It seems some in the cable industry aren’t only out of touch, they are out of this world.  Todd Spangler, from Multichannel News, a cable industry trade publication, lets an unnamed cable industry exec go all X Files on us when he gives column space to this whopper [thanks to Dave for pointing the way]:

A cable industry insider pinged me last night with an interesting conspiracy theory:

Rep. Eric Massa (D.-N.Y.), who this week blasted Time Warner Cable’s bandwidth-metering plan as “monopolistic” and inflicting harm on middle-class Americans, is based in Corning, N.Y. — the hometown of the world’s biggest fiber-optic supplier, Corning Inc.

The implication: That Massa is railing against Time Warner Cable because a big Corning customer is Verizon Communications, which has bought thousands of miles of fiber-optic cabling for its FiOS buildout.

And here is where I exert the tiniest effort to collapse this ludicrous nonsense.  Hey, clueless cable guy: your theory only works if Verizon was the phone company that sought to wire Rochester with those fiber optics.  They aren’t, and as disappointed residents have come to learn, they have no plans to bring their FiOS service into this area.  Oops.

Spangler’s own remarks suggest he isn’t on board this flight of fancy, but manages a few shots at the congressman anyway.

None of this is surprising of course.  We’ve been listening to the propaganda parade all weekend from Time Warner, trying to convince consumers who have never seen a rate change from the cable company that didn’t end up eventually costing them more… much more.

The cable television industry just cannot fathom why cable subscribers might be outraged about paying up to three times more tomorrow for a service they enjoy today at rational, profitable prices.

Why is it shocking to discover a member of Congress that is actually thinking about his constituents, instead of just cashing telecom lobby checks and shrugging shoulders saying there is nothing that can be done. Do I believe the congressman has all the answers?  No, which is why consumers will fight back against this on many different fronts.

Spangler offers his own bad analogy:

One wonders if Rep. Massa would summon the same level of outrage if, say, Corning Inc. had been selling strands of glass for a fixed, all-you-can-eat flat rate (surely something it has never done) and shifted to charging by the mile.

If Corning had, through decades of lobbying influence, successfully established itself as a de facto monopoly supplier of the kind of fiber necessary to deliver the fastest possible service in a community, and decided to “experiment” tripling the price in just that captive community, I’d suggest we would hear from the congressman, local, state, and federal officials, and angry customers.  I suspect we may not hear too much protest from a trade publication that exists because of the advertising, subscriptions, and goodwill of the industry it covers.

As I work my way through the e-mails that we’ve received, I thought that those of you looking for ideas on how to write your own complaint might get some ideas from this particularly poignant letter one person shared with me.  I have omitted names and made a few minor changes for privacy reasons.

By the way, if you submitted a Letter to the Editor that didn’t get published, send us a copy and we’ll publish it.  Newspapers often only print a small representative sample of the letters they receive on a single subject.  We have more space than they do, and it may help inspire you in your own letter writing efforts.

These are real people facing real struggles in this difficult economy.  There is no money for movies, trips, and adventures when people are having enough trouble just meeting the very basics.  In tough times, people tend to stay home and look for entertainment and escape from the stress and anxiety we are all coping with, wondering what could possibly go wrong next.

And it turned out to be a cable company that honestly feels that preserving unlimited access to the Internet requires at least a $75 rate increase in overage fees and that is somehow fair and equitable.  Perhaps to someone living in a Manhattan penthouse, but not out in the real world.

Message to Time Warner:

Hello,

As someone who recently lost my job of nine years, the internet has become my connection to the outside world. I have had to cut back on my spending substantially, but have kept our three-in-one package because the all-inclusive plan has kept me in contact with the family that I cannot drive to see on a regular basis anymore, and the television is a source of education for my children and stress relief for my husband and I. Most of all, the internet has been my savior in a time where I have felt the most unconnected, stressed and depressed about the future.

I spend hours on the internet job searching, finding healthy recipes for my family, and researching ways to save money elsewhere. In the efforts to not spend money on entertainment, we now have a Netflix subscription. I owe it to Netflix and the internet for introducing me to my new passion of organic gardening and learning about other environmental matters. I have also recently reconnected with friends I haven’t seen in over 15 years thanks to Facebook. This whole new world has opened up to me, and now you’re going to take it away? My husband has been wonderful about taking care of all of our expenses while I cannot seem to find a job in my field and while I stay home with the kids since daycare costs so much, but my husband’s salary only stretches so far in this economy. I will no longer be able to justify my internet usage if the costs go up, which will be the case if you choose to make this switch. It’s more important to put food on the table and clothes on my children.

We currently have the Time Warner 3-in-1 package and are in the trial period for DVR. I have been your unofficial spokesperson on how great your services are up until now. If you make this switch, we will have to start making considerations to lower bills again since we’re living on one salary. I very much like having a land line with unlimited phone calls, unlimited internet and cable usage for one somewhat reasonable price but of course the best deal always wins. You have gone from being a reasonable company to a greedy company in my eyes. In a time where many people only have one connection to the outside world, and some are even living in tents, is it really the time to change a good thing you have going for you and potentially disrupt your bottom line?

If you want more customers during this time of economic crisis where people are making difficult decisions about what they need opposed to what they want, a more educated approach to gain customers (and profits) would be to launch an empathetic PR campaign. I found your commercials highlighting the fine print of Frontier services to be very productive. Instead of alienating current customers, why don’t you find empathetic ways to reach out to new customers to increase profit?

Please reconsider this approach to profit. The internet is a wonderful place for educating myself when I’m stuck home and trying to save gas, but I can go back to educating myself through books from the library instead if necessary. I love your 3-in-1 service, but we will have to look at the need for it more closely if you chose to make this switch.

Sincerely,
A Loyal Time Warner Customer for over 13 years

Congressman Eric Massa to introduce legislation designed to prevent Job Killing Broadband Internet Caps; Freshman Congressman will fight to prevent high priced burden on families

Rep. Eric Massa (D-NY)

CORNING, NY – Today Congressman Eric Massa (D-NY) announced officially that he is drafting legislation designed to prevent job killing broadband internet downloading caps. The Massa Broadband Internet Fairness Act would prohibit unfair tiered price structures from internet providers. The bill will also address the importance of helping broadband providers create jobs and increase their bandwidth while increasing competition in areas currently served by only one provider.

“I am taking a leadership position on this issue because of all the phone calls, emails and faxes I’ve received from my district and all over the country,” said Congressman Eric Massa. “Time Warner has announced an ill-conceived plan to charge residential and business broadband fees based on the amount of data they download. They have yet to explain how increased internet usage increases their costs.”

Regarding Time Warner’s 4/9/09 statement, Rep. Massa had this to say:

“Time Warner’s decision has the potential to more than triple customers’ current rates and I think most families will find this to be too taxing to afford. Time Warner believes they can do this in Rochester NY, Greensboro NC, Austin TX and San Antonio TX, and it’s almost certainly just a matter of time before they attempt to overcharge all of their customers. And while I favor a business’s right to maximize their profit potential, I believe safeguards must be put in place when a business has a monopoly on a specific region.”

“At a time when millions of Americans have lost their jobs and businesses are struggling, I am compelled to fight against additional, unnecessary burdens placed on my constituents.”

In the past week, there has been a significant uproar in the Rochester, NY area regarding Time Warner’s announcement that they will “test market” a plan to charge customers based on how much they download. The initial proposal was to introduce a 5, 10, 20, or 40 gb/month downloading cap. If customers went over the cap, they would start mounting additional fees.

Then today Time Warner announced a new tiered plan similar to the previous one. However, for a consumer to receive the same unlimited internet that they currently do for around $40 per month, they would be billed $150 per month under the new plan.

In addition to this excessive and disproportionate charge, as internet usage increases by an average of 50% per year, companies setting caps sets a horrible, long-term, precedent. At a time when Americans need to utilize all available assets to improve the economy, limiting internet usage, which this plan would do, handicaps our ability to compete on the global stage. Furthermore, it will have significant stifling effects on start ups and small businesses.

This would also have significant impacts on the agricultural, medical, and educational communities. Farmers are increasingly dependent upon constant exchanges of GPS information to control all aspects of their operations. Medical professionals are increasing their data transfer rates, and patients rely on their ability to continue doing so unimpeded. Finally, educational institutions use more bandwidth every year. In Western New York, students at RIT’s School for the Deaf, who use video transfer software to communicate, would be greatly disadvantaged by Time Warner’s proposal.

As soon as the drafting of the Broadband Internet Fairness Act is completed, it will become available.

Another night spent tossing and turning….  It’s amazing how irritated one can get when they just feel deep down inside they are being played as a sucker.

So I fire up the laptop looking for something that will bore me to sleep in short order.  Since I already had waded through the Bank of America “change in terms” legalese mailing they sent me explaining why they needed to raise everyone’s credit card interest rates, the only other surefire snoozefest was reading Securities & Exchange Commission 10-Q filings.

I consider the fact Time Warner has been on my mind as of late for some reason, so why not start there?

As I scroll through a whole lot of excuses about why AOL has fallen from grace, I finally find my way down to a peculiar passage.

High-speed data costs decreased for the three and nine months ended September 30, 2008 primarily due to a decrease in per-subscriber connectivity costs, partially offset by subscriber growth.

Wait.

High-speed data costs decreased for the three and nine months ended September 30, 2008 primarily due to a decrease in per-subscriber connectivity costs, partially offset by subscriber growth.

Oh no.  I am fully awake now!

I fire up Google.  How can this be?  Did we not read less than 24 hours ago the sob story from company officials complaining their costs were spiraling and they needed more revenue from customers in order to pay for required upgrades?

Thank goodness someone else had braved the even more ponderous 10-K filing and mined these goodies (quoting their findings):

“In 2007, TW made $3,730 Million, on high speed data alone, and then had to turn around and spend $164 Million to support the cost of the network. 2007 total profit on high speed data: $3.566 Billion”

“In 2008, TW made $4,159 Million, on high speed data alone, and then had to turn around and spend $146 Million to support the cost of the network. 2008 total profit on high speed data: $4.013 Billion”

“It cost TW 11% less money in 2008, to keep their network running, than in 2007.”

If you actually spent less on your infrastructure in 2008 (during the incoming tidal wave of those pesky “heavy users” sucking down all those files and videos) than 2007, earned even more last year than you did the year before on broadband, then why are you coming to the consumer in 2009 begging for a bailout?

So is this entire tier “experiment” nothing more than a PR snowjob for a money party, exposed by filings made with the SEC, an agency that presumably would take a dim view of snowflakes falling in their offices. Maybe I’m all wrong.  Or maybe they’ve been wrong all along with this crazy cap scheme.

While Mr. Hobbs was telling consumers about the trials and tribulations of delivering broadband to consumers, he was responding to Saul Hansell in the New York Times (and to investors): ‘He said it was “absolutely not” true that Time Warner’s profits were being squeezed by the cost of heavy broadband users.’

So just how much money does Time Warner need to upgrade their cable systems to DOCSIS 3.0 to fix all this?  The New York Times reports:

Pretty much the fastest consumer broadband in the world is the 160-megabit-per-second service offered by J:Com, the largest cable company in Japan. Here’s how much the company had to invest to upgrade its network to provide that speed: $20 per home passed.

The cable modem needed for that speed costs about $60, compared with about $30 for the current generation.

The experience in Japan suggests that the major cable systems in the United States might be able to increase the speed of their broadband service by five to 10 times right away. They might not need to charge much more for it than they do now and they’d still make as much money.

The cable industry here uses the same technology as J:Com. And several vendors said that while the prices Mr. Fries quoted were on the low side, most systems can be upgraded for no more than about $100 per home, including a new modem. Moreover, the monthly cost of bandwidth to connect a home to the Internet is minimal, executives say.

$100!  Yet Time Warner was asking for up to $110 more per month from the “heaviest users” they blame this problem on. And for everyone else, capped access and higher prices for paltry tiers. Math has never been my strongest subject, but even I know this only adds up to one thing: MoNeY PaRtY!

The Rochester Democrat & Chronicle published an editorial this morning decrying Time Warner’s bungled proposal to introduce what they call a “tiered pricing system.”

The Rochester region has questions, Time Warner. Lots of them.

Your plans to create a tiered pricing system for Internet usage has come out of the cyber-blue, accompanied by a dismissive attitude that consumer complaints are OK, but, hey, a little late in the game. You’ve decided, you control the local market for high-speed Internet service and we’re just going to have to adjust.

Time Warner executives agreed to meet this week with the Editorial Board but canceled after learning of plans here to cover the event with live video to be streamed onto DemocratandChronicle.com. This was no gotcha condition. The company’s announcement to establish a usage pricing system has provoked a near firestorm of complaint and opposition. Putting the company on camera makes sense.

Time Warner said no, that video coverage was over the top. That’s a missed opportunity. But the questions remain.

Of course, the irony is that video coverage would have been over the top for another reason: it risked helping to blow through the ludicrous usage caps Time Warner wants to impose on its customers.

Several questions also raised in the editorial deserve answers, and those answers must come from the raw data, not from internal company “analysis” that requires people to simply take their word for it.