One of the most common questions we get is will cord cutting cost more than cable some day? Study after study shows cord cutters save a ton of money. On average, Americans save $85 a month when they cut the cord including the cost of internet.
But what about 5 years from now? Will it still be cheaper? Often when people try to dismiss cord cutting they say “it will just cost more in a few years so why bother?” Is this true? Are we just a few years away from cord cutting costing more than cable TV? Let’s look.
Cable Owners Will Just Raise the Cost of Internet
This one is the most serious and honest concern. Right now, in most of America you are lucky to have two internet options. In a few places you may have a third option with fiber and while that is growing it is still rare. In some rural areas you may only have one option for internet. So, what is stopping them from raising the cost of internet?
Right now, what is holding them back is two growing trends. The fear of fiber and wireless home internet are both holding down the cost of home internet. (When we say wireless home internet, we are including 5G and fixed wireless internet. They work differently but both offer home internet wirelessly like cellphone service.)
If cable would double the cost of internet, they would make it financially feasible for more companies to run fiber to customers’ homes all over the United States and sell it for less than cable.
The other issue is the wireless home internet services that are launching. Very quickly a growing number of companies are offering cheap $50 home internet with speeds in the 100 Mbps to 300 Mbps range—perfect for streaming. 5G is getting all the press right now because it will allow a quick nationwide rollout that will really get under way in 2019. Other companies already have wireless networks popping up, especially in rural areas.
Soon cable companies will no longer just have to worry about DSL but also AT&T, Verizon, Dish, Charter, Spectrum, T-Mobile, and others all launching wireless home internet services. If they double the price of home internet, they run the risk of a company like T-Mobile refusing to double and taking away their customers.
For now, the fear of new competitors is holding them back. Soon the reality of new competitors in home internet will force them to become more aggressive.
Cable Companies Will Just Raise the Cost of TV Shows to Streaming Services
This argument is the least likely. The fear is that since companies like Comcast own NBCUniversal and AT&T owns Turner Networks they would just jack up the cost and force streaming services to raise their costs.
This has two main issues. First, the Department of Justice is fighting AT&T’s ownership of Turner and giving strict warnings to Comcast. Second, the domination of content is quickly moving from companies like Turner to companies like Netflix and Hulu.
Increasingly many cord cutters are skipping live TV streaming services and moving exclusively to services like Hulu, Netflix, and Amazon. At the start of 2018, there were about 25 million cord cutters but only about 5 million subscribers to live TV streaming services from Hulu, Sling TV, and others.
There are so many great shows to watch by numerous content companies, so if they want to jack up the cost of their service, they face the real risk of viewers saying well Netflix has a show I would rather watch anyway.
The day and age of ABC, CBS, FOX, and NBC controlling the TV you watch is long gone. Other companies are taking over. This new diversity will make it impossible for companies to just dictate the cost of content.
Will Cord Cutting Prices Go Up?
Yes, cord cutting will go up in price over the years. Nothing stays the same price forever. Inflation alone will force the price to increase. Yet when we are seeing cable companies raising their price every year or sometimes twice a year it would be hard for streaming to keep up even if they wanted to. With over 100 services we are already seeing some price wars. CuriosityStream recently cut the price of their service and others are offering crazy low Black Friday deals like Hulu’s $0.99 a month for a year offer.
So, while cord cutting will go up in price, it won’t go up as fast as cable will. Both face inflation.
In the end no matter what way you look at it cord cutting is cheaper now and will be cheaper in the future.
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