The cost of high-speed Internet access is expected to rise this year as factors ranging from a plunge in advertising revenue to fewer companies offering the service conspire to affect the market, analyst and industry executives said yesterday.
Over the past several years, DSL rates have remained in the neighborhood of about $40 a month. But now that seems destined to change, said Jeff Sadler, a stock analyst at FAC/Equities.
“If you're not making money on advertising and you've got objectives to meet, raising prices is one of the ways to do it,” he said. “Who is going to step in to counter it?”
Another factor in the expected rate increase appears to be the ongoing high demand for broadband services. The equipment necessary to install a broadband connection is more expensive than traditional dial-up services.
“The cost of rolling out the broadband network is too high relative to the revenue it produces,” said Charles Ardai, CEO of Juno Online Services. “The upfront costs of setting up a customer potentially can swamp many months or years of profits,” he said.
