Cord-Cutting On Rise At Time Warner

by Wendy Davis, Nov 5, 2012, 7:13 PM

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Cord-cutting seems to be taking a toll on Time Warner Cable. The company reported today that it lost 140,000 video subscribers during the third quarter of this year, the company said today.

That high number was slightly higher than the 131,000 subscriber loss predicted by ISI analyst Vijay Jayant, Reuters reports.

But it really shouldn't be surprising that people are shedding video packages given the growing number of cheap Web-based alternatives. These days, people can stream programs at very low cost from Hulu and Netflix, purchase programs from iTunes and, in New York City, sign up for service from the start-up Aereo. That company offers people the ability to watch over-the-air TV on demand, on iPhones and other devices, for $12 a month. While that figure might sound high, it's a lot less than Time Warner charges for video -- even with a "bargain" priced triple-play bundle. In fact, it's almost equivalent to the $10.25 a month in extra fees that Time Warner subscribers in New York City pay just to rent a converter box and remote control.

As the number of cord-cutters grows, it seems inevitable that Time Warner (and other cable companies) will be tempted to roll out new pricing systems that could discourage people from watching video online. In fact, three years ago, Time Warner tried to test metered billing, but the pricing proved so unpopular that the company was forced to backtrack.

Earlier this year, the company dipped its toe back into tiered pricing with a plan to offer some subscribers in parts of southern Texas the ability to save $5 a month on their bills by limiting their data transmission to 5GB per month. Time Warner says it intends to always offer subscribers "access to unlimited broadband at a flat monthly rate" -- but hasn't said how high that rate will be.

Remarkably, the Federal Communications Commission doesn't seem to see a problem with data caps or tiered pricing. In fact, Chairman Julius Genachowski said several months ago that usage-based pricing could be "healthy and beneficial" -- despite the possibility that cable companies will be able to manipulate pricing models to the detriment of online competitors.

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