Time Warner Cable has quietly boosted the upload speed for Road Runner Turbo customers in Rochester, N.Y., from 1Mbps to 2Mbps.  Stop the Cap! reader Michael was the first to inform us about the free upgrade, and we’ve since been able to confirm it.  Road Runner Turbo customers need to reboot their cable modems for the speed increase to take effect.

Road Runner Turbo is available for an additional $5-10 a month on top of Standard Road Runner service pricing (ask about available promotions to receive a lower price).  It brings Turbo service speeds in this area to 15/2Mbps.

Michael is happy with the speed upgrade now that it finally arrived.

“It only took years to go from 1 to 2Mbps,” he says.

Update 9:27pm ET:  Kevin writes to inform us the download speed for Turbo has also increased — to 20Mbps.  Road Runner Basic is now 3/1Mbps, Road Runner Lite is 1/1Mbps.  The only speed remaining unchanged is for the most popular tier — Standard, which remains 10/1Mbps. We use Time Warner’s 30/5Mbps service here, which makes it difficult to test some of these speeds ourselves.

Comcast, Time Warner Cable, and Bright House Networks sold AWS spectrum in areas shown here to Verizon Wireless, virtually guaranteeing the cable industry will not compete in the wireless phone business.

Two years ago, Cox Communications was hungry to get into the wireless phone business.  It announced it was launching “unbelievably fair” wireless — an oasis in a wireless desert of tricks and traps on offer from competing wireless companies.  No more expiring minutes, the option of affordable flat rate service, and no hidden fees or surcharges were all supposed to be part of the deal.

“Our research found that value and transparency are very important to consumers when choosing a wireless service plan, but they are not finding these qualities in the wireless plans offered today,” Stephen Bye, vice president of wireless said back in 2010, introducing the service. “Total loss of unused minutes as well as unforeseen overage charges on bills are just two examples of what our customers have told us is just unfair.”

Those same issues still exist for wireless customers today, but Cox won’t be a part of the solution.  The company announced this past May it was exiting the competitive arena of wireless and would simply resell Sprint service instead.  Last month, it announced it wouldn’t even bother with that, and will transition its remaining wireless customers directly to Sprint.

What changed Cox’s mind?  The cost of building and operating a wireless network to compete with much larger national companies.  It simply no longer made sense to build a small regional wireless carrier and rent the rest of your national coverage area from other providers, who set wholesale prices at a level high enough to protect them from would-be competitors.

The lesson Cox learned first has now been taught to America’s largest cable operators Comcast and Time Warner Cable (and its sidekick Bright House Networks).

All three cable operators have effectively signed a non-aggression treaty with Verizon Wireless, agreeing to sell their unused wireless spectrum acquired by auction in 2006 at a 50% markup to Big Red.  In return, Verizon will market cable service to wireless customers.  It’s the ultimate non-compete clause so wide-reaching, Verizon stores will soon be selling Time Warner Cable right next to Verizon FiOS, something unheard of in the telecommunications marketplace.

It’s a win for Verizon Wireless, which accumulates additional wireless spectrum and peace of mind knowing the cable industry will not enter the wireless communications business.  Cable companies get to profit from their purchase of the public airwaves and see the potential of a dramatic reduction in customer poaching, as cable and phone companies stop fighting each other for customers.  Ultimately, it means customers could eventually pay the cable or phone company for all of their telecommunications services from television and broadband to wired and wireless phone service.  What consumers enjoy in one-bill-convenience may eventually come with higher rates made possible from reduced competition.

Verizon Wireless' currently unused AWS spectrum favor the east coast, but not for long.

Verizon will pay $3.6 billion to Comcast, Time Warner and Bright House Networks for the spectrum.  The deal has stockholders cheering because that payment represents a tidy profit for cable operators who did absolutely nothing with the spectrum they purchased five years ago.  It also makes AT&T even more intent on completing its own spectrum merger with T-Mobile USA.

The agreement has concerned consumer advocates because it seems to signal Verizon is content making money primarily from its wireless business, and will repay the favor from the cable industry by pitching phone customers on cable service.  That could ultimately spell big trouble for Verizon’s stalled FiOS fiber-to-the-home network.  Verizon may find it easier and cheaper to end its aggressive entry into Big Cable’s territory by simply reselling traditional cable television products.  It can still market wireless products and services to cable subscribers and not endanger the new atmosphere of goodwill.  Rural broadband, where cable never competes, could be served through wireless spectrum, for example.

For now, Verizon says it intends to continue competing with its FiOS network, but the company stopped deploying the service in new areas nearly two years ago.

The deal will go before regulators at the Justice Department and the Federal Communications Commission for review.  What will likely concern them the most is the appearance of collusion between the cable companies and Verizon.

“A flag is raised when two rival networks move to start selling each other’s services,” a person familiar with the concerns of federal antitrust officials told the Washington Post. “They lose their desire, impetus, to compete. That is a big antitrust flag.”

Mark Cooper, the director of research for the Consumer Federation of America, expressed serious concern as well.

“Verizon was supposed to be the great competitor for Comcast in the video space, while Comcast has been looking for a wireless play to match the Verizon bundle,” he said. “The deal signals bad news for consumers, who can expect higher prices for video, fewer choices and higher prices for wireless.”

Who owns what

Four years into the deal, consumers may not know what company they are dealing with, as cable operators will be able to market Verizon Wireless service under their own respective cable brand names.

The deal is also trouble for lagging Clearwire, which had been providing wireless broadband service to both Comcast and Time Warner Cable.  Under the agreement, both cable companies will end their relationship with Clearwire, which is particularly bad news for the wireless company because of its ongoing financial distress.  Sprint, which has heavily invested in Clearwire, may ultimately find itself with an investment gone sour, troubling news for the third largest wireless company manning the barricades against a nearly-complete duopoly in wireless service between AT&T and Verizon Wireless.

Cable stock cheerleader Craig Moffett from Sanford Bernstein seems thrilled with the prospect.  In a research note to his Wall Street clients, Moffett says AT&T could benefit from the Verizon pact with Big Cable by ending up in a “more duopolistic industry structure without paying for it.” If the FCC approves the non-aggression pact, the deal “would amount to an unmistakable step towards the duopolization of the U.S. wireless market, inasmuch it would leave T-Mobile, once again, stranded without a 4G strategy.”

Cable investors, he adds, are likely to be excited the cable industry won’t spend billions of dollars in capital building a wireless venture, and instead has agreed to work with competitors to cross-sell products and services.  With little competitive pressure, prices won’t be falling anytime soon.

That’s great news for investors, even if it is “unbelievably unfair” for consumers.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bloomberg Verizon to Buy Wireless Spectrum for 3-6 Billion 12-2-11.flv[/flv]

Bloomberg News explains the deal and its implications in the wireless industry spectrum battle.  (2 minutes)

Esteves

Time Warner Cable wants to introduce usage-based broadband pricing for its residential customers, according to the company’s chief financial officer.

Irene Esteves told investors attending a UBS media investor conference the cable company sees broadband usage as a “complement to our TV offering,” but reassured Wall Street Time Warner has a “wonderful hedge” against the cord-cutting customer: usage-based pricing.

Esteves believes usage-based pricing for Time Warner Cable broadband will become a reality sooner or later.  Charging “heavy users” more would already be familiar to consumers used to paying higher prices for heavy use of other services, and she claimed light users would have the option of paying less.

But despite favorable reception to the idea of usage pricing by Wall Street, Esteves acknowledged the company’s past experiments in usage pricing didn’t go as planned, and she suggested the company will introduce usage pricing “the right way rather than quickly.”

Esteves’ view of broadband pricing echoes that of Time Warner Cable CEO Glenn Britt, who in 2009 approved an experimental pricing scheme that raised the price for flat-rate broadband to a whopping $150 a month.  The plan was shelved by Britt less than two weeks after it was announced because of consumer backlash and political pressure.

Time Warner Cable was the loudest proponent of usage pricing at the investor event.  Comcast CFO Michael Angelakis told the same conference while the company wasn’t opposed to the concept of charging customers for usage, he saw no immediate need to “nickel and dime customers” for broadband service.

Critics of usage pricing point to the enormous profits cable companies earn from existing flat-rate broadband service.  One Wall Street analyst says cable operators already collect a 95% profit margin on unlimited service, and Comcast pays costs of around $8 a month for broadband it sells for $40-50.

Esteves’ comments come the closest yet to admitting what Internet Overcharging critics have claimed all along — usage-limiting pricing schemes are about protecting revenue from cable television packages, and boosting profits that have waned on the television side of the business.  In the 2009 experiment, light users would have faced usage limits as little as 1GB per month, with a steep overlimit penalty, so critics doubt light users would realize any significant savings, and “heavy users” would face overlimit penalties that represent almost pure profit for the cable operator.

Time Warner Cable’s progression towards all-digital cable continues to spread across Maine as customers in Albion, Augusta, Belgrade, Benton, China, Clinton, Farmingdale, Gardiner, Hallowell, Litchfield, Manchester, Monmouth, Mount Vernon, North Vassalboro, Readfield, Richmond, Rome, Sidney, Vassalboro, West Gardiner and Winthrop lost many of their analog channels last week.

But customers losing AMC, Animal Planet, Cartoon Network, CKSH, CHLT, CNBC, E!, EWTN, GAC, Hallmark Channel, HGTV, History, HSN, INSP, NECN, Ovation, QVC, SyFy, Shop NBC, TCM, TNT, and USA also provoked the loss of something else: patience.

“Cable TV is the only service I pay for that increases my bill and frustration at the same time,” says Augusta Stop the Cap! reader Jeff E. Smith.  “The digital adapter Time Warner sent me was defective right out of the box, and two of my neighbors were also sent defective units that never powered on,” Smith writes.

Time Warner Cable is dramatically reducing the analog cable lineup to make additional room for new digital HD channels and faster broadband speeds.  The company is supplying palm-sized digital adapters for subscribers who don’t have a digital set top box on every television.  Although free until 2014, the boxes will carry a monthly fee of $0.99 each after that.

“The upgrade gives them the chance to cram on more channels we don’t want and more expensive broadband, and yet we have to eventually pay for the equipment,” Smith says. “And it doesn’t even work right.”

Smith’s neighbors have discovered patience-testing lines at some Augusta-area cable stores as customers rushed to obtain the equipment they assumed they didn’t need.

“The neighbor’s mother-in-law doesn’t understand how to use OnStar in her car, so it was no surprise she found out she needed the equipment when most of her favorite channels disappeared,” he adds.  “Time Warner really overestimated the level of understanding customers would have about this after buying new digital-TV’s a few years ago.”

Jim has several suggestions for Time Warner to adopt before the digital upgrade begins its progression across the country:

1. The equipment should be free of charge and included with your regular monthly service.  You can’t realistically expect to buy Time Warner Cable service without a box for every set after the digital conversion is complete, so just include the equipment;
2. A better and less intrusive way to manage this would be to install a single digital converter on the outside of the home or in a closet which could provide analog service to every TV not already equipped with a set top box.  That would mean no annoying box on every set in the home and would probably cost less (in time, money, and aggravation);
3. People assume they are ready for digital cable because they bought digital-ready TV’s after analog television service ceased. Most customers will not read generic letters carefully.  It would be better to send people customized letters telling them they specifically will need the equipment because records indicate additional outlets were installed in the home without corresponding cable set top boxes attached to them.  What are the chances customers are using CableCARD units these days?  Chances are, they’ll need the DTA adapters, so make this clearer.
4. Don’t you dare put customers through this, increase broadband speeds, and then slap usage caps or usage billing on us!

The original Yule Log

Time Warner Cable is going extreme.  Refreshing last year’s reboot of the timeless holiday tradition of The Yule Log, the cable operator is unveiling a new 3D Holiday Fire experience for subscribers equipped with a 3D-ready television (and appropriate glasses) to make the crackling fire come alive.

The concept of running a looped film of a roaring fire backed by traditional Christmas music was made famous by WPIX-TV in New York and the nation’s cable systems that used to carry the “superstation” well beyond its local coverage area in New York, New Jersey, and Connecticut.  Fred Thrower, then-president and CEO of WPIX, envisioned showing several hours of a crackling fire Christmas Eve as a gift to New Yorkers who lacked fireplaces.  “Yule Log” premiered in 1966, simulcasting the easy listening Christmas music fare from WPIX-FM.

Originally, a fireplace at the governor’s mansion entertained viewers.  But the 17-second long 16mm film loop quickly deteriorated after two holiday seasons.  The Yule Log that most New Yorkers (and the rest of the country) are most familiar with was filmed on 35mm stock in 1970… in California… in the middle of a scorching hot August.  Viewers had caught on to the short-looped film in the original, but detecting the splice in the later version was much harder.  A clue: it happens at around 6 minutes, 3 seconds into the full screen fire.

For 23 years, WPIX ran the traditional Yule Log program for 2-4 hours Christmas Eve.  It was a ratings sensation, which probably says something about the quality of 1970s television programming, and it was soon duplicated by others.  It disappeared for a time during the late 1980s, but was brought back to comfort New Yorkers during the 2001 Christmas season, post-9/11.  Now a facsimile is available for free, on-demand, anytime during the holiday season from Time Warner Cable, along with repeats of last years’ offerings — “Winter Green” – snow falling on pine branches, and the self-explanatory “Snowman.”  Subscribers can find them under the “Yule Log” category on the Free Movies on Demand and Movies on Demand channels.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/WPIX Yule Log.flv[/flv]

For those who prefer the original, here is a portion of WPIX’s version of The Yule Log from Christmas Eve, 1983.  (9 minutes)