Tim Lee vs. Comcast's hidden discounting
The Philadelphia blogger says he's weary of the games he has to play each month to keep his broadband bill from rising.
Tim B. Lee - no, not that one - has a story to tell about his experience with Comcast over its broadband prices. Or maybe I should say over his broadband prices, because his complaint is that cable companies always seem to play games with the prices they offer, and that Comcast played even more games after he outed them in his first of two recent blog posts, Why Comcast's Price Discrimination Strategy Makes Me Hate Them, on Forbes.com.
Lee, unrelated to Web inventor Tim Berners-Lee, seems to suggest he'd prefer transparent pricing to Comcast's practice of what economists call price discrimination. It's a fascinating tale - absolutely worth reading if you need fortification before your next negotiation. But at the end, I wondered if he was focusing on the wrong problem.
Lee starts by recounting what happened when he was unhappy at a price increase - or the expiration of discounts - that raised his monthly broadband bill from $52.55 to $80.51. As he had done with Charter Communications when he lived in St. Louis, he called and threatened to cancel, saying he could choose Verizon's DSL service instead.
Voila! Though he wasn't really about to switch, and after resisting further pitches, he got a new deal from the Comcast rep. "After trying to upsell me to a 'triple play' package and putting me on hold for a minute, she offered me a $10 discount. I probably should have held out for a bigger discount. But I wasn't actually prepared to have her actually cancel my service, and $10 is better than nothing. I'll probably call back when I'm better prepared."
Even as he acknowledges the efficiency benefits of Comcast's willingness to bargain, Lee found the process a waste of time and distasteful, though apparently less distasteful than paying $120 more a year:
The plot thickened after Lee's initial Forbes posting, when Comcast apparently decided to respond by calling him back to explain and, in the process, offer him a better deal. Lee recounted that conversation in a second post, Comcast's Pricing Shell Game. To make a long story short, Comcast told Lee he had been getting its fast "Blast" service, officially priced at $80 a month, for a $25 to $35 a month discount. But because of rules against back-to-back discounts, that couldn't continue - at least under Comcast's ordinary customer-service rules.
Those rules had already been broken, of course, by the new $10-a-month break. But now Lee was upset that, as a blogger who had openly recounted his truth-shading bargaining strategy, he was being offered an even better deal:
Journalists always walk a fine line in these situations. If this really was an effort at "damage control" by Comcast, perhaps Lee should have said a polite, "No, thanks," to avoid benefiting from his position. But Lee only alludes to the major, underlying issue here: More than 15 years after the Telecommunications Act of 1996 was supposed to bring a new era of competition, Comcast, Charter and their counterparts still enjoy monopoly or near-monopoly status in their markets. In parts of Philadelphia, Lee could have credibly threatened to jump to Verizon's high-speed FiOS service, but apparently not where he lives.
The problem isn't that companies bargain with customers. That's how the market works, as Lee - an adjunct scholar at the Cato Institute, according to his bio - surely knows.
The problem is a lack of real competition. Even the small threat of his jumping to Verizon's DSL service was enough for Comcast to lower its prices repeatedly. Who knows what the price would be if Lee and his neighbors had real and attractive options, or - in the fantasy of people like Slate's Matthew Yglesias - we imposed utility-like price regulation?
We've abandoned price regulation for a fantasy version of competition, and gotten the worst of both worlds. Would firm and transparent pricing solve anything here? Not really.