Cable Companies Can Afford Lousy Service

Our cable TV service wasn’t working; with one week’s notice, I was able to get a service person, but my wife or I had to be available at the house the entire day of the scheduled visit, fouling up our schedules and making work difficult for us. (Sadly, we cannot afford a butler!) The cable company is a monopoly, and its price is outrageously high.

Simple economics tells us that the economic cost of monopoly is the underproduction generated by the high monopoly price.

Another cost is the lousy service that monopolists provide — including the time the monopolist makes you spend waiting so that he can keep costs low and earn higher profits. With competing providers, service would be better — and time wouldn’t be wasted — since lousy service would cause people to switch to competitors, forcing all to offer better service.

Monopolists, however — including my cable company — have a lot of latitude, as it will take even worse service than this to get me to switch to satellite TV. Over time, as services like cable form an increasing share of people’s spending, and as the opportunity cost of people’s time keeps rising while their spending power grows, this cost of monopoly — its deadweight loss — will be ever more harmful to the economy.


Gary

Ebartz,

Remember TWA? Apparently they weren't essential to the economy.

Bankruptcy isn't always the end of the company. United filed for reorganization, in order to use the courts to protect them from creditors while they got things back up and running.

Airlines are horrible not because of their government subsidies, but because its what the consumer desires. I fly out of DCA today. My trip would take 7-8 hours by car, and gas and tolls would cost be somewhere around $120 each way. I'm flying on a major airline instead, less than an hour and a half flight each way, for $247. That's a pretty fair deal by my math, even if they do charge me $15 for my checked bag.

montpelier28

Just had to agree - thank you.

Ebartz

Reading this in fact reminded me of my recent trip from Austin to Oregon, where rude and poor service, extravagant prices (notice how they're charging you for check-in luggage now?--not to mention the cost of food at the airport), delayed flights, etc. made me start thinking about monopolies as well. Obviously no one airline has a literal monopoly on air travel, but neither does one cable company have a literal monopoly on the airwaves. What these companies both have, I think, are complete job security. Let me explain what I mean with regard to the airlines. Airline companies that are established in the business, such as United, Continental, etc., are what we could consider an essential part of the modern economy. Without their services, our modern economy would not be able to function the way it currently does. It would fall apart. How does this give them job security? It means that, should business ever get bad enough, they can always count on the government to bail them out. The government can be counted on to bail them out because the government obviously has some interest in seeing that the entire economy doesn't collapse. Recall after 9/11 United went bankrupt--well, my recent flights to Oregon were in fact booked on United, and their service is worse than ever. They know that can save money by hiring incompetent workers, charging extra for things that used to be free, and just generally sucking at their jobs because they know that are in no danger of going away. In fact, it's already been proven.

I think that any time we see companies that suck at what they do and yet seem inexplicably to not go out of business, we can surmise there is a certain government-backed "job security" that they enjoy. While it may sound a bit more conspiracy-theory-esque (and really, I try not to consider myself much of a conspiracy theorist), I suspect governments are pretty happy to have a good relationship with media. First, remember the whole scandal when we found out that telecommunication companies were spying on American citizens on behalf of the administration without warrants? These are the same companies that provide us with really crappy internet, cable, and phone services. Also, governments and politicians have an interest in getting messages across to the people. Cable, internet, etc. would be good ways of doing this. For this reason, I feel no great stretch in supposing that there is a "you scratch my back, I'll scratch yours" relationship between government and media. The government makes sure the ones it likes never have to go out of business, even if they suck, and in return those same companies do the political dirty work for the government. Okay, like I said, maybe it sounds like conspiracy theory hogwash, but it might be worth a thought.

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SDC

uhh....Kill Yr Television! (?)

dnm

Try Rogers cable in Canada. They possess a monopoly in most markets on cable, and they have people on payroll on the CRTC which prevents us from doing anything about it -- they do things which you'd swear was a thumbing of the nose at their customers, and an active effort to make them quit, but we can't.

Rogers is the most horrible, evil, disgusting company in the history of the earth. Seriously. And they know they can get away with it. And until our Canadian government pulls their heads out of their asses long enough to see how they're making one raging douchebag (Ted Rogers) rich and not letting anyone else fairly compete, we'll continue to get screwed.

Dry.

Without lube.

J

"Let’s look at the flip side: unlimited competition. Flown in an airline lately? The more flights there are, the worse the service. Someone is missing something here"

Airline customer behavior has demonstrated repeatedly and emphatically the ONLY thing customers care about when making a purchase decision is price. Nearly everything airlines do is aimed at serving that priority, including curtailing or eliminating services that increase price. The question is, is it bad customer service to focus on what customers have clearly demonstrated is their highest priority?

Emmanuel M

I think cablecompanies may have the same issue as airways : the consumer votes with his wallet.

And he always voted, at every opportunity, that he doesn't want to pay for a quality service. Does he get what he pays for ?

P.S : I started writing this comment before reading the previous one. It seems that we both make a parallel with airlines, saying that service is poor. Though I personally think that service is poor only because the customer doesn't want to pay for it.

brittany

Whoa, man. Let me tell you. At least you don't live in Alaska.

R. Miller

Cable companies aren't the monopolists - the local governments are. Local municipalities which could extract most of the monopoly rents through a competition for a monopoly franchise have conspired to split the profits with cable companies. Although they grant specific licensing for the "natural monopoly" of cable, they exercise little regulatory oversight for customer complaints. In short, your local government is the problem.

BTW, for those whose landlords won't allow satellite, that is a violation of federal law. Inability to acquire a satellite signal is another matter.

Eorr

I have cox and was dissappointed. Then Verizon started offering FIOS in my area. I thought about switching because the service seemed better but cox doubled my bandwidth and tripled the HD channels over a few months. Things have gotten much better with this new competitor. Monopolies are terrible.

JoshG

Competition? What about iTunes, Amazon Unbox, free episodes available on company websites, satellite, other internet TV, and HD antenna, etc. Most phone companies also provide TV. The reason why customer service sucks is because you don't often deal with the bad end of customer service while you're signing up for your contract. So while you've sold your soul for a $10/month discount on a service that still makes you watch commercials you didn't even think about the day you'd need to deal with the service end of it. You'd gladly give that $120 a year back not to have to deal with the poor service, but you don't get that choice anymore because you got screwed by yourself 6 months prior. The reason markets are inefficient in this case is because a company can't be held liable because of radical conservatives that think it's bad for the market for companies to be sued for misrepresenting the service they're providing.

If you pay $50/mo. for cable/internet, that's for uninterruped cable/internet, not prorated cable/internet. If I told you your internet connection would be unstable every other second you wouldn't pay $25/month you would pay 0 for it and even that's not enough punishment to stop a company from doing it, you need to add punitive damages for the all the injured parties who don't have time enough to complain and so that the company actually won't do it!

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benamery21

Right, like competition ensures excellent customer service. The whole U.S. economy has horrible customer service. Why? Because you buy customer service as a typically minor part of bundled product, and it typically does not make dollars and sense for companies to provide excellent customer service when this is not the aspect of their bundled product which people are evaluating in making purchasing decisions. This is a case for more, and not less regulation.

jeffrey

DMB...it's in Korea but the usa outlaws it. now people are watching tv on the subway, the bus, the bus stop, and in the mens room while standing at a urinal, can't speak for the women, DMB, why do our reps give the cable and satelite people one bit of control over our free and domestic lives? DMB south Korea

rich

no response from Charter to the following letter, thus I'll never use their services again-

To whom it may concern:

I would like to express my dissatisfaction with the customer service experience that I have had dealing with Charter Communications. For the month of March I received a bill stating that my February bill was past due on March 12th- it said I was past due on the previous month’s balance. Firstly let me state this for the record that I paid my balance for February through my Bank of America account via “On-line Bill Pay” (which does include a memo of my Charter account number). I received confirmation from my bank that Charter Communications had received the monies as of February 29, 2008 for $82. I have always been diligent about paying my bills on-time as I hold my credit rating sacred; therefore, I immediately called customer service on 3/12/08 after opening this bill to request that a new bill be sent with the correct amount that I owed, reflecting that I had already paid $82. I explained to the representative that I had already submitted an $82 payment and he said that there was no record of this ever happening according to Charter’s records. I asked him to locate the check that Charter had already cashed and the representative essentially told me that it was a problem that I would need to deal with on my own, proposing that I needed to go to my bank in person to get verification that Charter had indeed received the check in writing, subsequently having to go to Charter’s branch office in Zephyr Cove, NV to submit all documentation (which is a 15 minute drive from my house). I replied that his solution was unacceptable as it would cost me at least two hours to run errands for Charter’s accounting department’s mistake and to drive there without any reimbursement for the gas that my car would have consumed. He told me that this was my only option and at this point I asked to speak to a supervisor. I got on the phone with “Jeremy” who seemed to genuinely want to help me and told him what had transpired. He agreed with me that I should not be required to drive out of my way and run errands for somebody else’s mistake and told me that he was going to locate the check and give me a call within ten days regardless of the outcome. He also re-assured me that my credit rating would not be affected and promised to put a note in my account reflecting that my account was being audited.

Unfortunately nothing ever materialized from my hour long customer service debacle and Jeremy’s promises were never fulfilled, but seemed to serve only as a façade. On 3/18/08, I received an abrasive reminder that my cable bill was past due- thus on 3/19/08 I phoned customer service again and spoke to a pleasant lady whom told me when I inquired why nobody had called me about the status of my billing inquiry that the reason was that the issue was still being worked on. The customer service representative promised that somebody would call me back by the end of the week to inform me of the status of the inquiry. This never happened- instead I found my cable turned off this morning (3/29/08). I called up customer service for a fourth time in one month and no action had been taken yet; I was only confronted with even more inconvenience for somebody’s mistake. Today it all came together my head that since Charter Communications is the only cable company in South Lake Tahoe; they can treat their customers however they deem fit as there is no other cable company to resort to. If I were to pirate cable from Charter and were to get caught the police are informed, but when Charter lost my check after cashing it, I had no immediate re-course, accept to go through a highly inefficient auditing process. The point I want to make is I have had a horrible customer service experience with Charter Communications and cannot remember a more patronizing or abrasive experience that I have had with any other company that I have dealt with. This has been an inconvenience and something immediately should be done to make-up for what I have experienced.

With that said, please do not hesitate to give me a call if you wish to discuss what happened further.

Yours,

Richard

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jimi

I don't own a TV.

There is a big world out there.

Austinmom

Dump the cable.

When my children were young we decided that the money could be better spent on family outings and books. My oldest in is his 20's, my youngest in middle school, and adults are always surprised at how well read and conversationally savvy they are. None of them seems to have suffered irreparable damage from being spared Teenage Mutant Ninja Turtles or the Disney channel.

We are still trying to decide if we're going to replace our 25 year old TV before February....

Ken Reiter

I'm curious why you don't switch to a satellite system. I switched to Dish Network 8 years ago precisely because of poor service from my cable company and I few companies' services have been more satisfying. Hurray competition.

chefesse

For all of you who ask "why don't you get satellite?"...

Sometime you simply cannot...you are truly at the mercy of the cable companies. I live in an apartment building with an exclusive Cablevision contract. The building is wired only by Cablevision and I am "forbidden" to have any dishes or so on hanging out of any of my windows.

It is an astonishing example of a total monopoly. I try to comfort myself with the thought that at least my "triple play" is a tad lower in cost then if I subscribed to ala-carte landline, web access and cable TV services.

This doesn't stop me from being constantly annoyed by the whole thing, and I so wish that I could simply "pull the plug" on the whole dang thing. Alas, I'm simply not ready to "let go" of my wiring habit cold turkey.

RZ

BTW, I'd love to be able to purchase certain cable stations only. I watch just a few and would rather pay for those only than for an entire package. And there are times when I'd want to add other stations (e.g., ESPN during certain sports seasons) that I wouldn't need year-round.

Gary

I had Comcast previously. If Comcast had spent the money they spend on their "Comcastic" TV commercials on customer service and well trained technicians, their service might not be horrible, and thus they might get referrals from existing customers. I now have FIOS, which has its some drawbacks (like slow video on demand service) but is otherwise decades of Comcast in terms of quality and reliability.

Oh, and the installer came once, set it up, and it worked, and yet to suffer an outage (except during a power outage, when TV was pretty difficult to watch anyway). My GF's Comcast installation took 5 installers and a month... some service.

Competition in this particular market, has been a very good thing for me personally.