TWC Misleading Customers on Internet Speeds

The NY State Attorney General is troubled by the way Time Warner Cable handles customer service and how their advertised Internet speed don't match up with reality.

Misleading Internet speeds are pretty common and you would almost expect that sort of flim-flam marketing from companies like TWC or Comcast. What concerns me is the almost willful suspension of reality when it comes to so-called Gigabit Cities.

I get about 16-18 Gbps from my Charter connection but my bill says I'm supposed to get 30 Mbps. I'm not too upset about that because I understand contention and my speeds are at least better than 50% of what I'm supposed to be getting. But what about subscribers in FTTH builds who are supposed to be getting "up to 1 Gbps" on their new fiber connection only to top out at 100 Mbps when doing a speed test in the middle of the night and much less when doing a speed test during normal hours?

What's worse and what's more misleading - Charter giving me 18 Mbps from my 30 Mbps connection or getting 100 Mbps or less on a supposed Gigabit connection? There's a pressure on many of these fiber builds to attach the name Gigabit to their build and at the same time set customer expectations that the engineers know are not realistic. I don't agree with the practice and it is becoming way too common.

Cable Bills Explained

The Consumerist has done a very good job breaking down various cable bills from the major providers. Here's their latest - breaking down the Charter cable bill.

Earlier they also broke down the bills from the other major cable companies;

- Comcast

- Time Warner

- DirecTV

Roku and Time Warner

Interesting to note that Roku will be able to make available 300 channels to Time Warner Cable subscribers. This means that Roku is becoming a defacto replacement for a normal TWC set top for TWC subscribers.

I have beaten this drum before - a move like this is good for all involved. TWC doesn't have the opex or headaches involved in supporting additional STB's. Actually expenses should reduce as some existing STB are replaced - plus there is no truck roll costs involved when a subscriber adds a Roku box. Roku gets a great revenue opportunity as they get to market to millions of TWC subscribers. For the customer - there are a number of advantages of owning a Roku box that they will now be able to take advantage of. A win-win-win situation.

I also firmly believe that Apple will eventually announce both a new Apple TV box and a relationship with larger operators like TWC. They won't let Roku have all the fun (or all the market)

The NFL and Time Warner's Subscriber Losses

OK - this may be a question that only interests me but I wonder how many of the 140,000 subscribers who dropped Time Warner cable in Q3 did so because of the NFL?

Time Warner was the last major operator to add the NFL Network and didn't add the channel until after the start of the NFL season. The negotiations were contentious and it was never clear that Time Warner was going to give in. The loss of the 140,000 subscribers in Q3 has been blamed mostly on "cord-cutters" but a person who dropped Time Warner for DirecTV (and their NFL Sunday Ticket) or Dish Network would look the same on paper (drop video but keep high speed Internet).

So the question remains - how many subscribers did Time Warner's hardball negotiations with the NFL Network cost them?

Cord-Cutting on Rise at Time Warner

Interesting look at how Time Warner has lost 140,000 residential video customers during the third quarter this year.

What the article doesn't tell you is that even though TW lost those 140,000 subscribers - profits are up in part because they increased the number of residential high speed Internet customers by 8%. People who cut the cord still need a good Internet connection to view Netflix, Hulu and the rest of the over the top content providers.

The real losers from TW losing 140,000 residential video customers are the content providers. That dip in TW subscribers should cost Disney (ABC, ESPN, etc.) well over $1 million a month just in Affiliate Rights fees never mind lost advertising revenue. If this becomes a trend then content companies may start rethinking a la carte pricing as a way to get back some of the cord cutters.

What Was Steve Jobs' Vision of the Future of TV?

Interesting look at Apple and what Steve Jobs may have in mind for Apple TV.

I still say that the idea of Apple replacing set top boxes for the major MSO's is an idea that is vastly under-rated. Time Warner Cable alone probably has 40 million STB's. They would be very glad to help subsidize customers switching out their existing gear for Apple TV boxes. Apple would get a tremendous boost in revenue, Time Warner would increase profits by greatly lowering operating costs and the customers would get shiny new Apple TV boxes with features their existing legacy STB's can't come close to offering.

Why wouldn't everyone involved go for a scenario like this?

The First Crack in the Content Dam?

Two things happened over at Time Warner cable last week. One got a lot of attention but the second went pretty much under the radar.

The first thing to mention is Time Warner Cable finally signing to carry the NFL Network. TWC was the last holdout among the major cable companies in the US. Why did they hold out so long? Because the NFL Network is pretty damn expensive. We are talking about adding over a dollar in rights costs. Is TWC going to raise their prices? Probably not because they are already changing a premium to their digital tier customers. So the costs for the NFL Network will be coming right off the bottom line for TWC.

That's a situation that won't last.

Which gets me to the second thing I wanted to mention. Last week Jeff Bewkes, the Chairman and CEO of Time Warner made the following comment (which could easily be properly called a complaint), "About 17% of TV viewing occurs outside these [top] 40 channels, and $7 billion [in rights fees] goes to those channels." The comment was made at a Goldman Sachs investment conference and the inference was clear - companies like TWC are paying way too much for channels nobody is watching!

My guess is that to cover that dollar plus for the NFL Network - TWC will start shedding smaller niche channels. It will probably take five or six channels to make up for the costs added by the NFL Networks. I'd hate to be the sales rep for a smaller channel whose contract is coming up with TWC any time soon. Those will be the first to go.

The cable landscape has been a non-stop history of adding channel after channel for larger and larger line-ups. I think the wave has crested and that we are about to enter a period that for every channel added a couple will be dropped. Last week may be remembered as the week TWC added the NFL Network but long term it may be remembered as the point in time that the channel line-up started to shrink.

Time Warner Cable and Fox News TV Everywhere

Time Warner Cable now has TV Everywhere apps for Fox News and Fox Business News. This announcement got me wondering if we will see a new trend where TV Everywhere becomes the first line of defense for content producers against the oncoming tide of a la carte TV.

HBO Go is tremendous but the over the top service is only available to people who are already subscribing to HBO through their cable company. One hand washes the other in this arrangement. If you think about it - HBO is also a defacto package of channels. Nobody gets just one HBO channel. Other content providers who are not premium channels may see this and wonder if a similar arrangement like this can be used to their advantage.

I am not sure about the details of the Time Warner Cable arrangement with Fox News and Fox Business News regarding their apps but I have to wonder if the language of the agreement states that the apps are only available to people who subscribe to both channels? That may not be a big deal now when Time Warner and other cable companies package the channels together but it would be good protection and a very valid selling selling point if a la carte ever came to be. Sure with a la carte TV you would be free to pick either Fox News or Fox Business News or neither but what if you lost access to the apps for both channels if you didn't also get both linear channels?

Just something that occurred to me.