Time Warner Raising Modem Fees Again; Blocks CBS

Oh yay. On Monday Time Warner Cable announced that it is raising the monthly fees to rent modems from the company to $5.99 a month. This will be the second time the broadband provider has raised its rates in the last eight months, as the company increased its modem fee to $3.95 back in November 2012.

Currently Time Warner Cable has roughly 12 million customers, thus the increase is expected to generate an additional $150 million in revenue this year alone. Customers who purchase the higher-end packages reportedly won't be affected by the change.

A Time Warner representative said on Monday that the monthly fee was raised due to the "cost associated with providing a modem". However customers not wanting to rent modems from the company can purchase their own solution that is compatible with Time Warner's broadband network. A list of compatible modems can be found here.

The representative said that the company is now notifying customers of the new modem rental rate. While many subscribers could lash out over the raised rate, ISI analyst Vijay Jayant points out that Comcast and Cox already charge modem fees between $7 and $8 per month. Time Warner customers, it seems, are still getting a discount.

Time Warner typically doesn't mention that customers can supply their own modems when they sign up for broadband service. Naturally the company makes more money from rentals, plus is has better control over the connection and the modem itself.

As an example, many modems come equipped with a Wi-Fi router that can only be turned on by Time Warner – customers do not have access to the modem's settings. To activate this feature, customers must call technical support for a technician to come out and log in, or to unlock the feature remotely. Typically the router aspect isn't activated when customers already have their own hardware.

In addition to raising its modem rates, Time Warner is currently facing increased fees of its own thanks to CBS. Unable to reach an agreement with the media giant, Time Warner pulled the plug on CBS "in some but not all areas" after midnight on Tuesday.

For weeks both companies have fought over increased fees collected by CBS, and the negotiations were expected to conclude on Monday. "There's progress being made and hopefully we don't go dark," said CBS CEO Leslie Moonves at an event in Los Angeles Monday night. "We still believe our content is worth a lot of money."

But both parties didn't come to an agreement, and Time Warner began to halt service in New York and Los Angeles which included CBS-owned Showtime, The Movie Channel, Flix and Smithsonian just after midnight. However at the request of CBS, Time Warner halted the blackout and agreed to extend negotiations until August 2 at 5pm EST.

Had the blackout continued, Dallas would have gone dark as well -- CBS affiliate stations owned by other companies would not have been affected. The actual contract between CBS and Time Warner expired in June, and the two sides already extended the deadline twice before Monday.

"We offered to pay reasonable increases, but CBS's demands are out of line and unfair," Time Warner said in a statement. "They want Time Warner Cable to pay more than others pay for the same programming."