If the free market is so great, why do all the phone companies suck? by mattsteinglass
August 10, 2009, 10:46 am
Filed under: Business

Kevin Drum has a dispositive and I think representative rant today about how awful mobile phone companies are, and how this is fairly representative of the way one gets treated in many situations by corporations these days. (Gist: he decided to use a supposed $100 “credit” to upgrade his phone, but found that in fact it would either cost him $240 to upgrade to a new network plan, or he’d have to pay $50 upfront and mail in a card to get a $50 rebate.) Punchline:

What’s really remarkable about all this is that I suspect most people don’t even complain about it.  It’s just the way corporations treat us these days and complaining about it is useless.  It’s not as if any other cell phone company would have treated me any better, after all.  They make their money on people who buy high-minute plans and send lots of text messages and download tunes and upgrade to email and broadband.  I don’t do any of that, so they don’t really care about my business.  And why should they?

I had a conversation about a related subject some months back with Deutsche Telekom’s representative here in Hanoi, who tried to explain to me why SMS’s cost so much. They used to be free; obviously, the marginal cost of an SMS, or a billion SMS’s for chrissakes, to the phone company is zilch; but nowadays they cost at least 10 eurocents each. So I asked him: why don’t some crazy college kids just start up a phone company, get some bandwidth, start charging people 2 eurocents per message, and bring mighty T-Mobile and Orange to their fat, pampered knees? He had a long and detailed response to this, and he’s an extremely smart guy, so I’m sure it made perfect sense. But I confess I didn’t understand a god damned word of it. Usually, when I understand something, I can repeat it in some adulterated version, but this explanation — there’s nothing left of it in my mind. I’m sure it didn’t run “All the CEO’s of the major European telecoms get together around an amoeba-shaped pool in Monte Carlo every six months with pitchers of mojitos and expensive hookers and set the new floor price for SMS’s, and occasionally some college kids try to start up a new mobile phone service with cheap SMS’s but they’re all buried in a forest in Belarus.” But other than that…I can’t remember a word. It’s like someone used a handheld device to wipe it out of my memory. Uncanny.


3 Comments so far
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I complain. I complain all the time. To my friends. On my blog. In my posts: But at the end of the day, my phone company provides the vital service of keeping me connected. However, given that this is an increasingly necessary part of life, I almost wish the government was the one paving the digital highway as it did our national ones.

Comment by Kashmir Hill

Matt, it’s pretty obvious that many of the talking heads who expend so much ink boosting free-market economics very often don’t actually understand what they are talking about and often lack any real background in economics. A certain asymmetrical commenter being a prime example. Still, I’m pretty sure that you are not touting a nationalised solution to this situation (in Soviet Russia, message texts you?) but are only pointing out that the market is far from perfect, something which most reasonable pro-free market commenter are happy to concede, just not people who essentially learned the free-market phrase-book without gaining any real understanding of its implications.

Comment by foarp

Oh, as a perfect example of the kind of punditry we are talking about:

Comment by foarp

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