Another remarkable admission from Time Warner CEO Glenn Britt came at the end of today’s investor conference call.  In response to claims by some cable companies of incremental bandwidth costs running 40-50 cents per gigabyte (a number we strongly dispute at Stop the Cap! for being at least ten times too high), Britt made the debate over bandwidth costs moot by saying they really don’t have anything to do with how Time Warner Cable prices its broadband service.

“I think that the conversation about usage based pricing should not be tied to a conversation about costs,” Britt said.  “This is not a rate of return regulated monopoly industry like AT&T was before 1984.  We have a lot of different products, a lot of different offerings and we’re aiming at different segments and different combinations and the pricing will relate to that.  This is not a strict cost-base thing so those facts are interesting but not terribly relevant to pricing.”

That clears that up quite nicely.  We’ll be sure to remember that should the cable company revisit its customers with another Internet Overcharging scheme blamed on bandwidth hogs.

Time Warner Cable CEO Glenn Britt is asked what Time Warner Cable is paying for bandwidth costs. Britt said the question is largely irrelevant, because those costs have almost nothing to do with how the company prices its broadband service. July 28, 2011. (1 minute)
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Britt

On this morning’s conference call for investors, Wall Street continued to pound Time Warner Cable CEO Glenn Britt about when the company would introduce an Internet Overcharging scheme for broadband customers in the form of so-called “usage based billing.”

This quarter, the pressure came from Deutsche Bank’s Doug Mitchelson, who used the occasion to remind Britt he called usage pricing “inevitable” and wanted to know when the company was going to get the ball rolling on the pricing scheme.

Britt was unprepared to answer, other than to make comparisons about his “inevitable” remark with wireless carriers, who have said the same thing about the end of unlimited use plans in wireless, a different technology.

After following Britt’s public statements for more than two years about this subject, we detected a moderating view.  Britt told investors he believes “there should remain an unlimited plan for those who want to buy that,” and suggested Time Warner Cable might not be interested in applying usage pricing on every level of its broadband service.  That could be good news, so long as Britt doesn’t believe the price of “unlimited” should be the $150 a month the company proposed in 2009.

“We’re more focused on affordability and lower income people who might be light users and might seek to pay less because they use less,” Britt said. “That’s a much better context than the usual ‘oh those people using all the bandwidth’ and caps and all that stuff.”

Britt added he doesn’t anticipate having caps across the board.

Mitchelson explained in a follow-up question why Wall Street is interested in the adoption of usage pricing – an increase in “ARPU growth” — the average revenue earned from each broadband customer in the form of more expensive usage plans.

Britt acknowledges what Stop the Cap! has predicted all along — ARPU growth can be realized instead from subscribers upgrading to faster speed tiers, which carry higher costs.  Britt told Mitchelson he, and other investors, can get the ARPU growth they crave by looking at those numbers instead of earnings from usage based pricing.

How long before Wall Street demands both speed-related ARPU growth and extra earnings from usage pricing is an open question, but Britt’s latest remarks represent a significant shift in attitude about pricing broadband, potentially because the company has a new found appreciation for the limited capability of customers to keep opening their wallets to pay higher and higher cable bills.  That was clearly in evidence as the company tried to explain another quarter of declining cable TV customers, many forced out of the service because of its high cost.

Time Warner Cable CEO Glenn Britt answers a question about usage-based pricing from Deutsche Bank’s Doug Mitchelson, just one of a parade of Wall Street banks pushing broadband providers to adopt Internet Overcharging to increase profits. July 28, 2011. (2 minutes)
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This digital transport adapter from Motorola is commonly installed on secondary television sets, such as those found in bedrooms, offices, or the kitchen to ensure reception of digital cable television channels without the size and expense of a traditional cable set top box.

Time Warner Cable has announced it will cease analog cable television service within five years, as the cable company embarks on a wholesale transition to all-digital cable.

The announcement came from CEO Glenn Britt during this morning’s investor conference call, and represents a major transition for the cable operator and its customers.

While Time Warner Cable already runs older digital cable systems in New York City and parts of Los Angeles, today’s announcement represents the company’s de-emphasis on Switched Digital Video (SDV), the technology the cable operator initially supported to free up channel space on its systems.  SDV allowed Time Warner Cable to maintain analog cable lineups for consumers who detest cable set top boxes.  Instead of converting the entire lineup to digital, Time Warner changed the way it delivered certain digital cable channels, only sending their signals to viewers in neighborhoods actually watching them at the time.

“We always said we would supplement switched digital video with going all-digital,” Britt said. “Our plan is to migrate all systems to all-digital over the next five years.”

The decision means Time Warner Cable has opted to follow Comcast’s lead towards all-digital systems, instead of trying to support both analog and digital video.

Britt said the company’s first target city for the all-digital switch is Augusta, Maine.  Customers there will be given the choice of taking the cable company’s traditional set top box or new Digital Transport Adapters (DTAs), devices which convert digital signals into standard definition analog video, suitable for televisions where customers may not need or want a full-powered cable box.  DTAs have traditionally been given away in small numbers or rented for a nominal fee (usually under $2 a month) by other cable operators like Comcast.  But Time Warner has not made any specific announcements about pricing for impacted subscribers just yet.

When complete, every Time Warner cable subscriber will need to have either a cable box, a DTA, or CableCARD for every cable-connected television in the home.

Time Warner Cable’s newest version of its iPad app — TWCable TV — has more issues than the New York Times.

Stop the Cap! previously judged the latest version of the app ‘garbage,’ and after several weeks of periodic testing, we’ve found nothing to change our mind.

Now the cable company itself is acknowledging what hundreds of reviewers have bottom-rated: it simply doesn’t work right.

We’ve identified a number of frankly aggravating issues that have presented themselves only in a live environment. Comment threads on Engadget, DSLReports, this very blog and others support our internal findings, too. If you’re experiencing the following issues, please be reassured that they should be fixed in an upcoming patch releasing by the end of this month at the latest:

• The app crashes after iPad awakes from sleep or lock
• HD filter returns incomplete results
• Intermittently, guide listings will overlay other guide listings (text appears overwritten and jumbled).
• The device selector slides off-screen or disappears altogether
• In-guide recording indicators do not appear

We’ve also discovered an intermittent quality issue with our live streaming that we are working to fix right now. This problem is independent of the release 2.0 code bugs, and will be fixed very, very soon.

The end of the month is a week away, and nothing appears to have been fixed just yet.  For Stop the Cap!‘s tests, the most obvious and aggravating problem continues to be streamed video that simply does not work for more than 30 seconds.  That such a core function of the product would remain hopelessly broken and unusable for almost a month is a profound embarrassment, tempered only by the fact the app and service is offered for free at the present time.

Time Warner Cable’s Jeff Simmermon tries to offer helpful, but very limited advice to the large contingent of users who find the app bug-laden:

Live TV playback – video buffers (displays “loading” message)

(Note, we are currently working to resolve an intermittent video quality issue that could result in excessive buffering of the live feed.)

Did you experience any video quality issues prior to the 2.0 upgrade? If not, has anything changed on the home network recently?

Simmermon

Download a speed measurement tool or visit an iPad compatible speed measure web site to measure speed on the device at the point in the home where live video is being viewed. TWCable TV’s high definition video streams require a sustained 1.5mbps to avoid buffering. Fringe WiFi areas (e.g., a far corner of the house, backyard, etc) may not achieve these speeds.

Contact customer care with a detailed report of which channels are impacted and the frequency of the buffering (e.g., every few minutes, every 5 sec, etc).

We reported this particular issue and note it is hardly intermittent — it’s a constant for us in the Rochester, N.Y., area.  What is particularly odd is the prior version never experienced any of these issues.  We’ve only received guidance that our home network — the one Time Warner Cable technicians installed themselves when we upgraded to DOCSIS 3 technology — might be responsible.  We think not.

Many Time Warner Cable customers have used the company’s blog postings on the app as an opportunity to vent frustration over the cable company’s foot-dragging on online video.  While other cable companies’ TV Everywhere projects are unveiling a second generation of online playback tools, Time Warner is still withholding HBO Go and CNN Networks’ new live streaming of their cable networks’ digital online productions.

One satellite television customer responded bemused with Time Warner’s technical problems: “My DirecTV iPad app just works.”

Murdoch

As Fox’s parent company News Corp. continues to reel in a wide-ranging criminal investigation involving phone hacking murder and terror victims in the United Kingdom, the scandal is now spreading into the United States with new revelations this week that CEO Rupert Murdoch, working with New York’s then-mayor Rudy Giuliani, used politically-motivated threats to force Time Warner Cable to add a newly-launched Fox News Channel to the cable dials of New Yorkers, raising their cable bills in the process.

The Daily Beast reports efforts by Murdoch to pay a substantial bounty to get the news/commentary channel on in Manhattan were not effective, so Murdoch turned to a political alliance with Giuliani, who received significant support from Murdoch’s NY Post in his earlier election bid, to force the issue with threats against the cable operator:

Let’s start in 1996, three years after Murdoch’s New York Post helped make Giuliani mayor with the narrowest win in modern city history. That year, Rupert and Ailes, who’d actually managed Rudy’s unsuccessful mayoral run in 1989, were launching Fox Cable News and they had one rather daunting problem: Time Warner controlled the prime NYC cable franchise, with 1.2 million viewers, including virtually all of Manhattan, where every advertiser who might buy a spot lived or worked. And Time Warner refused to give Fox a channel for its new venture. In those days, Time Warner only had space for 77 channels on the dial, and 30 applicants had lined up before Fox. Richard Aurelio, who ran the NYC cable system for Time Warner, recalls now that he assured Ailes that in a year or so, they would “get more capacity and put you on.” But, says Aurelio, now long retired at age 83, “Murdoch was furious.” A former deputy mayor under John Lindsay, Aurelio says he’d “never seen such a display of raw political power,” branding it “ferocious.”

Records revealed that after Murdoch and Giuliani talked directly about the matter on Oct. 1, their aides had 25 conversations and two meetings in the space of a few weeks. A deputy mayor instantly warned Time Warner about the possibility that their franchise, granted by the city every 15 years, might not be renewed and volunteered to fly anywhere in the country to meet with a Time Warner executive above Aurelio. When Time Warner wouldn’t budge, Giuliani came up with an extraordinary remedy. The city controlled five public-access channels, written into law as alternatives to commercial television, and the mayor decided to give one of them to Fox. In fact, presumably to make it look like this wasn’t something he would just do for Murdoch, he offered another to Mike Bloomberg’s then-fledgling TV network. The Bloomberg News channel actually had its debut one night before a federal judge could stop the deal, but soon the courts blocked this transparently extralegal adventure.

Giuliani

While Murdoch was initially willing to pay cable systems up to $11 per subscriber to launch Fox News on cable systems in the fall of 1996, most cable systems were effectively out of channel capacity at the time.  Fewer than ten million households had access to the new new network when it launched, despite the record launch bonus Murdoch was willing to pay.  Time Warner Cable had promised the network it would likely have channel space within two years as the company completed the rollout of its then-new “digital cable” service, which opened up hundreds of new slots for additional channels, but Murdoch was not willing to wait.

The Giuliani Administration owed a lot to Murdoch’s newspaper operations in the city, trumpeting his political campaigns.  One year before Fox News launched, Giuliani’s then-wife Donna Hanover was hired by WNYW-TV, Fox’s owned and operated local station in New York, despite the fact it was over a decade since her last job in television.  Fox tripled her salary just after Giuliani began threatening Time Warner Cable’s franchise to provide cable service in New York, unless and until the cable system made room for Fox News.

By 1997, Time Warner Cable added the network not only to its Manhattan cable system, but agreed to roll the channel out to most of its cable systems nationwide by 2001.

Murdoch’s early willingness to pay a bounty to get cable carriage has proved a worthwhile investment, considering Fox News has now become one of the most expensive networks in the cable package.  In December, Chase Carey, COO of News Corp., compared Fox News’ value with ESPN — America’s most expensive cable channel.  Carey has sought wide-ranging rate increases for Fox News in 2011, even after the network won earlier increases which made them by far the most expensive channel in the news and commentary category, running about a dollar per month per subscriber.  Those rate increases are passed down to every cable subscriber in the form of a higher monthly bill, whether one watches the channel or not.

In 2007, additional pressure was brought against cable operators to add Fox Business Channel, a perennially-low rated channel that was started to counter “the anti-business bias” of CNBC.  Despite now being available in nearly half of all American households, the spring Nielsen ratings show only about 57,000 people over the age of 2 watch the channel on any given day, even though every cable subscriber with the network on their lineup pays for it.