Could Your Internet Price Double Soon? Wall Street Bets On 'Yes'

Internet rates may be due for a significant increase in the near future. According to researchers working with Wall Street investors, the cost of broadband internet could be set to double from current price levels.

News of the potential increase in broadband pricing came from a research note sent to investors by New Street analyst Jonathan Chaplin. The expert suggested the charge to raise prices will likely be led by Comcast as a way to make up for the slowing growth of the broadband market.

“We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” the researcher said. He suggested a recent price raise from Comcast for its standalone internet service could pave the way for even more increases as households continue to ditch cable and purchase internet-only services.

Chaplin said Charter would likely follow the trend in upping the cost of a basic internet connection, though suggested the telecommunications giant would wait until after it completed fully integrating the assets of Time Warner Cable, which it acquired last year for $65 billion.

New Street researchers suggested when all is said and done, “broadband pricing could double from current levels.” That would mean Comcast would charge as much as $100 per month and Charter as much as $130 per month for the most basic broadband internet service.

That potential for skyrocketing internet costs are driven by two factors, according to the researchers: the fact that the number of television subscribers continues to dwindle and that internet costs have, by their assessment, “barely increased” in recent years.

The lack of price increase may be true when it comes to the advertised prices that telecom companies show to the consumer, but the prices have undoubtedly seen a raise in recent years through price increases after promotional offers and through unlisted fees that are tacked on to the service.

Cable providers including Comcast, Charter and even satellite TV provider DishTV —owned by AT&T—have come under fire for attaching charges like the Broadcast TV and Regional Sports fees to the bills of consumers. The extra costs are supposedly designed to recoup costs associated with airing content from regional networks and have risen dramatically in recent years. Comcast increased its fees by 50 percent in 2017.

Not addressed at all by the researchers is how the change in leadership at the United States Federal Communications Commission may impact the outlook for broadband costs. Since former Verizon lobbyist and Donald Trump appointee Ajit Pai took over as chairman of the commission, the governing body has gone lax a number of policies that may have stifled the increase in internet costs.

Pai has taken an adversarial view on net neutrality, a concept made into law during the Obama administration that said all data online must be treated equal. The rules prevented an internet service provider from blocking specific content, slowing or throttling data speeds or charging additional fees for “paid prioritization” or favoritism toward certain services.

Additionally, the FCC under his leadership has lifted a number of restrictions on telecom companies, including merger requirements placed on Charter for its acquisition of Time Warner Cable. Pai has also taken a total hands-off approach to AT&T’s attempt to purchase the Time Warner content company that owns HBO, CNN, and other major networks.

Recently, Pai suggested lowering the upload and download speed requirements for broadband, lowering the standards set on ISPs as they eye the possibility of raising prices.