst Television’s general manager and president of WLKY has stopped referring to those watching the station simply as “viewers.” Glenn Haygood now calls them “subscribers.” Haygood talks with WHAS Radio about the dispute and what he thinks about Insight/Time Warner Cable. (10 minutes)

But why are Louisville viewers now watching the boating forecast for Lake Ontario, several hundred miles away? Because Time Warner Cable thinks it has a signed contract with Nexstar Broadcasting Group that lets them turn several Nexstar-owned stations into “superstations,” importing them in cities where contract disputes have knocked the local station off the cable lineup. In Louisville, WLKY, a CBS affiliate, has been replaced by WROC, the CBS affiliate in Rochester. In Greensboro and several other cities, WXII, an NBC affiliate, has been replaced with WBRE in Wilkes Barre, Penn. Some other Time Warner customers are instead watching WTWO out of Terre Haute, Ind., for NBC shows.

It represents a half-measure that Time Warner Cable’s Jeff Simmermon tells Stop the Cap! is “making the best of a tough situation.”

Viewers are naturally outraged.

“I’ve always wanted to know the weather and news in Rochester, Buffalo, Ontario and Caribou,” Kelly Grether teased. “Louisville did make [WROC’s weather] map believe it or not.”

Others are simply confused and engaged in must-flee TV.

“I saw the news coming on,” Greensboro resident Mona Wright told the News & Record. “It didn’t take me but one minute to figure out that these counties were nowhere around us; I changed the channel.”

Some Louisville viewers are even assuming the sales and discounts being advertised on WROC are good in Kentucky as well (often, they are not).

For now, it is difficult for Kentucky viewers to know what WROC is airing because the local on-screen program guide has not been updated to include listings for the Rochester station. Time Warner is pushing a lot of viewers to WROC’s website for program information.

Viewers hoping to practice their Jeopardy and Wheel of Fortune skills during the dinner hour lost that opportunity altogether in some cities, while in the Triad of North Carolina, viewers discovered the two shows on two different channels at the same time.

For now, WROC has completely ignored its new Kentucky audience, but WBRE’s morning anchors now regularly acknowledge and welcome their viewers from several states away.

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WFTV in Orlando reports on Bright House Networks’ customers being shut out of WESH-TV in Daytona Beach after the cable operator failed to meet Hearst Television’s demands for an increase in carriage payments.  (2 minutes)

The dispute has since enlarged to bring in side players who are unimpressed with Time Warner’s creative problem-solving:

• Impacted stations now off Time Warner’s lineup think the “new” stations on the lineup are about as honorable as employing scab workers during a union strike;
• Nexstar, for the second time, declares Time Warner is illegally importing their stations to unauthorized places. They are threatening to complain to the FCC and possibly sue to stop the practice. Nexstar earlier complained about a similar dispute in upstate New York which left viewers in northern New York watching WBRE in Wilkes-Barre. But the carriage dispute was settled quickly enough for WBRE to go back to being  viewable only in Pennsylvania, ending the dispute;
• Syndicated program owners sell shows like Wheel of Fortune on a “market exclusive” basis, which means competing local stations already paying for syndicated shows do not want out of area stations also carrying those shows to local audiences, diluting their audience.
• Advertisers on stations now off the lineup paid ad rates based on tens of thousands of cable viewers who are now probably watching another station. Some are demanding “make goods” or outright refunds to get the value for money they were originally promised.

But nobody is more caught in the middle than consumers, especially those paying for channels they are no longer getting.

“I want my money back,” says Orlando Bright House customer Luis Fernandez. “I have lost two stations on my lineup and my bill should be going down to compensate, but Bright House is refusing to credit me.”

Time Warner Cable does not usually give refunds either, arguing that its customers pay for a package of channels and the technology that delivers those networks to customers. Giving a refund for the loss of one or two stations would be tantamount to the industry’s worst nightmare: getting customers used to the idea of paying individually for every channel.

One customer willing to make himself a major nuisance in Wauwatosa, near Milwaukee, Wis., finally wore Time Warner down and secured a $5 a month discount on his bill for the length of the dispute that knocked Milwaukee’s WISN off his lineup.

“[I called] Time Warner to voice my disgust in them putting me (the paying customer) in the middle of their negotiation failures, and after reaching a ‘supervisor,’ I was able to get a discount on my monthly bill,” the reader told the Journal-Sentinel. “It wasn’t easy, but I did it.”

Hearst is encouraging viewers to drop Time Warner like a hot potato and switch to AT&T U-verse or a satellite provider like DirecTV. Negotiations seem to be continuing on a sporadic basis, but one week later, customers heading for the door have already left or are simply watching the local news on another channel.

Satellite Showdown — DirecTV vs. Viacom: Playing Down and Dirty With Everyone

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Viacom turns the tables on DirecTV’s clever ads to lambaste the satellite provider for cutting off more than two dozen cable channels owned by Viacom.  (1 minute)

If a customer took Hearst’s advice, they might find themselves out of the frying pan and into the fire. Newly arriving DirecTV customers can join the Anger Party 20 million satellite customers are now throwing over a much larger, higher profile dispute between the satellite provider and Viacom. Collateral damage: the loss of networks including Palladia, Centric, Tr3s, CMT, Logo, NickToons, VH1 Classic, TeenNick, Nick Jr., Nick@Nite, Spike, BET, VH1, TV Land, Comedy Central, Nickelodeon and MTV.

Some financial analysts are calling the dispute the mother-of-all-program-fee-battles, and as they watch both sides dig in, some warn it could mean DirecTV customers won’t be watching The Daily Show with Jon Stewart until August.

DirecTV says Viacom wants a 30% rate increase to renew its contract to carry the company’s networks. That is comparatively cheap contrasted with the prices Hearst wants Time Warner Cable to now pay. Analysts expect DirecTV and Viacom will eventually settle their dispute by agreeing to a 27% rate increase, but nobody knows how long the two will battle it out before an inevitable agreement is reached.

Regardless of the timing, customers will likely pay the price. Nomura analyst Michael Nathanson informed his Wall Street clients DirecTV will end up paying Viacom $2.85 per subscriber — about 60 cents more per month than it pays today. That’s tough for DirecTV to swallow, and probably even harder to pass along to customers. Satellite TV providers have some of the country’s most-frugal pay television customers who are especially resistant to rate increases.

The dispute is so high profile, both companies are bringing out high-powered executives and show talent to argue their respective cases.

Millions of dollars are at stake, and both Viacom and DirecTV are willing to fight to the death, even leaving customers on the battlefield.

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Not so fast, says DirecTV CEO Michael White, seen here presenting DirecTV’s position in the Viacom dispute for the benefit of concerned customers.  (1 minute)

“All we are trying to get is a fair deal for our customers and I’m sorry our customers are being forced into the middle of this,” DirecTV’s Michael White said. “We just think we pay a half a billion dollars a year and a billion dollar increase over five years, over 30 percent, is not justified by the marketplace or fair relative to our largest competitors or by their ratings.”

Viacom CEO Philippe Dauman counters, “In the last seven years since we did the last DirecTV deal, we have successfully and peacefully concluded affiliate agreements with every major distributor in the U.S. We are prepared to move forward. It’s unfortunate consumers for the first time are not able to enjoy our channels,” said Dauman, adding, “I don’t want to negotiate in public.”

DirecTV was telling its customers it can watch many of the missing shows for free online, until Viacom reportedly began removing that direct viewing option last week. That hardball tactic could impact everyone trying to stream Viacom’s shows — DirecTV customer or not.

“We’ve temporarily slimmed down our offerings, as DirecTV markets them as an alternative to having our networks,” a Viacom spokesman told CNNMoney. “The online content is intended to serve as a complimentary marketing tool for our partners.”

“At least they were honest about the reasons why they pulled this,” said Stop the Cap! reader Dick Armlo, a DirecTV customer in Idaho. “But fortunately, you can still find a lot of the shows on Amazon’s video on demand and Hulu.”

Customers threatening to switch providers often discover the new neighborhood they move to is just as bad as the one they left.

Dish Network customers are currently enduring a long-standing dispute with Cablevision-owned AMC Networks. The result is no AMC, IFC, Sundance Channel and WeTV on Dish. AMC is telling Dish customers to turn their dish into a birdbath and head elsewhere… perhaps to AT&T U-verse which just recently averted its own blackout with AMC over the same channels. AT&T customers can expect part of their next rate increase to cover the negotiated rate hike AMC won for itself — the one AT&T agreed to on your behalf. After all, it’s your money at stake, not theirs.

[flv]http://www.phillipdampier.com/video/CNBC Viacom CEO on Dispute 7-12-12.flv[/flv]

CNBC talks with Viacom CEO Philippe Dauman to get his views about the dispute with one of his best customers — DirecTV.  (2 minutes)