AT&T announced it will raise broadband rates as of December 1 by $5 per month. This is the second year in a row that the company has raised rates by that amount. The fact that the company is raising rates in today’s environment is an interesting choice. I suspect the rate increase says several things about AT&T. The increase tells me that the company is meeting its fiber penetration goals and doesn’t think a rate increase will hurt its market share. It also speaks to a belief that customers perceive fiber as the superior technology that people are willing to pay for.

This will take AT&T fiber broadband prices to $69 for 300 Mbps, $80 for 500 Mbps, $95 for 1 Gbps, and $160 for 2 Gbps. Before the two rate increases, AT&T was priced noticeably lower than its cable competitors, but that is no longer the case.

The rate increase will apply to existing customers, although AT&T is not raising the rate for it’s low-income plan. In a move that always mystifies long-time customers, AT&T is still offering aggressively low rates for new customers while asking for more revenue from long-time customers. While writing this blog, I saw the AT&T website is offering introductory rates of 300 Mbps for $42 and 1 Gbps for $50. AT&T is also offering a low rate for its FWA cellular broadband of $47 per month.

AT&T is giving customers the typical story that the rate increases are needed to ensure that customers will receive a high level of service. But the company is not mentioning to its customers that it had a net income of $4.9 billion and free cash flow generated of $4.4 billion in the second quarter of this year.

This has to be good news for the big cable companies that compete against AT&T fiber. If the cable companies decide not to raise rates now, they can advertise against AT&T for doing so. However, this could also give cable companies the cover to raise rates again, and I’m sure this announcement is being discussed in cable Board rooms.

What I find most interesting about the rate increases is that the big cable companies have spent a lot of advertising dollars talking about lower rates. Cable companies are in a panic about losing customers to both fiber and FWA and have mostly fought back with lower introductory rates and special promotions.

Charter had a rate increase this year and raised broadband rates by $2 per month, starting with the July 2025 billing cycle. That’s the lowest rate increase from the company in years and follows a $3 rate increase in the summer of 2024. Charter has been pushing a two- or three-year price lock where rates are guaranteed without customers having to sign a contract.

Comcast has not been so cautious with rate increases and announced an across-the-board 5% rate increase for broadband at the end of 2024. It will be interesting to see what they will do this year. But Comcast has also been pushing low-rate deals, including a promotion in April that gave new customers a 5-year price lock.

These annual rate increases always prompt small ISPs to ask if they should raise rates. The majority of small ISPs do not raise rates every year. I know a number of cooperatives that typically only raise rates every three to five years. It’s ironic that, on the whole, these rate increases will mean that urban broadband rates will become significantly more expensive than rural rates, mostly due to urban rates getting increased every year. There are exceptions, and some rural companies have high rates, but most do not.