Next generation cable or a spray-on solution to a really bad quarter?

Time Warner Cable has a plan for multi-gigabit broadband speeds over a state of the art network that, for the first time, might include fiber to the home service.

TWC Max is Time Warner Cable’s code name for selected markets where customers will be given first class treatment and provided what incoming CEO Rob Marcus calls “best-in-class reliability and service.”

Marcus made it clear in a conference call to investors this morning that TWC Max will only be available in specially chosen markets, most likely those facing intense competition from Google Fiber (Austin, Kansas City), Verizon FiOS (New York, parts of Dallas, etc.) or upgraded AT&T U-verse.

TWC Max might also be offered in cities where community-owned fiber-to-the-home providers best TWC’s broadband speeds and prices. North Carolina, in particular, would be a logical choice as Time Warner Cable recently acquired DukeNet, a major commercial fiber broadband provider headquarted in Charlotte, also a major hub for Time Warner Cable’s data services. Wilson, Salisbury, Mooresville, Davidson and Cornelius are all served by publicly-owned broadband providers.

Beginning next year and over the next several years, those chosen will get major broadband speed upgrades — up to several gigabits, totally new customer equipment, and an all-digital experience.

“We will replace modems with state-of-the-art DOCSIS 3 modems and advanced wireless gateways, so we can meaningfully increase broadband speeds,” said Marcus. “And by the way, we’re not talking about tweaks here but rather quantum changes to our speed tiers. We’ll also replace standard definition and older HD set-top boxes and roll out new DVRs, better user interfaces and more advanced versions of our TWC TV apps to fundamentally improve the video experience.”

If the competition is DSL, you may have a really long wait to be considered a TWC Max city.

Marcus added that in some mixed business/residential areas, fiber to the home service is increasingly possible because of declining costs and pre-existing fiber infrastructure already serving commercial customers and cell towers.

But Marcus was quick to stress that his philosophy about upgrades is to provide them in focused markets, not share them with every city where Time Warner Cable provides service.

“The goal here is, really, to fundamentally change the customer experience in a given market, said Marcus. “So rather than spread our efforts like peanut butter throughout the footprint, I’m very anxious to deliver a complete experience.”

“That means not only going all-digital but also ensuring that we have state-of-the-art modems in every customer’s home, ensuring that they have the best video and that the overall experience is really optimal,” Marcus added.

“So we’re going to concentrate market by market rather than take individual components and run them through the entire footprint.”

So what are the chances your city will be designated a TWC Max target area?

After reviewing the transcript for this morning’s conference call,  Stop the Cap! has created this handy-dandy, simple to use guide:

• If your community has or was chosen for Google Fiber: A VIRTUAL CERTAINTY!
• If your community is served by Verizon FiOS or AT&T’s Next Generation U-verse: EXCELLENT
• If your community has a fiber to the home provider competing with Time Warner Cable: VERY GOOD
• If your community is served by copper-based DSL from the phone company with no prospect of getting U-verse or FiOS: WHEN PIGS FLY!

Time Warner Cable’s summer was “horrible,” to quote one analyst, after three percent of customers left over programming disputes and increasing prices for broadband and telephone service, with more likely to follow as price promotions expire and rates increase further.

Cable analysts were shocked Time Warner Cable lost 308,000 customers in the last three months, most leaving over interruptions of CBS and Showtime over a contract dispute. But customers were also ready to leave over increasing modem rental fees, rate increases, and the company’s growing pullback on promotional pricing. Time Warner Cable’s poor results have ironically caused its stock price to increase this morning, but only because investors suspect a shareholder value-boosting merger with Charter Communications could come within months.

“Just horrible,” MoffetNathanson analyst Craig Moffett wrote in a note to investor clients this morning. “The CBS dispute apparently took a much larger toll than anyone would have imagined, and this colored all the results.”

Sources have told Reuters that cable billionaire John Malone has approached Time Warner Cable about a full takeover by Charter Communications, but has been rebuffed by Britt so far. But with Britt exiting and Time Warner Cable’s underperformance, shareholder pressure for a deal with Charter will only increase.

“This enhances Malone’s appeal to Time Warner Cable shareholders that they would be better off with another management team,” Brean Capital analyst Todd Mitchell told Reuters.

When promotional prices end, a growing percentage of TWC customers drop services or take their business elsewhere.

The subscriber losses pushed profits down 34 percent at the cable company, to $532 million. The triple play tragedy saw subscriber losses for all the company’s residential services. At a time when other cable companies cannot process High Speed Internet sign ups fast enough, at least 24,000 Time Warner Cable broadband customers left over rate hikes and equipment fees. Analysts had expected the company to pick up more than 46,000 broadband customers during the last three months, not lose them. The company’s phone service is also in decline. Only rate increases and customers upgrading to higher speed tiers delivered a slight revenue boost.

Outgoing CEO Glenn Britt set the stage for the current forced retreat on its revenue forecast for the year:

• Time Warner Cable executives made the decision at the end of 2012 to stop heavily discounting service and cut back on promotions. Their theory was the company would attract a larger base of stable customers willing to pay non-promotional rates and tolerate rate increases;
• Executives announced as Time Warner’s phone service was brought “in-house,” the company would stop aggressively pricing triple play bundles that included phone service. That turned out to be a bad decision for growth because customers, already prone to landline cord-cutting, downgraded their bundle or left when promotions expired and ditched the phone line;
• A year of broadband price increases and the introduction of a modem rental fee rubbed customers the wrong way. “We have raised prices recently in the form of modem rental fees, but it’s really just broadband price increase,” again admitted Britt this morning. Future rate increases on modem rentals will give broadband customers another push to shop around for a better deal. At least 24,000 did that over the summer and left, mostly for AT&T U-verse in the midwest and Verizon FiOS in the east.

The lengthy dispute between Time Warner and CBS did the most damage and not just to customers directly affected by channel losses. A major increase in call volumes from alienated customers overwhelmed national call centers, creating long hold times for everyone calling in.

Time Warner expects 40 percent of the cable company’s service area will be overlapped by major competitors AT&T U-verse (now 27%) and Verizon FiOS (now 13%). That represents one million more homes than last year.

Bye Bye: Time Warner Cable lost residential customers for all of its services during the third quarter.

Incoming CEO Robert Marcus said he was dissatisfied with subscriber results from current promotions and rates. New Time Warner Cable customers, Marcus noted, are paying higher prices for fewer or less robust services as part of current promotional packages. Although that has driven a “dramatic improvement in recurring revenue” among customers actually signing up, many choose the lower-priced competition instead.

Marcus also noted customers are taking fewer services and are resistant to upgrading to double or triple play packages, reducing the potential average revenue per customer (ARPU).

“To a great extent, these are expected outcomes of our pricing and packaging strategy and the trade-off between ARPU and volume, but I’m confident we can do better on volume without giving up the ARPU benefits we’ve been achieving,” Marcus told analysts on a morning conference call.

Instead of getting more aggressive on pricing, the company plans to trot out free gifts and pitch discounted slow speed Internet to attract price-resistant DSL customers.

“Next week, we’ll launch our holiday offer, which includes a free Samsung tablet loaded with all of our apps, including TWC TV, with the purchase of higher-end packages,” Marcus said. “I think this will generate lots of interest and really highlight TWC TV and the value it adds to our service offerings.”

Marcus called it inconceivable and unacceptable that at least 4.5 million people are still subscribed to telephone company DSL in Time Warner Cable service areas. The company plans an advertising blitz to steal customers away from companies like AT&T, Verizon, Frontier, CenturyLink, Windstream and FairPoint.

At the center of that effort is the recently announced 2/1Mbps Lite package, which will sell at the everyday price of $14.95 a month. Marcus wants at least 500,000 DSL customers switched to Time Warner over the next 18 months.

“Over time, as these customers’ speed and capacity needs increase, we’ll be well positioned to sell them higher-end product,” Marcus said.

Or they will switch back to the phone company if Time Warner increases the price.

Since introducing its version of TV Everywhere more than a year ago, one of the most frustrating aspects of Time Warner Cable’s video streaming service has been it only works within your own home over the cable company’s own broadband service. As of tomorrow morning, that will change. If you own an Apple iOS tablet or smartphone, the cable company’s new version of its TWC TV app (free) will bring streamed and on-demand programming from a handful of cable networks regardless of where you happen to be.

There are several limitations however:

1. Having access to a Wi-Fi network while on the go will be a big help. Streaming access over 3G/4G service will initially be limited to Verizon Wireless customers, perhaps a fringe benefit of the agreement between Verizon and Time Warner Cable to collaborate in cross-marketing services;
2. Only nine cable networks and one Time Warner Cable-owned news channel will be available for live streaming when the service launches. None of them are particularly compelling. Programmers are fearful that streaming access outside of the home may open up cable programming to non-paying customers with access to a shared password;
3. Fox News Channel and Fox Business were reportedly going to be available as of tomorrow, but Time Warner Cable’s official blog post omits the two networks;
4. Android and desktop users will have to wait until summer to get the upgrade, an annoying prospect considering Android users now outnumber Apple iOS users, who have to wait.

The online programming guide is also being revamped to help users find TV channels and online on-demand content more quickly.

The initial out-of-home On Demand library offers over 1,100 hours of programming from the following providers:

BBC America
BET
CBeebies
CMT
Comedy Central
Cooking Channel
DIY
FEARnet
Food Network
Hallmark
HGTV
Logo
MTV
MTV2
Nick Jr.
Nickelodeon
Palladia
Spike
TeenNick
Travel Channel
Tr3S
TV Guide Network
TV Land
UniMas
Univision
VH1
VH1 Classic

Live TV streaming will be available from the following national networks:

Aspire
BBC America
beIN Sports (English/Spanish)
FearNet
GMC
Pac-12
TVGuide Network

Additionally, all Time Warner Cable local news channels will eventually be available out of home, though all local news, traffic and weather channels may not be available immediately. The following news channels will be available at launch:

NY1
NY1 Noticias
News 14 Carolina
YNN (New York and Texas)

Time Warner Cable today launched a major update to its free TWC TV app for iPad that will introduce on-demand access to more than 4,000 TV and movie titles from 91 different providers.

Existing Time Warner customers can access both standard definition and HD content, with plans in place to regularly refresh available titles.

But DVR owners are still out of luck — no application from Time Warner other than its Whole House DVR service will let you remotely watch recorded shows stored on your digital video recorder.

Time Warner Cable’s blog outlined the major upgrades in the new release:

1. On demand – Over 4,000 TV shows and movies from 94 providers

• FF / REW / Pause using standard iOS player controls (FF disabled where required).
• Browse by TV Shows, Movies, Kids or network.
• Search – search the On Demand catalog by title.
• Parental control – Channel blocking (network based parental control) is enforced for both TWC TV live and on demand content. To block channels, visit myservices.timewarnercable.com.

2. Live TV guide – now features “recently viewed channels” button to quickly recall previously viewed live TV channels.

3. Numerous performance enhancements and bug fixes have been implemented to improve the overall user experience.

Time Warner Cable TV customers will soon be able to access on demand, full length episodes of popular TV shows aired on cable networks like Comedy Central, Nickelodeon and VH1 at no additional charge thanks to a new agreement signed with Viacom.

Currently Time Warner’s “authenticated” cable TV customers can live stream Viacom networks over the cable company’s TWC TV app, but soon will also be able to view on-demand content using a Time Warner user ID and password on Viacom websites.

Time Warner has been among the slowest cable operators to embrace the industry’s TV Everywhere project — allowing only paying cable television subscribers to access popular cable shows on the web. The new agreement will help Time Warner sell customers on keeping cable TV subscriptions to enjoy extra online features, while protecting the company from would-be cord cutters finding ways to watch favorite television shows for free online.