If you are worried about US cable operators like Comcast making enough money at the expense of consumers, fear not. They’re about to make a substantial profit on residential and business broadband.
According to analyst Jonathan Chaplin of New Street Research, cable companies are poised to make more money from their broadband customers.
“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street said. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 (including 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.”
For consumers, the most critical point made by New Street is that consumers could potentially see broadband prices double from their current level. As consumers switch to internet only-cable packages, cable providers will be forced to lower their rates to remain competitive. To compensate, they will likely raise prices of broadband to increase their revenue. Unfortunately for consumers, they simply do not have another choice but to pay the higher prices. Only about one in five consumers have a choice of high-speed internet providers, leaving the others with little choice but to pay.
Cable companies like Comcast continue to generate ill-gotten gains. While they amass huge profits, consumers suffer through poor service, few competitive choices, and extremely high prices.
At Billshark, our mission is to bring the power back to consumers, one bill at a time.