Time Warner Cable has assured customers that the company's $45-billion acquisition by Comcast will improve service and innovation.
Customers might wonder how the pairing of two profit-hungry cable giants will remedy the biggest problem: ever-increasing monthly bills.
Time Warner Cable has just sent out notices of its latest rate hikes, which take effect with the next bill. As usual, the company says higher prices were unavoidable.
On the one hand, it says, "the rates that TV networks and programming providers are charging us to deliver your favorite channels have risen to new highs."
At the same time, "the cost to maintain and grow our infrastructure has also increased."
Both of those explanations are valid. But what Time Warner isn't saying is that it needs to keep shareholders happy at a time when its number of TV subscribers is steadily decreasing and more people want high-speed Internet access.
Time Warner lost 831,000 TV subscribers last year but gained 154,000 broadband Internet customers.
The company's new rates reflect efforts to squeeze more money out of both camps.
On the broadband front, Time Warner's Lite Internet service will now cost $37.99 a month, Basic Internet will be $47.99 and Standard Internet will be $57.99. But, frustratingly, the company neglects to say on its notice to customers what the former prices were.
Dennis Johnson, a Time Warner Cable spokesman, said the company is required by regulators to provide such information for some fees, but Internet rates aren't one of them.
So Time Warner kept the size of the rate hikes to itself. What it apparently doesn't want people to know is that the increase for each Internet tier adds $3 to monthly bills.
That means the 11.1 million broadband customers Time Warner had as of Dec. 31 could be coughing up an extra $33.3 million in monthly revenue, or nearly $400 million a year, depending on their service plan.
Meanwhile, the company's 11.4 million TV subscribers will face an array of higher charges. The monthly cost of set-top boxes and digital video recorders, for example, will rise to $11.25 from $10.
That 12.5% increase will produce more than $14 million a month in additional revenue, or almost $170 million a year.
Johnson said the higher price for boxes reflects "investments to improve customers' experience," including revamped guide and search functions.
I don't know about you, but I haven't noticed my box performing any better, certainly not in any way that merits an extra $15 a year.
Time Warner also is introducing a $2.25 monthly "broadcast TV fee" to address higher costs involved in providing local channels — and presumably to avoid the sort of spats that resulted in a month-long blackout of CBS stations last summer.
That fee will produce more than $25 million a month in revenue, or more than $300 million a year.
To be sure, Time Warner is correct when it says programmers such as Disney, Fox and Viacom are soaking pay-TV customers by making them take fat bundles of channels, regardless of whether they want them.
"Our largest competitors — DirecTV, Dish, Verizon FiOS and AT&T U-verse — have also recently raised prices of their TV services, all citing increased programming costs as a major factor," Johnson said.