Home » Competition »Consumer News »Data Caps »Online Video »Public Policy & Gov't » Currently Reading:

Wall Street Analyst: Cable Monopoly Will Double Your Broadband Bill

Phillip Dampier April 18, 2017 Competition, Consumer News, Data Caps, Online Video, Public Policy & Gov't 1 Comment

Thought paying $65 a month for broadband service is too much? Just wait a few years when one Wall Street analyst predicts you will be paying twice that rate for internet access, all because the cable industry is gradually achieving a high-speed broadband monopoly.

Jonathan Chaplin, New Street Research analyst, predicts as a result of cord-cutting and the retreat of phone companies from offering high-speed internet service competition, the cable industry will win as much as 72.2% of the broadband market by the year 2020. With it, they also win the power to raise prices both fast and furiously.

In a note to investors, Chapin wrote the number of Americans left to sign up for broadband service for the first time has dwindled, and most of the rest of new customer additions will come at the expense of phone companies, especially those still selling nothing better than DSL.

“Our long-term penetration forecast is predicated on cable increasing its market share, given a strong network advantage in 70% of the country (this assumes that telco fiber deployment increases from 16% of the country today to close to 30% five years from now),” Chaplin wrote.

Cable companies already control 65% of the U.S. broadband market as of late last year. Chaplin points out large cable operators have largely given up on slapping usage caps and usage pricing on broadband service to replace revenue lost from TV cord-cutting, so now they are likely going to raise general broadband pricing on everyone.

“Comcast and Charter have given up on usage-based pricing for now; however, we expect them to continue annual price increases,” Chaplin said. “As the primary source of value to households shifts increasingly from pay-TV to broadband, we would expect the cable companies to reflect more of the annual rate increases they push through on their bundles to be reflected in broadband than in the past. Interestingly, Comcast is now pricing standalone broadband at $85 for their flagship product, which is a $20 premium to the rack rate bundled price.”

Chaplin himself regularly cheerleads cable operators to do exactly as he predicts: raise prices. Back in late 2015, Chaplin pestered then CEO Robert Marcus of Time Warner Cable about why TWC was avoiding data caps, and in June of that year, Chaplin sent a note to investors claiming broadband was too cheap.

“Our analysis suggests that broadband as a product is underpriced,” Chaplin wrote. new street research“Our work suggests that cable companies have room to take up broadband pricing significantly and we believe regulators should not oppose the re-pricing (it is good for competition & investment).”

“The companies will undoubtedly have to take pay-TV pricing down to help ‘fund’ the price increase for broadband, but this is a good thing for the business,” Chaplin added. “Post re-pricing, [online video] competition would cease to be a threat and the companies would grow revenue and free cash flow at a far faster rate than they would otherwise.”

Currently there is 1 comment on this Article:

  1. Limboaz says:

    It’s a shame that Google has thrown in the towel with their fiber network expansion, and it’s also a shame that Telco’s like Centurylink are just so pathetic. What’s to stop these greedy monopolies from ripping off consumers at this point?







Search This Site:

Contributions:

Recent Comments:

  • PAUL: I JUST CANCELED HULU BECAUSE THEIR ROKU SCREENS CHANGES ALMOST EVERY DAY. ALSO HULU LISTS CHANNELS, NOT ALL THE SHOWS ON ABC,CBS, NBC AND FOX ARE AVAI...
  • nbeacon: The valid complaints with Spectrum/TWC have visited me many times over. Then suddenly my bill went from $76 to $102 without any notice. This charge ...
  • LG: It is now Sept. 23rd, and the same is true. I am using a neighbor's satellite internet while my Comcast is still out. Many promises of "by 7pm if n...
  • LG: (Sorry i wrote 911 twice)...
  • LG: Yes, I agree this "HD fee" is hysterical. It would be even funnier if people knew their picture is barely HD or not at all. There isn't enough bandw...
  • Brian: Let me tell you a little story about cable companies, they like to charge their customers even when there are no service to be had, well I learned a l...
  • Geroge: 100mbps is now base speed in many areas that aren't maxx...
  • Ed: I find it amazing that anyone expected Frontier to do anything differently...they have never been an invest and build company...they have always been ...
  • kim collins: i work for Frontier. And i have to say there is alot of people who still need their landlines because cell service is not available to them. Frontie...
  • Lee: Those who own the land leased to cell towers, they should NOT have sold the land, need to get good legal council on the terms of the lease if the comp...
  • Rex: The lights in your home (whether incandescent, CFLs or LEDs) emit far more electro-magnetic radiation (over the course of a day) than you could ever g...
  • Adam: That's pretty unfair to Frontier... Obviously AT&T and Verizon sold off big chunks of their wireline operations because they saw the end of profi...

Your Account:

%d bloggers like this: