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Time Warner Cable Q2 Broadband Revenue Surges, Largely Thanks to Cable-Modem Fees

Time Warner Cable’s broadband revenue climbed 12.5% in the second quarter, to $1.42 billion — driven primarily by higher-speed tiers and recently introduced cable-modem rental fees, which the operator just hiked 50% to $5.99 per month.

Over all, TW Cable’s revenue for the period increased 2.7%, to $5.56 billion, and net income rose 6.4%; to $481 million.

Meanwhile, the No. 2 operator’s video losses accelerated: Time Warner Cable lost 191,000 net video subs — worse than analyst consensus estimates of 174,700, according to StreetAccount — to stand at 11.9 million as of June 30. Revenue from residential cable TV fell 4.4% to $2.67 billion.

SEE ALSO: Pay-TV Sector Posts Worst Q1 Subscriber Trends in Four Years

The cable company added a net of just 8,000 residential broadband subs, to 11.1 million at the end of the period. TW Cable gained 13,000 business broadband customers, for a total of 21,000 high-speed Internet net adds, which was well under analyst expectations of 55,400.

The No. 2 U.S. cable company said growth in residential high-speed data revenue was primarily due to an increase in equipment rental charges and a greater percentage of subscribers purchasing higher-priced tiers of service, with 608,000 subscribers now on tiers of 30 megabits per second or higher (double year over year).

Now the MSO wants to rake in even more coin from cable-modem fees. This week, Time Warner Cable alerted customers that the modem lease fee of $3.95 introduced last fall will increase to $5.99 per month. The fee applies to about 9 million of its 11 million residential broadband customers.

Time Warner Cable said the hike in cable-modem fees is “relative to both the price of the equipment and the service agreement to always maintain or swap out the modem as needed.” The MSO also defended the increase by pointing out that it makes ongoing infrastructure investments.

Last week Time Warner Cable announced that chairman and CEO Glenn Britt will retire at the end of 2013, with Rob Marcus, currently president and COO, stepping in to take over the top job.

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