Time Warner gobbles up more cash from customers by raising modem fees

Time Warner Cable informed customers today that it is raising the price of leasing a modem from $3.95 to $5.99 per month.

Time Warner only started charging customers for use of the company's modems last November after introducing the $3.95 monthly fee. With the fee now being $5.99, that's $71.88 extra per year compared to the days when Time Warner did not charge for modem usage—for the same "equipment that customers already had in their homes" as Consumerist notes. The modem fee charges are in addition to the various price increases Time Warner customers have been seeing for Internet service.

The message sent to customers today regarding the modem fee increase was reprinted by several news sites. According to Reuters, the fee is charged to "[s]ubscribers on Time Warner's Cable's most popular Internet plan," and the fee hike does not affect "customers who buy higher-end packages."

We contacted Time Warner, who told us that "We have close to 11 million high-speed customers, most of whom lease their modem from us." The "high-end customers Reuters mentioned are subscribers to SignatureHome, which provides 50Mbps download speeds and multi-room DVR, Time Warner said.

Time Warner customers can buy their own modems instead of paying the fee. The company publishes a list of devices compatible with its service, generally costing between $40 and $130.

Reuters quoted a Time Warner spokesman as saying the fee was raised to cover the "cost associated with providing the modem."

"The higher rate could generate an additional $150 million in revenue this year, according to ISI analyst Vijay Jayant," Reuters wrote. Comcast and Cox charge modem fees of $7 to $8 per month, Jayant said. A lawsuit regarding Comcast's $7 modem fee was dismissed in May.

In its message to customers, Time Warner said it "continue[s] to invest in our network." The company noted  that in the past year it's boosted speed 50 percent on its most popular tier and expanded its network of Wi-Fi hotspots in public places.

But as we wrote earlier today, Time Warner is one of numerous Internet Service Providers locked in financial disputes that harm the quality of service to customers. Time Warner has refused Netflix's offer to host video caches in Time Warner's network, even as its customers complain about the quality of streaming video.