Been enjoying your reasonably-priced home internet connection recently? Don’t get too comfortable. US cable companies, led by Comcast, are all set to start increasing broadband prices dramatically, with price hikes of double current rates expected in the future.
That’s the conclusion of New Street Research and analyst Jonathan Chaplin, who released a new report that’s good news for the cable industry, and bad for anyone who doesn’t enjoy giving money to their local monopolist.
“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street’s report said. “Our analysis suggested a ‘utility-adjusted’ average revenue per user (ARPU) target of ~$90. Comcast recently increased standalone broadband to $90 (including modem), paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable.” Those increases could be as much as double the current price, New Street notes.
The read-between-the-lines conclusion here is that cable companies will start leaning more heavily on broadband as a revenue generator, as cable packages start to decline — something’s that’s happening faster with every passing year. As people start eyeing internet-only cable packages combined with a live streaming service for TV, the cable companies can cut the price of the cable bundle to appear competitive with streaming services, but raise broadband pricing to compensate.
The sad truth is that only one in five Americans actually has a choice of provider for high-speed broadband, so if you want internet at home, you’re going to have to pay for it. Cable companies will likely justify price increases by citing the cost of new investment in their networks, which is true in some sense. Running fiber (or experimenting with fixed wireless installs) is expensive and time-consuming, but it’s also a gradual process that networks will profit from for decades. As New Street’s report shows, price increases right now are happening because they can, not because they have to — and there’s nothing you can do about it.
October 7th, 2017