Completely disagree. This is about power, they are raising the price simply because they can and people will stay on. They've got a long way to go to increase it before the elasticity changes.
The business model was never about being really underpriced, that was just a way to acquire customers.
How do you imagine they are "raising the price simply because they can" when their growth has slowed[1] and they have decided to no longer use debt in order to finance content?[2] I think those two facts taken together are a much more plausible explanation of why they are raising prices i.e because they have to. Further given the competitive head-winds they're now facing streaming space they are definitely not in position of price leadership.
The business model was never about being really underpriced, that was just a way to acquire customers.