Study: It's up, up, up for broadband fees

Wed, 05/29/2002 - 8:00pm
Susan Rush

Whether a high-speed Internet connection is provided via cable or DSL, consumers are likely paying more for their service now than they were at the end of last year, according to one analysis.

Consumer broadband rates climbed to their highest levels on record at the end of the first quarter, according to new research from ARS Inc. In the cable modem sector, monthly subscribers rates rose from $43.21 in Dec. 2001 to $44.95 in March — marking a 4 percent increase on average.

Basic ADSL subscribers were hit by a smaller overall increase, but are still paying more than cable modem subscribers. This sector posted a 1.4 percent increase from $51.09 in Dec. 2001 to $51.82 in March for basic ADSL service.

Case in point, yesterday AT&T Broadband joined several of its brethren, and announced a rate increase. The company said it plans to boost cable modem service fees by $7 a month on July 1. The MSO also announced plans to standardize customer upstream speeds across its high-speed data footprint.

ARS found that 91 percent of broadband service providers that have been in business since the beginning of last year have raised their rates since then. The research firm contends that industry consolidation has decreased consumers' broadband choices. "We expect this trend of raising prices will hamper the widespread adoption of broadband services and that the vast majority of users will continue to access the Internet via dial-up connections for the foreseeable future," says Mark Kersey, an ARS broadband and cable industry analyst.

Although service providers are raising rates, they are still trying to attract new customers. Promotions, such as free or discounted installation and service rebates seem to be the hot ticket right now. ARS found that during the first quarter, 81 percent of providers offered free or discounted installation, which is up from 77 percent in the fourth quarter 2001. The number of providers offering a rebate on monthly service grew from 47 percent in Q4 to 58 percent in Q1 2002.


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