Analyst: Cable Operators To Double Broadband Prices Over Next Several Years


Prices charged by cable operators for broadband services will double over the next several years, offsetting declines from broadband saturation and erosion of linear pay-TV services, says New Street Research analyst Jonathan Chaplin.

In a note sent out to investors over the weekend, Chaplin says cable operators will be looking for new ways to increase their average revenue per user (ARPU). At a time when revenue from their linear television business is declining, cable operators can use their increasing near-monopoly on broadband to squeeze customers who need internet access to power their home wifi as well as connect with SVOD and OTT services.

"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."

In other words, customers who don't opt for the two-year "triple-play" option will be paying substantially more for their broadband.