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An early Christmas present from cable companies: Internet price hikes

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We regularly do our best to try to help readers save money on their cable and internet bills. In fact, just two days ago we told you about a little $40 box that shaves anywhere from $96 to $120 off your annual cost of internet service, taking that money right out of the pockets of your internet service provider. The good news is it’s easy and anyone can do it. The bad news is there’s precious little anyone can do when ISPs jack up the prices of their core internet services, and that’s exactly what’s happening right now. In fact, a new report says that cable companies have raised internet subscription prices by double-digit percentages over the past year alone.

A new report released this week by analysts at Morgan Stanley says that cable companies have increased broadband service prices by a hefty 12% year on year. According to the firm’s survey, the average monthly cost of internet service from a cable company in the United States now sits at $66.

The move to raise prices is believed to be a response to decreased revenue from cable television subscriptions. American households are cutting the cord at a dramatically increased rate compared to years past, turning instead to streaming services like Netflix and a new crop of web-based live TV services.

“As video revenue growth is increasingly pressured, leaning on data pricing is tempting to sustain earnings,” Morgan Stanley analyst Benjamin Swinburne wrote in a note seen by Investor’s Business Daily.

Don’t worry, there’s more good news: Some industry watchers believe internet prices will continue to rise.

“Cable companies are likely to raise stand-alone broadband pricing in order to combat the EBITDA declines from downsizing,” Jefferies analyst Mike McCormack said in a separate note just last week. “This practice is already evident and justified given the lack of a bundling discount.”

McCormack notes that Comcast is already raising prices, with $40-per-month plans for new internet subscribers jumping to $65 after an introductory period comes to an end. “Based on our analysis, we estimate Comcast would need to raise stand-alone pricing to roughly $80 in order to break even from a profitability perspective,” the analyst added.

Zach Epstein

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.