Internet Access Rates Head for the Sky

June 9, 2001
With new entrants falling by the wayside, the big names in Internet access are losing no time in raising their prices. AOL Time Warner, Comcast, Cox, AT&T and Verizon are among the major companies announcing price increases for dial-up or broadband service in recent weeks.

Company officials say the rate increases are long overdue and will enable them to provide better service. Critics say the companies are simply taking advantage of consumers now that Wall Street has yanked the rug out from under the scrappier, cheaper start-ups.

Congress and the Federal Communications Commission have taken a hands-off approach to the Internet, saying they want to "let the marketplace decide." But consumer leaders say the end result is that the telephone and cable monopolies wind up in control.

Gene Kimmelman of Consumers Union said the price increases show that, "There are no meaningful competitive forces in this market." Despite their rhetoric, the cable and telephone companies "have no intention to compete on price," Kimmelman said.

Other observers noted that as customers get used to high-speed service, they're unwilling to do without it, thus enabling companies to raise rates with little or no customer resistance.

After a slow start, high-speed cable and DSL service has caught on to the point that many companies are having a hard time keeping up with the demand. AT&T Broadband, the nation's largest cable company, reports adding 200,000 cable modem subscribers in the first quarter of this year. Verizon says it added 180,000 new DSL customers in the same period.