Comcast customers will see a 3 percent increase in their monthly cable bills next month. The increase comes just one month after Verizon announced a boost in its prices for new customers.
While both of the company’s rate increases remain relatively low, they fly in the face of the hoped-for price wars that Verizon’s entry into the market was expected to bring to Washington area consumers.
But consumers may have misinterpreted what a new cable provider would mean for prices, industry analysts said.
While prices haven’t fallen, Verizon, Comcast, Cox and other satellite companies compete through the packages and services they offer.
“When there are a small number of providers, competition is more likely to be through services than through price,” Stifel Nicolaus & Co. Inc. Regulatory Analyst Blair Levin said.
Verizon, Comcast and Cox all offer “bundles” that include cable, telephone and Internet services. Each bundle includes different offerings, such as varying numbers of channels, video on demand and high definition features. In addition, each provider will tell you its Internet is the fastest and their customer service is the best.
The competition hasn’t carried over to prices because Verizon is still new to the marketplace and hasn’t made a huge impact on Comcast’s customer base, Forrester Research Principal Analyst Maribel Lopez said.
Verizon’s bundles are somewhat less expensive than Comcast’s comparable packages, but not enough to cause Comcast’s customers to switch, Lopez said.
“Prices are only going to go down when Comcast feels the need to respond to competitor pressures,” Lopez said. “They need to see Verizon grab some subscribers. You’re going to wait until you feel some heat before you take some action.”
Verizon doesn’t break out regional numbers, but spokeswoman Christy Reap said the company has about 9 percent market penetration for its cable services and 14 percent for its Internet services nationwide.
“Verizon is relatively new [to the Washington market],” Reap said. “So to expect an instant reduction in price is maybe too fast.”
