The Cable Industry's Ingenious 'Solution' To TV Cord Cutting? Raise Broadband Rates

from the Comcastic dept

In a healthy, competitive market, cable providers would respond to the growing threat of streaming video competition by lowering prices, improving their historically awful customer service, and giving consumers more flexible cable bundles.

But because these same cable operators enjoy a growing monopoly over the uncompetitive broadband market — they don’t have to do that. Instead, they’ve found that the easiest response to added competition on the TV front is to impose a relentless array of rate hikes on captive broadband customers. There’s a myriad of ways they accomplish this, ranging from misleading hidden fees that jack up the advertised price (something they’re being sued for), to usage caps and overage fees (which let them not only charge more money for the same service, but hamstring streaming competitors via tricks like zero rating).

But with the U.S. entering a period of rubber stamp regulators, and a lack of telco upgrades resulting in less competition than ever, Wall Street is pressuring cable operators to also jack up the standalone price of broadband services outright. New Street Research analyst Jonathan Chaplin recently predicted that a lack of broadband competition could allow cable providers like Comcast to double already expensive broadband prices over the next year. UBS analyst John Hodulik issued a research note the same week stating that cable operators should specifically jack up the price of standalone broadband service to $80 to $90 per month.

Not too surprisingly, cable operators are already heeding these demands. Analysis from Morgan Stanley this week indicated that cable operators had already hiked the cost of standalone broadband 12% from last year’s rates:

“In a note to clients Tuesday, Morgan Stanley said that based on its own survey, cable TV companies hiked broadband prices by 12% to $66 monthly from a year earlier for customers that buy only high-speed internet and not a TV package.

“As video revenue growth is increasingly pressured, leaning on data pricing is tempting to sustain earnings,” said Benjamin Swinburne, a Morgan Stanley analyst in a report.”

Tempting, indeed. Especially when there’s neither healthy market competition nor regulatory oversight there to stop companies like Comcast and Charter from doing so. Of course this is before you factor in all manner of additional costs that await consumers over the next few years, from the problems that will be caused by the mindless gutting of popular net neutrality protections, to the Trump administration’s gutting of privacy rules that would have stopped ISPs from their stated goal of charging users more money if they want to protect their own privacy.

And instead of creating policies aimed at improving competition in what’s clearly not a healthy market, the Trump administration’s FCC is engaged in the mindless gutting of consumer protections, and the manipulation of data to try and pretend the broadband market’s obvious problems don’t actually exist.

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Comments on “The Cable Industry's Ingenious 'Solution' To TV Cord Cutting? Raise Broadband Rates”

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Anonymous Champion says:

i need to isp in canada lowered my monthly

haha guess we give a shit what happens south of the border with all your insanity…..i think the song ….stuck n the middle with you is YOUR SONG..can’t wait for nafta to end then we go off on our own and you really see what happens as we de-americanify everything

SirWired (profile) says:

Doesn't help out everyone, but look into EarthLink

I’m a TWC (okay, offically Spectrum, whatever) customer who officially gets internet-only through Earthlink.

It’s a very strange setup; I have an Earthlink-owned IP address (and an Earthlink e-mail if I chose to use it), but other than that, it’s TWC all the way… TWC bill (with a line that says “Earthlink Internet”), TWC support, and if I didn’t have my own, a TWC-supplied modem, the works. I pay a long-term rate only $2 more than Spectrum’s temporary promo rate. I’ve received routine speed upgrades in lockstep with regular TWC customers.

I called them on the phone, signed up, and I had to reboot my cable modem to pick up the new IP; that was it. No tech visit, no sign up fee, nuthin…

I think EarthLink has similar arrangements with several providers (not just Spectrum)

TenderBabyMeat (profile) says:

Re: Doesn't help out everyone, but look into EarthLink

Once upon a time I had a similar arrangement with a local ISP that subbed out through blocks of AT&T IPs. It was a pretty sweet deal because it was somehow cheaper than going through ATT directly yet was not subject to the data caps imposed by ATT to their own customers. What’s more, the local ISP was more mellow than a hardcore stoner when it came to billing. No joke, they may as well just come out and say that paying for the service is optional and on the honor system.

I wept softly when I moved out of their service area.

Chris ODonnell (profile) says:

I was just looking at broadband prices yesterday, as I’m moving in Nov. $40/mo for 50/50 FIOS Internet only. It’s $70 a month for 100/100.

Or, I can can get 100/100 Internet, cable, and phone, for $89, before all the bullshit fees and equipment rental, etc.

They are basically giving cable away.

I’m not doing it though, as I have 50/50 FOIS now and I’ve never had an issue with lack of bandwidth, so I don’t see any reason to upgrade.

Anonymous Coward says:

Re: Re:

What’s phone service these days except for a low-speed internet data stream and a number assignment? That’s worth maybe a few bucks a month. Which means the cable is worth about $15/month in that bundle, which is hardly “giving it away”… actually, isn’t it still more than their online competitors are charging?

Anonymous Coward says:

How exactly do you see a monopoly due to physical locale could ever be "competitive"?

It’s a bad premise for comparison. Never exists for utilities — that why the term.

Anyhoo, with another characteristic oversight you zoom right past the key problem: Wall Street, The Rich, stockholders, parasites on society all, demanding high profits so that they can live even more ridiculously high.

Yet again the solution to this starts with steeply progressive tax rates on The Rich. — None of you here are The Rich, but you’ve been manipulated to think that you’re somehow better off by allowing the few to gain money out of all reasonable proportion. You ignore the facts that The Rich demanding ever more excess for themselves is inevitable.

Solution is easy: REGULATE UTILITIES and TAX THE HELL OUT OF THE RICH. Take the money out of every monopoly. It’s proven to work.

compujas (profile) says:

Re: How exactly do you see a monopoly due to physical locale could ever be "competitive"?

Define “The Rich” and explain how you intend to guarantee that when that new money is no longer enough that the definition of “The Rich” doesn’t suddenly creep to start including “The Not Quite So Rich, but Still More Money Than Me So It’s OK”.

ANON says:


If they raise the rates on internet, it will just encourage more cord-cutting. After all, the internet is a necessity today. So people are not going to drop internet if the overall cost goes up – they’ll drop the other services – TV, phone – which can be done over the internet also.

Perhaps the cable companies will like this. Charge the same, but since specialty cable TV channels are paid by the subscriber usually, fewer cable subscribers means less money going out if the cable companies can make up the TV revenue difference in internet revenue.

Anonymous Coward says:

Re: But...

So people are not going to drop internet if the overall cost goes up – they’ll drop the other services – TV, phone – which can be done over the internet also.

But dropping the TV service will raise the price with some companies. It might be $70/month for TV+internet and $75 for internet alone. Companies should be getting people off cable to reduce their programming costs, but 1) some of that money goes right back to their other divisions (Comcast owns Universal for ex.) and 2) they’re still in denial.

orbitalinsertion (profile) says:

Re: Re: But...

Yup. It significantly raises the internet-only rate, and then they throw ridiculously low caps on it. So cord-cutters (i.e., people who still watch programs) are not going to make out at all, unless they watch little. It would pretty much suck even for me, and i don’t watch much if anything.

With even higher rates, it will definitely have the effect they want.

Paul Brinker (profile) says:

Commercial Service

With Internet access there does become a point where I will swap over to a commercial account if things get to far out of hand. That way I don’t need to deal with overage caps (which can push your bill into commercial territory already) and prices changes over the contract term as you can quite easily pull out your itemized contract and state your paying for what you signed up for and no one passed a law adding what ever your calling a tax.

Accounts like this assume the other side has access to a lawyer, Accounts Payable department, and accounting that wont allow for stupid stuff. Unlike home service where you just add a new tax every few months.

Anonymous Coward says:

In some places where AT&T no longer offers landline phone services, they are renting out the lines to broadband internet providers, who could become serious competition to the cable companies.

In the Sacramento suburb where I live, AT&T does just that. AT&T no longer offers landlines, but the lines are rented out to Sonic and CalWeb, who provide broadband services for way less than that Comcast does for the same level of service.

Sonic is now offering 20 megabit internet, plus a home phone, for just $63 a month. On Comcast, you would pay a hell of a lot more.

MyNameHere (profile) says:

Re: Re: Re:

Google will never admit it, but even they figured out that trying to catch up to the incumbent players is a lost cause. The return on investment is too small – and that was with cherry picking only higher density areas and not serving the “one house every 5 miles” rural parts of America.

Remember too, wireless is (and will always be) supply limited. There is only so much bandwidth to work with, you can only fit so many towers, and they can only handle so much throughput. Wireline is better, but still limited by distance and cost per mile.

Supply will always be at least somewhat limited, especially outside of the densest population centers. Thus, demand pushes prices up.

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