Does More Cord-Cutting Mean Higher Broadband Prices?

It seems like every quarter more cable customers are cutting the cord. AT&T (NYSE: T) recently reported it lost 390,000 linear video subscribers in the third quarter. Last month, Comcast (NASDAQ: CMCSA) warned that it expects to lose between 100,000 and 150,000 subscribers, partly due to competition and partly due to the hurricanes that hit the southern United States. UBS analyst John Hodulik estimates the pay-TV industry lost over 1 million subscribers in the third quarter, compared with just 325,000 in the same quarter last year.

Even as more consumers cut the cord, they're still reliant on AT&T, Comcast, or their local provider for broadband internet. How else are they going to stream all that video content to replace their cable subscription? But Jefferies analyst Mike McCormack estimates the average customer moving from a triple-play bundle to broadband-only costs each service operator $32 in EBITDA. As such, they need to raise their broadband-only service to $80 per month on average to make up for earnings lost from cord-cutting.

Image source: Getty Images.

Continue reading

Source: Fool.com