Internet service rates to be jacked up by the cable industry?


Editor’s note: This segment originally aired in Nov. 2010.

The cable industry is making noises that it plans to raise the price of Internet service.

The New York Post reports the industry is seeking to compensate for revenue they’ve lost from people firing them as pay TV providers. I, however, believe the marketplace will continue to set the price of Internet service.

There’s a term called “cord cutting” that comes from the local monopoly telephone business. Cord cutting describes what happened when people began dumping their landlines en masse because of the popularity of cell phones. Now each quarter, the phone companies report in their 10-Q financial statements how many landlines people got rid of during the last 90 days. It’s a dying business.

Similarly, the cable industry is quaking in its boots about people cutting the cord and firing them because so much programming is now available on the web.

This year, 40 million web-enabled TVs will be sold. NPD, a research group, estimates that number will only grow over the next couple years to over 100 million sets being shipped in a single 12-month period.

Meanwhile, Netflix in Canada is now offering a web-only subscription (no DVDs in the mail whatsoever) for $7 and change each month. Rumor has it that Netflix may start testing the service in the United States in the next couple weeks.

Despite the coming changes in technology, maybe you’re not ready to completely fire pay TV. That’s fine. But perhaps you can dial back your pay TV package and supplement it with something cheaper such as Netflix.

For those who are ready to completely fire the cable and satellite providers, the savings can mean $80 or $100 back in your pocket each month. That can add up to $1,000 or more over the course of a year!

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