Time Warner Cable customers will see a spike in cable television and Internet rates on monthly bills starting in March, as the company will increase rates by an average of 6.4 percent to cover the cost of carrying local broadcast channels.
Bills will show an increase in three line items, which will start taking effect during billing cycles that begin March 19, said Joli Plucknette-Farmen, spokeswoman for the companys Northeast region. The cost of renting a converter box needed to get digital television service will jump from $8.99 to $10.25 a month, while rates will jump for all Internet services by $3 a month. A newly introduced broadcast TV fee of $2.25 per month will take effect, covering fees the company pays local television stations to retransmit their programming.
Customers now enrolled in promotional packages wont be affected by increases until those discounts expire, Ms. Plucknette-Farmen said. Some 70 percent of the companys customers are enrolled in promotional deals.
They wont see the broadcast TV fee, or increases in the Internet or TV tier until they roll out of their pricing plans, she said, calling the increases an unavoidable move to cover rising costs. In 2013, our overall broadcast fees increased by over 40 percent, and specifically thats the reason behind the new broadcast TV line item. It breaks out the customer impact of these fees that keep escalating. The costs for us to retransmit broadcasting and networking have escalated dramatically, and Time Warner Cable has taken a stand in the past against those broadcast increases.
Time Warner is required to pay fees to carry local broadcast stations, such as CBS and FOX, that customers may get for free over the air using an antenna.
But at the same time, Time Warner has continued to make ongoing investments to improve the reliability of its network and add customer services, Ms. Plucknette-Farmen said. Last year it invested $227 million in its network across the Northeast, which helped add more than 2,000 on-demand shows and movies, offering more than 18,000 overall.
Time Warner continues to make investments despite news this month that it has agreed to be bought out by Comcast in a $45.2 billion deal, which would swallow up the companys roughly 11 million subscribers across New York, Pennsylvania, Maine and the Carolinas.
But that pending merger, anticipated this year, wont hamper the companys business strategy in the meantime, Ms. Plucknette-Farmen said.
Its going to be months before that transaction would be finished, she said. So we plan to continue with our business plan as we would have regardless, and these investments are ongoing.
The cable television giant isnt the only one hiking its rates. This month, satellite television providers DirecTV and Dish Network increased package rates anywhere from $2 to $5, also blaming the increasing cost of retransmission and programming fees. DirecTV reported that its programming fees to owners of television channels were projected to increase about 8 percent in 2014, prompting it to increase customer rates by an average of 3.7 percent. On average, Dish Network customers are expected to see a 5.5 increase in 2014.
Even so, Time Warners move to increase rates comes after a track record of new fees in the past two years. In the fall of 2012, it implemented a $3.95 monthly fee to lease its Internet cable modems, which it said was needed to cover the rising cost of repair services for customers. It then increased that fee last summer from $3.95 to $5.99, a cost of about $72 a year.
Though the cost of other services will increase in 2014, the company has no immediate plan to hike its $5.99 modem lease fee, Ms. Plucknette-Farmen said.