Several months after the fact, the media has discovered that cable speeds are increasing; but is the move what consumers want, and will it be enough to fend off a DSL price war?. Though the news wires are buzzing with news of downstream speed increases; it's not a new revelation. We've been discussing the industry wide shift to higher speed tiers for months; DSLPrime mentioned Comcast's intentions as early as May of this year.

The press releases by Comcast, Roadrunner and others are having the desired effect; they're generating the marketing idea that cable now offers twice the speeds - a true value to consumers. But with cable rates endlessly rising should consumers clap jubilantly that their providers finally gave them a little something in return? Not that the industry should look a gift horse in the mouth, but many users and analysts simply aren't impressed.

"It's a nice marketing move, but it doesn't do much to expand broadband to a wider market," says Kinetic analyst Michael W. Harris, to the Washington Post. "If the consumer isn't ready to buy at 1.5 megs, switching to 3 isn't going to change their mind. A lot of users simply don't need that much Internet."

A growing number of industry reports have slammed the industry for rate hikes. Groups like the Consumer's Union filed a series of scathing attacks last year (see .pdf report), claiming that the cable industry was taking advantage of their monopoly position, and that price hikes were based primarily in greed, not necessity. "We think this is largely because cable companies have no real competition in their communities" says Consumers Union rep, David Butler.

A recent PIRG report offers up some additional data. The cable industry's operating margin is expected to be nearly $19 billion for 2002, up nearly 60 percent from 1997. Operating revenues per subscriber have jumped to $273 per year in 2002 from $190 in 1996. Comcast alone has seen a 36 percent increase in operating cash flow, with 36.5 percent profit in the second quarter of 2003, despite a sluggish economy and rising programming costs.

The FCC indicates that rates for basic cable packages have soared 8.2%, ($40.11 a month on average), while the cost of living was up 1.5%. Senator John McCain, who has been one of the only vocal politicians on this issue, warned the industry that they were "gouging" American consumers and that he'd be focusing on the issue in coming months.

According to the latest industry numbers, the recent DSL price reductions are so far only an irritating gnat in the face of the cable industry. The day will come when the bell's (and possibly fiber wielding utilities and PLC operators) give them ample competition. But until that day comes the cable industry is apparently content to simply throw crumbs from the profit table.

3Mbps is nice; granted, but it's costing providers very little to provide, and it means little to communities that have seen their cable bills increase countless times over the past several years. What's holding broadband back from the mainstream market isn't limited downstream bandwidth; a lack of compelling content in the eyes of the typical web user indicates that 1.5Mbps will serve them well for the time being. What's holding broadband back from broader market adoption is the cost, and what's holding back cost reduction certainly is not the fact that the technology is expensive to provide for MSO's.

With cable still pulling in 67% of all new broadband adoptees (DSL distance limitations and a stigma that it's a more 'complicated' technology hold it back) the ball for price reduction lies in the court of the cable industry. The recent speed increases are more PR product than improvement. Flyers can now proudly proclaim cable offers "Double the speed of DSL"; a fleeting flick of the wrist against the DSL gnat that will, undoubtedly, progressively grow in size (DSL leads cable by a significant margin in a growing number of countries).

The broadband industry simply won't explode until competition forces its major player to trim the fat and hand consumers some monthly fiscal relief. You'll be able to note the arrival of that competition by a push among cable industry insiders to trim sports channels off of cable line-ups, and a more serious push to embrace a la carte programming packages (the industry blames growing sports and programming costs for the hikes). Until then, crumbs and 3Mbps speeds (with limits set on how much you can download) are what you'll get to tide you over.

The majority of broadband consumers in our forums want improved upstream speeds, price reductions, and perhaps added security and other services. Feel free to speak your mind on what you'd most like to see from your provider in our latest Broadband Reports poll.