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Time Warner Cable increases Internet modem lease fee 50 percent

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SYRACUSE - Time Warner Cable said Monday it’s raising its monthly fee to lease Internet modems from $3.95 to $5.99.

To take effect on customers’ next bill, the 50 percent increase comes only eight months after the company started its $3.95 modem lease fee. Before that, customers were not charged for the modems.

News of the increase arrived only a few days after customers learned they’ll pay an average of $3 more a month for Internet service starting Aug. 9. When combined, price hikes for the modem fee and service fee will mean an additional $5 a month on customers’ bills.

Customers can avoid the modem fee — $71.88 a year — by buying their own Internet modems compatible with Time Warner’s service. A list of modem models that will work with the company’s Internet service is posted on its website at http://wdt.me/QFLxb7.

The email sent to customers fails to remind customers they can buy their own modems. It does say, however, that customers who lease modems have “access to 24/7 customer support and required equipment upgrades or replacements.” It also notes improvements made by Time Warner to Internet services in the past year, including the launch of more free WiFi hotspots available nationwide.

The fee adjustment by the company was made “to deploy upgraded equipment, cycle out older modems and provide ongoing equipment and support to ensure there’s optimal service for customers,” said Time Warner spokesman Scott Pryzwansky.

Customers will begin seeing the increase reflected in their bills Aug. 19, he said, when the next billing cycle starts.

The modem lease fee implemented by Time Warner in November was a source of controversy, because the company notified customers only weeks before implementing the change by mailing postcards. At the time, the company stated the fee was needed keep pace with the rising cost of free repair services for customers with modems. Introducing the $3.95 fee yielded an additional $40 million a month for the company.

That fee, which took effect Oct. 15, spurred a class action lawsuit accusing the nation’s second-largest cable provider of violating its own customer contracts, along with consumer fraud laws in New York and New Jersey. Time Warner has moved to dismiss the lawsuit, but attorney Steven L. Wittels said Tuesday he is optimistic the case will advance to the next stage in federal court. Mr. Wittels said the success of the suit will hinge on whether a judge agrees that the company deceptively raised fees on consumers who used its Internet modems. Mr. Wittels and the Roth Law Firm, both from New York City, are representing Time Warner customers in the lawsuits. They were filed in the state Supreme Court in Manhattan and Superior Court in Bergen County, New Jersey.

The company “is a large behemoth snubbing its nose at consumers,” Mr. Wittels said, adding that the modem fee increase is more evidence of the company’s deceptive practices. “They’ve already been challenged in a class action lawsuit, and to add salt to the wounds, the company is simply increasing the fee to line their coffers. It’s not enough that they’re already charging $4. It’s a cash cow for them and easy picking from consumers.”

Mr. Pryzwansky had no comment on the litigation.

Time Warner’s net profits rose 29.4 percent in 2012, from $1.67 billion in 2011 to $2.16 billion. Fee increases for Internet services accounted for the majority of that profit increase. Revenues for Internet services increased by 12.7 percent from 2011 to 2012, from $4.48 billion to $5.09 billion.

The cable franchise has 15 million customers nationwide and roughly 600,000 in its Central New York region, which encompasses the north country.

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