There’s this weird theory that the whole ‘supply and demand’ stuff yields very efficient structures and top notch services for customers. The sad thing is that it blatantly isn’t true. And if companies had it their way there’d be no ‘free’ market but just very long contracts which let those companies screw you without end. Unless the state severely regulates what is allowed and what isn’t, a ‘market’ that could reasonably be consdiered free isn’t possible. Instead just a shitload of legalese will happen.
My favourite example of such regulation is what they did to the phone market in Germany. Everything used to belong to the state-owned postal service and building the expensive network was subsidised by the state. Everything was inefficient, slow and expensive. But sometime in the 1990s they decided to open up the system and simply forced the postal service (now: Deutsche Telekom) to let others use their lines for fees which were limited by law. Very soon small competitors appeared who sold you the same service for less.
The beauty of the system was – and still is – that you can keep your phone line but any competitor can offer a ‘call-by-call’ service which you can access by a short prefix code to the number. No extra contracts needed and no separate billing either as everything will just appear on your usual phone bill. While, arguably, that system isn’t perfect – the maximum fee Deutsche Telekom can charge for a minute of national calling is still relatively high, which means that you’ll usually pay more for a long distance call within Germany than for a call to another rich country – it works pretty well. Free choice for the customers and full flexibility at all times led to greater efficiency and better prices.
I suppose Deutsche Telekom hates it, though. And so will all other phone companies. In fact, if you get your phone line from other companies which are not bound to let you use those ‘call-by-call’ services, you’re quickly back in the territory of the 60 Cent a minute call to South Africa rather than the 3 Cent per minute one you used before.
And all of the other telecommunications branches seem to do the same. Mobile phones with unclear ‘subsidies’ for the hardware and contracts lasting 2 years. Mobile phones with international calls costing well over a Euro per minute (just roaming was regulated last year by the EU) which means that if you use your phone in a different EU country to call home, the price is capped by law. However, absurdly, calling the other country from your mobile phone while you are at home is much more expensive.) And then there’s of course the iPhone with Apple wanting to squeeze as much money as possible out of their ‘customers’ and locking the phones to ‘exclusive’ providers. In particular that means that iPhone lemmings cannot use their phone abroad without being totally ripped off or ‘jailbreaking’ it. Which either hints that non-jailbreaking iPhone users don’t pay their own phone bills, don’t get out of the country or will be a bit unhappy.
Finally there is network access. DSL lines are pretty much a commodity by now in all but the most rural areas and some parts of Eastern Germany (I’m not sure whether that’s true, but people say that after reunification they replaced the old phone network there by a state-of-the-art fibre optic phone network. Afterwards people came up with DSL which needs copper to get to the houses…). And pretty much everybody working in that business seems to be a crook. Of course you know that before signing the contract, but if all you have is a choice between one crook and another, what can you do?
We switched to one of the shoddy DSL providers in 2005 when using the university’s city-wide wireless network had become infeasible (presumably because of too much interference with more and more wireless networks being between our place and the antenna we used half a kilometre down the road). And to be honest, yeah, everything seemed a bit dodgy. Yet, it worked. Which is pretty much all we asked for. But time passed and the DSL offerings developed. Which means that we are now paying something like €35 a month for an unlimited DSL line with 6Mbit down and less than 1Mbit up while current offers claim to provide up to 16Mbit down for €10 less.
Now if the provider were decent, they would have just upgraded our connection after a while. But they didn’t. Instead they are somewhat customer hostile, hard to contact and their web site makes it hard – if not impossible – to find out the actual conditions of your current contract or those you are supposed to agree to for a new one. It turned out we couldn’t really tell the next date to which we could cancel our contract. We didn’t have any current terms and conditions at home and the help section of their website listed terms and conditions which explicitly mention 600Kbit/s DSL lines of many years past.
And thus the idea was born to simply cancel the contract. Which seems to be the only language they understand. And thus the language they want us to use. After a bit of searching we found out that they have a special web site for managing your contract. And it also offers an option to cancel it.
However, that is where the trouble begins. When we upgraded our line shortly after getting it, the process was easy: Log into our account with them. Follow a few obvious links. Done. We received a letter confirming this a few days later and the upgrade kicked in at some stage. Cancelling the contract is in no way as simple. To cancel it you have to deal with plenty of extra red tape. It is approximately a million step process requiring confirmation after confirmation – which pretty clearly seems to aim at frustrating people. [We, however, felt obliged to follow it through. Taking it as a ‘challenge’ if you are into euphemisms.]
Having clicked through all those web pages you aren’t done, though. Not by far. At the end of the process they provide you with a form which you have to send to them by mail (as in snail mail) or fax and they won’t accept your cancellation otherwise. (Update: even worse, on the first number of attempts the given fax number was invariably engaged.) However, they will not let you download that form right away. The web page tells you that you first have to ‘authenticate’ yourself by calling a phone number (toll free at least) and telling them a code that is displayed on the web page there. That number only works until 10 at night – we called it half an hour later – and only after you have surmounted that barrier you can download the cancellation letter as a PDF file.
The letter is accompanied by notes that the whole cancellation process is invalid (and has to be started anew) if you don’t send it in within a week and that you are not allowed to add anything to it. I am not keen on testing that, but I wonder how many of those conditions would survive in court. They seem overly restrictive.
This whole process is just ridiculous in how many potential – and realistic – points of failure have been designed into it. What should be a single phone call or freeform letter to an openly advertised address requires you to
In short, they require you to use pretty much all the media you may or may not have access to. And what will happen if you can’t easily phone? If you don’t have a printer? If you go friggin berserk after step 3? All of which would seem entirely conceivable. (I’m not even starting to touch accessibility issues here…)
So let’s see how that goes. The cancellation process included a questionnaire which also asked for the reasons of cancelling a contract.
Minimum contract duration of 24 months is too long was an option there, as was
lack of opportunity to get a good deal on an upgrade. Which suggests that they are totally aware of this and I cannot attribute their crooky behaviour to incompetence but it is straightforward malice we are dealing with here.
Currently I am not sure I’d wish to prolong that contract even if they made us a very good offer. Just as a matter of principle. On the other hand – who knows how bad other providers will be.
What I completely don’t get about this is that you always hear companies whine about how expensive it is to get new customers. They spend millions on mind numbing ads and on tarts in short skirts trying to make you sign some contract. Yet, once you signed it, they don’t make any effort to simply provide good service and keep you as a customer. That wouldn’t be hard to do and it wouldn’t be that costly at all.
The thing is that their behaviour also changes my behaviour. I know they will act like crooks, so, in turn I will have to be an unfriendly bastard as well. Cancel contracts as soon as possible. Show no loyalty, ever. Always bargain and mention other, more attractive, offers. And I think that just sucks. I’d be perfectly happy to keep the same contract for a long time. I don’t want the hassle of having to deal with different companies (which equals different bastions of incompetence) all the time. But in exchange for that they’d have to show some trust in both themselves and me first. If the knew their services will always be good and competitive, they can allow me to cancel my contract on a monthly basis. And they’d make it easy for me to contact them. Perhaps we’ll need some harsh regulation in this business as well. The companies would all cry foul at first because some ideology makes them think the state shouldn’t intervene. But with a bit of luck the better of them would still survive and we’d have better and cheaper services with the bad companies going bust as capitalism suggests they should… win-win-win!
Heya Sven, thanks for writing this, saving myself to do it. I can now link to your post whenever I need. And that would be every 24 months.
The only DSL provider that does not issue bondage contracts is Alice. The contracts last a month and they upgrade you, or lower fees as time goes by. This sounds nice. And I have not tried cancelling yet, so they might not be any better. The one caveat is, at least here in Berlin, that they are clearly on the edge of capacity and frequent bandwidth and connection problems arise on weekends. The neighbours’ (friendly shared in these cases) T-DSL line works fine usually.
A friend of mine just signed up for that Alice thing. The monthly contract certainly sounds like a good idea. I will certainly check how that goes.
At least superficial reading of their web site does suggest, though, that they also want to take over your phone line which I’m not sure I’d be happy about.
Some time ago I read about a behavior experiment with students:
They had to make a deal with a customer. If they made the deal they got a fixed amount of money. The deal was about how much of the money they had to share with the costumer.
There were 2 big clusters of people in the resulting experiment. The ones who proposed a more or less 50:50 deal as dealer and only accepted 50:50 or better deals as costumer (“if you treat me unfair you will not get anything”) and the ones who proposed 90:10 deals as dealer (i.e. 90% of the money for the dealer and 10% for the customer), accepted these kind of deals as customers (“better to have the 10% than nothing”) and also did not understand the reaction of the first group.
In the second group (90:10) they mainly found students of economy. In the first group (50:50) they mostly found the rest.
Given that the management of these companies normally is composed of former students of economy, the typical behavior of these companies does not come as a surprise anymore.
Interesting story, Ingo. Although I’d perhaps make a difference between economy and business students…
In the end the lack of real competition seems the main problem. If people weren’t locked in such long term contracts, companies would have a harder time getting away with such behaviour.
Received data seems to be invalid. The wanted file does probably not exist or the guys at last.fm changed something.