Comcast and Charter broadband customer growth has stagnated, and all of the cable companies are now slowly losing customers. There are a lot of reasons for the stagnation and customer losses. There is new competition from fiber overbuilders eating into the core markets of cable companies. The big customer growth in the broadband industry over the last two years has been with FWA wireless from Verizon and T-Mobile, and this also has to be eroding cable broadband customers.

One of the factors that put cable companies at such a competitive disadvantage is broadband prices. The cable companies have been regularly raising rates annually for years to levels that are far higher than all of their competitors. The high rates were sustainable in markets where the cable companies held a virtual monopoly, but an increasing number of their markets now see competition from fiber and FWA.

To be fair to the cable companies, not all customers pay the highest list rates. My firm has been doing broadband surveys throughout the country, and we find a lot of people paying the high rates. Interestingly, the customers who have been with a cable company the longest tend to pay the most, while newer customers have been offered much lower special rates.

I’ve been expecting cable companies to react to the new competition. They have a number of options for how to react to competition, and one option is to lower rates. I recently saw that Altice (Optimum) announced a major decrease in its undiscounted standalone rates. Altice has good reason to lower rates. Since the beginning of 2022, the company has lost 4% of its broadband subscribers, losing 189,000 customers on a base that was at 4.8 million at the beginning of 2022. The company had a net broadband customer loss in every quarter in the last two years.

Altice/Optimum has some of the most expensive list prices for broadband in the industry. Its list rates have ranged from $109.99 for 300 Mbps broadband to $139.99 for gigabit speeds. It has lowered those two prices to $70 and $110. The company says that it doesn’t have a lot of customers paying the list rate, but there are some.

To offset the rate decreases, Altice is raising its Network Enhancement Fee to $6 per month, a fee that applies to all customers. This had a list price of $4.50, but a lot of customers were paying as little as $1.50. This is the type of hidden junk fee that the FCC has been highlighting because it is nothing more than a way to bill customers extra money. It’s possible that what is being dressed up as a rate decrease could end up costing customers more in the short run.

Not every cable company is taking the same tactic. In December 2023, Comcast announced an average rate hike of $3 per Xfinity broadband customer. The company raised rates even though it has been seeing a small overall broadband customer decrease and an even larger erosion of cable TV customers.

Cable companies are under tremendous pressure from Wall Street to increase earnings, and that’s extremely challenging in an industry where they are losing customers to multiple aggressive competitors. Comcast reported to investors at the end of 2023 that its revenue per customer has been climbing. It’s likely that the company has been cutting back on the discounts given to customers and that more customers are paying the list rates. Raising rates or cutting back on giving discounts is the only way to increase revenues when competitors are taking customers. It’s going to be interesting to see what the other big cable companies do this year.