*Home Internet prices to double. Thank you Comcast.

cable tv remote

TechViews News   …..

Everyone knows that cable subscription pricing has blown through the roof. 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 near future.

That’s the conclusion of New Street Research and analyst Jonathan Chaplin. He concedes that the previously torrid pace of cable broadband marketshare growth has slowed in recent quarters, due to factors outside of cable provider’s control.

“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 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.

Please note that the ~$90 average cost is for cable Internet access only, and not the added services of phone and TV.

The read-between-the-lines conclusion here is that cable companies will start leaning more heavily on broadband as a revenue generator, as cable triple-play packages start to decline — something’s that’s happening faster than expected 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 as a stand-alone service to compensate.

Meanwhile, the firm contends that cable is better insulated from the current cord-cutting trend than most.

“The traditional pay-TV market saw the worst loss of subscribers on record this quarter. We don’t expect this trend to change anytime soon; however, we think cable could be somewhat insulated because: 1) we the loss from subscribers dropping pay-TV is generally recovered through higher broadband Internet pricing; 2) there is minimal cost for us to increase Internet delivery speed while the potential increase for billing that service will be significant.”

The sad truth is that due to municipal franchise agreements, 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 more for it. Cable companies will likely justify price increases by citing the cost of new investment in their networks. This is true in some sense, but only if the infrastructure is upgraded to optic fiber rather than an expansion of the 30-year-old cable system.

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.


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