Sunday, June 27, 2010

Pulling Prices from DirecTV

This article could also be called, "Customer Ignorance As A Business Model".

Yesterday I had the most interesting customer service experience with DirecTV. My wife and I were looking at ways to cut our costs with our satellite service. If we want TV, satellite is the only way to go to get all those fun networks. Why? The
absolute market failure on my street.

To get more information, I logged onto my account at DirecTV so I can see all the plans. But what do I get? Only *upgrade* plans. The lower cost plans are hidden from my view. More fun. So now I have to contact customer service to get more information.

I work through the menus to get to what I want to do and wait. While I'm waiting for customer service to answer, I get to listen to glib commercials about the great service I'm getting to make the wait a little bit easier. After waiting a couple of minutes, i get a customer service representative. The conversation went something like this:

SCOTT: Hi, I'd like to downgrade my service. I've looked at my account on your website and I don't see any plans that cost less than the one I already have.

CUSTOMER SERVICE: I'm sorry about that, sir. But there are some plans we won't show on the website.

SCOTT: I see. I have to talk to customer service to find a lower cost plan, right? Isn't there some place where I can see all of the plans at the same time so I can make an informed decision about which plan I want to ultimately buy?

CUSTOMER SERVICE: I'm sorry, sir. But if you want that information, you will have to go to and click on feedback. Then you can ask for a list there.

SCOTT: But I'm already talking to you here. Can't I make that request here?

CUSTOMER SERVICE: I'm sorry, sir. I can't do that for you here. You will have to submit feedback to DirecTV in order to make that request.

SCOTT: But I want to see all the plans in writing so I can compare each one and then be able to calculate the pricing myself. This way I can make an informed decision about what I'm going to buy. Isn't there some kind of regulation that requires you to list all the offered plans so that I can compare them with your competitors?

CUSTOMER SERVICE: As I said before, you will have to submit feedback to get that information, sir. I cannot give that to you here. Is there anything else I can do for you, sir?

SCOTT: Yes. What are my options for reducing our costs down to $40 a month?

CUSTOMER SERVICE: We offer the Select Plan with 120 channels at $39.99 a month.

SCOTT: Great. So what is the total cost per month with taxes, fees and discounts?

CUSTOMER SERVICE: I'll have to generate an estimate with our proprietary cost calculation system. I'll need a couple of minutes to access the state tax tables. Can you hold?


CUSTOMER SERVICE: The total comes out to $50.92, sir.

SCOTT: Ok, that sounds good, but what about High Definition?

CUSTOMER SERVICE: That's an extra $10 a month, sir.

SCOTT: Ok, but I've been watching the ads from the Dish Network, they are offering free HD.

CUSTOMER SERVICE: We are offering free HD to select customers. You may qualify, but I won't be able to tell you that. You will have to talk to a Advanced Programming Specialist. Would you like me to transfer to that department now sir?

SCOTT: Sure.


SCOTT: Yes, I'm calling to see how to get HD for free. That's $10 a month I'd like to save. And I see that Dish Network is offering free HD, too.

ADVANCED PROGRAMMING SPECIALIST: We are offering free HD to select customers. Would you like me to check to see if you qualify?


ADVANCED PROGRAMMING SPECIALIST: Ok, sir. It looks like you do qualify (what a coincidence!). As long as you retain the automatic payments from your bank account, you will get free HD for up to 24 months.

SCOTT: Whew! Thank you so much!

ADVANCED PROGRAMMING SPECIALIST: Is there anything else I can do for you now?

SCOTT: No, that should do it. Thanks.

As you can see, getting information about how to lower costs is tedious and time consuming. Clearly it is within their business interests to discourage cost cutting as much as possible. DirecTV is at least partially controlled by Rupert Murdoch. I've been reading some of his rants and it's clear that he's old school, old media. The attitude and demeanor of service provided by DirecTV seem to reflect that rather well.

As I work with customer service, and within customer service at my own job, one thing is becoming increasingly and alarmingly clear: customer ignorance isn't just a business model in the US. It is *the* business model among the largest corporations running amok here. Their cavalier attitude towards pricing, options and fee information is about as oblique as the FBI.

Examples like DirecTV prove that a private monopoly is no better than a government monopoly, no matter what the Republicans have to say about it. Sure, they compete with Dish Network, but two competitors do not make a free market.

Here are a couple of remedies for the problem:

1. Tax corporations and executive compensation up to 90% if they aren't willing to lay their assets bare to the market and the legal uncertainties of the business world. If they operate as something other than a limited liability organization, they get taxed at a far lower rate.

2. Require open access for all content carriers. Prohibit *any* ownership interests in content by carriers. That will help to level the playing field.

So when you're talking to customer service at any business, consider the possibility that Customer Ignorance is the primary business model of the company you're working with. That's what' I'm starting to do.

Have a nice, lazy Sunday.

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