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Time Warner Cable's gift to itself: More of your money

December 14, 2010|David Lazarus

There are things you can count on every year — the changing of the seasons, the happy faces of kids during the holidays … higher cable rates.

Time Warner Cable is notifying Southern California customers that their cable bills are about to go up yet again, with higher charges for pretty much everything the company offers, from TV to Internet access.

The $3 monthly rate hike for basic service follows an identical increase in April for about 500,000 local subscribers and higher bills for the remainder of Time Warner's nearly 2 million SoCal customers a few months earlier.

Jim Gordon, a Time Warner spokesman, said the latest rate increase reflects higher programming costs as well as overall improvements to the company's service.

"Throughout 2010, every one of our products has continued to see enhancements," he said. "We've continued to invest in products that add value to subscribers."

Be that as it may, customers of Time Warner and all other telecom service providers wouldn't be remiss in wondering why their rates have to go up every year like clockwork, and why those rate increases routinely surpass the inflation rate.

Next year's Time Warner rate hike for basic cable: 5%. Projected 2011 inflation rate, according to the Congressional Budget Office: 1%.

Although all businesses face higher costs from time to time, and most pass them along to customers, the cable industry's annual price increases appear to be little more than money grabs intended to keep shareholders happy at a time when TV subscribers are increasingly jumping ship for alternative viewing options.

In the most recent quarter, Time Warner posted gains in Internet and phone customers but saw its number of video subscribers drop by 155,000.

Customers can't be faulted, though, for thinking that everything's great at the company. In letters that arrived last week at many households, Time Warner pats itself on the back for recent service enhancements and philanthropic programs, and adds — almost in passing — that it "must periodically adjust our prices."

No word in the letter on how prices are being adjusted.

An accompanying pamphlet similarly devotes most of its space to extolling Time Warner's many accomplishments and services. It's not until you arrive at the back pages of the pamphlet that you finally learn rates are going up across the board — again.

The price of Time Warner's "All the Best" service bundle, combining TV, Internet and phone service, will rise in January for about 1 million local customers to $125.99 from $122.99. The cost of basic cable will increase to $63 from $60.

The remaining 1 million customers will see their prices go up later in the year, after current contracts expire.

A number of service charges are experiencing eye-popping hikes. For example, the fee for simply having a Time Warner employee come to your home to pick up old equipment will climb 50% to $29.99. The cost for installation of digital phone or Internet service will jump 65% to $32.99.

Time Warner's Gordon noted that technologically savvy customers can save money by installing equipment themselves for free.

If you have DVR service with your cable box — more than a third of TV viewers do, according to Nielsen — the monthly charge for being able to record shows and movies will rise another $1 to $11 (and how it can cost that much for a service with such huge economies of scale is beyond me).

That one increase alone will result in a windfall of hundreds of thousands of dollars for Time Warner's local operation.

A similar $1 increase in the monthly cost to lease the cable box will net an additional $2 million or so for the company.

You see how it works. Factor in the price increases for video, cable and phone service, and you see that Time Warner will pull many millions of dollars in additional revenue from customers — after already doing the exact same thing this year.

I've said it before and I'll say it again: Cable and satellite bills are too high, and it's nuts that people have to pay through the nose for channels they never watch.

It's time for cable and satellite companies to switch to a la carte programming so we can start paying for products we actually want, rather than ones that we're forced to accept.

One other thing

As it did last year, Time Warner is again trying to make its annual rate hike more palatable by giving customers coupons to watch premium movies for just 99 cents.

The catch is that you have to mail in the coupon with your bill to have it redeemed. Or you can mail it separately if you want to add 44 cents in postage to your 99-cent movie.

But what about all those customers who have gone paperless — as Time Warner prefers — with automatic bill payments or electronic cash transfers? Isn't this unfair to them?

When I suggested last year that maybe the cable giant should include a digital code on its coupons so that customers could redeem them online, a company spokeswoman said this was a good idea and she'd take it up with her superiors.

I suggested the same this year to Gordon. He said it was a good idea and he'd take it up with his superiors.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5. Send your tips or feedback to david.lazarus@latimes.com.

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