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Wall Street Predicts Your Comcast Bill Will Soon Double

Wall Street research firms predict that your broadband bill is about to get a lot more expensive. According to a research note sent to investors by New Street analyst Jonathan Chaplin, “broadband pricing could double" from existing pricing levels, which are already among the most expensive in many developed nations. While the report doesn't explicitly say it, the elimination of consumer privacy protections and the looming death of net neutrality rules has incumbent cable providers -- and the people that profit off of them on Wall Street -- giddy as schoolchildren.

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Another unmentioned reason for Wall Street's "optimism": While Google Fiber and gigabit connections are getting over hyped, in reality many areas of the country are getting less competitive than ever as incumbent telcos simply refuse to upgrade DSL users at any real scale.

With rubber stamp regulators in office busy weakening broadband definition standards to obfuscate this growing lack of competition, the end result is a stronger cable monopoly with less government oversight than ever, allowing for greater price hikes.

As a result, Chaplin insists that US broadband is currently "underpriced."

“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.”

While Chaplin insists that broadband pricing has "barely increased," he's notably talking about the advertised price. Comcast has used a rotating crop of sneaky fees to jack up the cost of service post sale; fees that have skyrocketed many times the rate of inflation over the last decade (the company is facing several suits for the practice). A lack of competition has also allowed Comcast to impose usage caps and overage fees, leading to Chaplin's optimism regarding the impact cord cutting will have on massive media conglomerates like Comcast NBC Universal.

“The traditional pay-TV market saw the worst loss of subs on record this quarter,” the investor note said. “We don’t expect this trend to change anytime soon; however, we think cable should be somewhat insulated because: 1) they should take share in a declining market, helped by the pull-through effect from growing share in broadband; 2) we don’t think cable makes much money in pay-TV. In fact, the [free cash flow] lost from subs dropping pay-TV is generally recovered through higher HSD pricing.”

All of this is great news for Comcast, but won't be such great news for you.

Most recommended from 73 comments



XBL2009
------
join:2001-01-03
Chicago, IL

34 recommendations

XBL2009

Member

Back to dialup then

I can't afford $90 a month....that is just too damn expensive. Sigh...remember when capitalism used to work and the quality would go up and the price would go down, bring back real capitalism.

SimbaSeven
I Void Warranties
join:2003-03-24
Billings, MT

26 recommendations

SimbaSeven

Member

Screwed

Hey, Comcast, are you supplying a tube of lube with each bill?

Economist
The economy, stupid
Premium Member
join:2015-07-10
united state

3 edits

18 recommendations

Economist

Premium Member

Okay team, how can we ensure more customers cancel?

I know, let's take another 3X inflation price increase! Not only can we get rid of the last of our linear TV customers, but we can start sending even more to mobile! When 5G comes along, then the real fun can begin!

T-Mo and other operators are already serving up 50GB in their unlimited plans. What happens when capacity grows and they can start offering 500GB or more, 2TB? Most users, even with streaming video services don't use much more than 500 or so GB and as wireless is getting better, so is compression technologies. Fixed wireless 10 years down the road can end up doing to the MSOs what the MSOs did to dial-up. 10 years is a VERY short time.

But you guys keep taking those price increases!
Papageno
join:2011-01-26
Portland, OR

13 recommendations

Papageno

Member

Underpriced?! Unbelievable, these people.

It's like Wall Street types think they're entitled by birth to ever more of our money.

WHT
join:2010-03-26
Rosston, TX

10 recommendations

WHT

Member

Test the Point of Dimishing Returns

Consider the price of gas. In Texas the tripping point might be $5 per gallon (it varies by region in the country). Once it passes $5, people will buy less - a lost profit. Any more increase in cost will yield diminishing return of profits.

Previous sub-$90 (for example) per month was begrudgingly taken in stride; $90 is forcing subscribers to rethink the need; plus-$90 will force cutting back to meet more important priorities. Doubling the price is a deal breaker, much more when three times as much.

The argument "broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded" is a selfish self-fulfilling prophecy of "hey, a can of soup is more expensive that it was". Given the upstream cost of internet egress has deflated faster than balloons and a kid's new BB gun.

Broadband executives (beholden to the short-term investors) dream of dollar signs and get all worked up like a teenage buck on prom night.

camper
just visiting this planet
Premium Member
join:2010-03-21
Bethel, CT

9 recommendations

camper

Premium Member

Was Milton Friedman wrong?

 

Tudor Jones Tells CEOs Stop Focusing on Profits Above All Else
»www.bloomberg.com/news/a ··· friedman


Paul Tudor Jones says corporate chiefs have gone too far in embracing economist Milton Friedman’s profit-above-all-else ethic and they need to change how they do business.

Corporations have paid too much attention to prioritizing shareholders, said Jones, who’s backing a nonprofit called JUST Capital that will rank companies on how well they treat their employees, consumers, communities and investors. Tudor, who runs the $7 billion hedge fund firm Tudor Investment Corp., spoke Tuesday at the Forbes Under 30 summit in Boston.

Even Friedman would rethink his ideas if he could see how divided the U.S. has become in terms of wealth, said Jones, a billionaire.

“One of the key things that always ends up tearing down great civilizations and countries is wealth disparity. It’s not sustainable,” he said. “The way wealth disparity has been historically dealt with is either wars, revolution or taxes. My guess is in the future it’ll be one of those three in this country.”...


Fun stuff to read, but I doubt his ideas will gain any traction...

Anon289a5
@comcast.net

8 recommendations

Anon289a5

Anon

Congrats

They have completed their gestation from Humans into anthropomorphic investment accounts.

pclover
join:2008-08-02
Santa Cruz, CA

5 recommendations

pclover

Member

Most users probably already give Comcast $90/month or more

Comcast's max tier for blast pro is around $90/month without any pricing breaks.

I suppose 60% of Comcast subscribers already have a APRU of $90/month or more.

YukonHawk
join:2001-01-07
Patterson, NY

5 recommendations

YukonHawk

Member

So I'm paying.....

205 per month......does that mean it's going to double to 410???
Ostracus
join:2011-09-05
Henderson, KY

4 recommendations

Ostracus

Member

Robbing Peter to pay Paul.

Wonder if "Wall Street" has a broadband connection at home? Maybe all that success will trickle out of their pockets and back to the companies they have investments in.

WHT
join:2010-03-26
Rosston, TX

2 recommendations

WHT

Member

The Bundle Shell Game

I may not have much dog in this fight as I haven't had TV cable, much less even a TV, since the first Regan Administration (early 80s).

The Shell Games - Keep moving the cost of internet under the shell of bundled plans.

Looking at CenturyLink in 2012, the cost of 10 Mbps DSL was the same regardless if it was stand-alone or bundled with POTS line. I think is was $99.

That meant one of two things was going on....

Either the cost of your internet was severally discounted when bundled with POTS (meaning their cost of internet was pretty low to begin with)...OR...your cost of stand-alone internet was severally increased (over their low cost) for no damn reason.

"Vanna -- I'll take no damn reason for $1,000" and contestant spins the wheel of fortune.

Kramer
Mod
join:2000-08-03
Richmond, VA

1 edit

2 recommendations

Kramer

Mod

Hoping

That they need to curb their enthusiasm. 5G fixed wireless isn't that far away and hopefully will live up to expectations. »www.fiercewireless.com/w ··· r-5g-ceo The nice thing about 5G fixed wireless is that you will have three or more companies providing it and competing with Comcast for the exact same market. Maybe it is a pipe dream, but I see Comcast's price hikes as being very short lived. More »www.fiercewireless.com/5 ··· -verizon
videomatic3
join:2003-12-12
Pleasanton, CA

2 recommendations

videomatic3

Member

it takes wall street to come up with this

but to the customer we can predict that every year