AT&T; Could Start Trend With Rate Hike for Internet Service
Cable-television providers may raise prices for high-speed Internet service after AT&T; Corp. announced a plan to boost rates 15%, industry consultants said.
AT&T;, the largest U.S. cable-TV operator, said Tuesday that monthly charges will increase by $6 on June 1 to $45.95. Rivals probably will follow if New York-based AT&T; continues to sign up new customers for the service and current ones don’t complain, consultants say. The service is as much as 100 times faster than conventional dial-up Web access over phone lines.
Raising rates an average of $5 a month would give cable companies an additional $222 million in annual revenue from the 3.7 million homes with cable Internet service at year-end, Allied Business Intelligence Inc. director Marc Liggio said. That’s unlikely to cut rising demand because the service still is cheaper than paying $50 a month for high-speed digital subscriber line, or DSL, service over phone lines, Liggio and others said.
“If AT&T; can get away with it and not hurt demand, you’re not too far away from seeing rate increases from other providers,” said Michael Goodman, a senior analyst at Yankee Group in Boston. “I don’t think it will be a huge impact on consumer demand.”
Some providers of high-speed Internet service already have raised prices. Phone companies had 1.7 million customers at year-end for DSL, which lets users send and receive e-mail and view Web pages faster than access by using dial-up modems.
SBC Communications Inc., the No. 2 U.S. local-phone company, charges $49.95 a month for DSL service. In February, it ended a year-long promotion offering the service for $39.95.
Internet service over cable lines can be as much as 10 times faster than DSL service, though cable-based Web access slows as the number of Internet users on a cable system increases.
Charter Communications Inc., the St. Louis-based cable company controlled by billionaire Paul Allen, increased its monthly charge by $5 as early as March in some of the 40 states where it has customers, spokesman Andy Morgan said.
“Even with the increase, we’re still lower than our primary competitor, which is DSL,” he said. Charter, the fourth-largest U.S. cable operator, won’t raise customer bills for Web access in all of its cable systems.
Other cable companies say they have no immediate plans to raise rates. That’s even though prices have remained steady at about $40 a month since high-speed Internet access over cable lines was introduced four years ago, Goodman said.
“We have no plans to raise ours, it’s as simple as that,” said Mike Luftman, spokesman for the cable unit of New York-based AOL Time Warner Inc., the country’s second-largest provider. “Our position has not changed as a result of the AT&T; decision.”
A spokeswoman for Philadelphia-based Comcast Corp, the country’s No. 3 cable provider, echoed Luftman’s remarks.
“We’ve not made any announcements about our pricing,” said Jenni Moyer, who declined to be more specific.
Officials at Atlanta-based Cox Communications Inc. and Coudersport, Penn.-based Adelphia Communications Corp., respectively the No. 5 and No. 6 U.S. cable providers, didn’t return phone calls seeking comment.
