Price Pressure Could Reduce ISPs to Tiers

For cable TV operators, offering Internet connections has been a gold mine this year. But in 2003, they might have to settle for silver.

If cable companies want to continue the impressive growth of their high-speed data service, they soon will have to start offering their customers lower-priced packages, or tiers, say some analysts. That possibility, currently obscured by cable executives' insistence they'll be raising prices for Internet service, could translate into slower returns on the industry's billion-dollar technology upgrades -- and lower stock prices, as well.

"There will definitely have to be tiered pricing very soon -- easily within the next year," says Bruce Leichtman, president of the Leichtman Research Group broadband consulting firm. That means, according to Leichtman and others, that cable operators will have to supplement their $45-a-month list-price service offer cut-rate broadband service with, say, a $30-per-month alternative by the end of 2003. ...