When to Raise Broadband Rates

I’ve been getting the question lately about raising broadband rates. I don’t think there is a decision that smaller internet service providers (ISPs) agonize over more than the idea of increasing prices to customers. The question is obviously being raised now due to inflation. The need for rate increases during times of inflation is basic math. If your predominant product is broadband, and if costs are rising, you either raise rates or suffer a loss of margin – there isn’t any other alternative after you have done whatever belt-tightening you might do with expenses. The only other alternative to rate increases is to sell a lot more broadband, but as broadband markets get mature, this gets to be harder to do. We are approaching a nationwide broadband penetration rate of 90 percent, and at some point, everybody who is willing to pay for broadband will have it. My advice to ISPs has always been to make small rate increases over time, something small like 25 cents per year, rather than waiting until raising rates is a crisis and dramatic. But if you’ve waited until you have no option but to raise rates, then don’t be timid. Raise the rates to what is needed, and don’t be afraid to explain to your customers why you had to do so.

[Doug Dawson is president of CCG Consulting.]