Tuesday, October 17, 2017

Broadband Prices Are About to Soar & Wall Street is Thrilled -

Thanks to the one-two punch of apathetic, rubber stamping regulators and a lack of competition in the space, Wall Street analysts have been celebrating what they believe will be a major spike in US broadband pricing. Last week New Street analyst Jonathan Chaplin predicted that Comcast's broadband rates specifically could double from existing pricing levels, which are already among the most expensive among all developed nations.

Yet in a research note to investors, Chaplin insisted 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."

In other words, consumers should get ready to pay a lot more money for the same broadband service.

And many Wall Street analysts are unsurprisingly cheering the looming hikes. A new investor research note by UBS analyst John Hodulik similarly urges ISPs to bump their standalone broadband pricing past $80 to help counter the lost revenues due to cord cutting.

"MSOs would need to raise standalone broadband pricing to $80, or more, in order to break even from a contribution perspective," Hodulik said. The analyst subtly made clear that thanks to a lack of competition, large ISPs will have no problem getting away with it. "We find that this level of pricing (non-promo) exists in some markets already, though pricing will vary," he added.

Granted, myopically focusing on the health of ISPs above all else is what these analysts are paid handsomely to do. On the flip side, regulators are supposed to keep tabs on the state of competition in the market and introduce policies aimed at keeping the market healthy and competitive to the benefit of competitors and consumers. Instead, existing regulators like FCC boss Ajit Pai are blindly gutting what few consumer protections currently protect consumers from duopoly abuse of the market, adding insult to injury by insisting this is of immense benefit to already frustrated consumers.

This lack of oversight has provided a green light to ISPs not only looking to raise their advertised rates, but to profit in a myriad of other ways, whether that's misleading fees and surcharges, arbitrary and unnecessary usage caps and overage fees, charging users more to protect their privacy, and abusing a lack of competition in the form of net neutrality violations that harm competitors and consumers alike.

And while that surely thrills Wall Street analysts whose Manhattan incomes insulate them from the real-world repercussions of these kinds of policies, American consumers will likely be somewhat less...enthusiastic in the months and years to come.

Let's block ads! (Why?)

see source

No comments:

Post a Comment