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Wall Street Hissyfit: Raise Broadband Prices to $90/Month Immediately! (Or Else)

If the average customer isn’t paying $90 a month for broadband service, they are paying too little and that needs to stop.

That is the view of persistent rate hike advocate Jonathan Chaplin, a Wall Street analyst with New Street Research, who has advocated for sweeping broadband rate increases for years.

“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” Chaplin wrote in a note to investors. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 with a 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.”

Companies that fail to raise prices risk being downgraded by analysts with views like these, which can have a direct impact on a stock’s share price and the executive compensation and bonus packages that are often tied to the company’s performance.

But there is a dilemma and disagreement between some cable industry analysts about how much companies can charge their customers. Companies like Cable ONE have been aggressively raising broadband prices to unprecedented levels in some of the poorest communities in the country, which worries fellow Wall Street analyst Craig Moffett from MoffettNathanson LLC.

“Never mind that the per capita income in Cable ONE’s footprint is the lowest (by far) of the companies we [Moffett’s firm] cover, or that the percentage of customers living below the poverty line is the highest (also by far),” Moffett told his investor subscribers. “What matters is that there is very little competition in Cable ONE’s footprint. If you want high-speed broadband, where else are you going to go? The unspoken fear among their larger peers is that over-reliance on broadband pricing invites regulatory intervention, not just for Cable ONE, but for everyone.”

Chaplin thinks the risk from gouging broadband customers is next to zero. With cable TV becoming less profitable every day, all the big profits that can be made will be made from broadband, where cable operators often enjoy a monopoly on high-speed service.

According to Chaplin, if customers value internet access, they will pay the higher prices cable companies charge. So what are companies waiting for? Raise those prices!

Currently there are 4 comments on this Article:

  1. Roger W says:

    Go ahead. Raise it to $90. I dare you.

    I guarantee you it will be the last day I subscribe to cable service. That’ll be your loss.

  2. FredH says:

    Like cable company CEOs need to be told to raise prices by some a-hole Wall Street analyst.

  3. goonierag says:

    I am sick of wallstreet the cable companies and telco’s gouging the people and of here this s**t from their fans. The internet was developed by the defence department from the money they government takes off the people in taxes. So the rightful owner of the internet is the people first then the government via the defence department. Not wallstreet, the cable companies or telcos or any other isp. The government should charge any companies that use the internet. (cable companies,telcos and other isp’s) billion yearly for use of the internet since they don’t own it . The people and defence department does. Then take them billions and actually use it for the people’s internet.
    And set prices for the isp’s to charge if they want to use it. Then lets see how wallstreet likes it or the isp’s. No more free ride.
    This is like the spectrum the was suppose to be owned by the people and the government took care of it. All they did was make a few rich off the peoples back and what the people owned. (The broadcasters and their ceo’s) Hell even made some rich off the peoples back that dropped out of broadcasting at the latest auction. The internet is headed the same way, Government is making their buddy’s that contribute to their cause rich and hell with the regular people.
    Well I got two words for wallstreet,cable company ceo’s and telco ceo”s,Go F^&* yourself and if that ain’t enough go F^&* you buddies on wallstreet,cable and telco. You all F^&*ed the people long enough and we aren’t going to stand fro it much longer.

  4. Lee says:

    It would be interesting to see the age cohort distribution of stock owners this analyst champions. I suspect the majority are not in the 20 to 30 range. Many are 50 to 70 range. The analyst wants the workers who install the cable and man the bucket trucks to be paid less to make the company profitable. This is necessary for those who own stock but do not do any work at the company to get more in dividends or higher stock price when they sell.
    It seems that those who make money solely off the work of others that they are not engaged in meet the profile of those who eat, poop, and take up space.







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