Some Time Warner Cable Internet customers are in for a double whammy.
A week after announcing plans to raise rates for many of its Internet service customers by $3 a month, Time Warner announced it is increasing the monthly rental fee it charges customers who use a cable modem to receive Internet service by more than 50 percent, or a little more than $2 a month.
Time Warner said it is raising the monthly rental fee for cable modems to $5.99 per month, from the current rate of $3.95 per month. Until last fall, Time Warner didn’t charge its customers for using the cable modems that are required to receive telephone or Internet services. The modem is separate from the set-top box that customers need to receive digital TV service.
The increase in cable modem fees will take effect Aug. 19 and will cost customers more than $24 per year, driving their yearly rental costs up to $71.88 from the $47.40 that they currently would pay during a 12-month period.
“The modem lease fee is being adjusted as we’ve continued to deploy upgraded equipment and cycle out older modems as well as provide ongoing equipment maintenance and support to ensure optimal performance for our customers,” said Scott Pryzwansky, a Time Warner spokesman.
The company, in announcing the increase in the fee, also noted that, in the past year, it has increased Internet speeds by 50 percent on its most popular service tier and now offers its Internet customers free Wi-Fi hotspots in more than 150,000 locations across the country.
Time Warner in recent months has been reducing the discounts it offers to both new and existing customers who subscribe to a package of services that include a combination of telephone, Internet and television services. The move is part of the company’s strategy to derive more revenue from each customer, even if it means losing some of those customers to competitors.
“This approach represents a conscious decision to pursue subscribers with higher average revenue per user, higher profit and lower churn even if that means fewer connects,” incoming Time Warner chief executive Robert Marcus said this week during a conference call.
And while the cable modem fee increase does not affect the rates that Time Warner charges for its Internet services, it raises additional revenue for the company, just as a general price increase would.
“The modem fee is a rate increase by all accounts. It takes a different form than usual,” Marcus said during a conference call in late April. “It’s very much a part of the overall revenue generation program.”
Time Warner customers can avoid the fee by purchasing their own cable modem, which can cost between $45 and $130, depending on the model. The company provides a list of qualifying devices on its website at www.twc.com/approveddevices.