Democracy & Technology Blog Competition and customer service

The companies delivering voice, video and data services rank low in customer satisfaction, reports the Washington Post. Customer service appears to be the primary culprit. The newspaper quotes the following expert opinion: when there is competition and consumer choice, it does get better.

Would the cable industry alone have spent almost $100 billion in network upgrades since it was deregulated in 1996 if not to compete against the satellite and phone companies? Competition is here. Customer service may not be as important as it once was, but that’s because customers today can also shop for innovative products and competitive pricing.

Gold-plated customer service existed under regulation, when government controlled price and market entry. AT&T emphasized customer service because it was under rate-of-return regulation, which meant that is was legally entitled to pass along its costs plus earn a profit of approximately 15 percent. AT&T could increase its profit every time it found a way to justify new costs to regulators’ and customer service was politically popular. Oh yes, it was easy for regulators to shift the cost to long-distance and business users. That’s why it was expensive to make a long-distance call. Innovation also languished. Cell phones had been invented but not deployed. Answering machines were a status symbol.

Deregulation, though incomplete, has provided more appropriate incentives for telecom companies to strive to offer the best technology at competitive prices along with good customer service, not spend the majority of their time trying to fool regulators.

Hance Haney

Director and Senior Fellow of the Technology & Democracy Project
Hance Haney served as Director and Senior Fellow of the Technology & Democracy Project at the Discovery Institute, in Washington, D.C. Haney spent ten years as an aide to former Senator Bob Packwood (OR), and advised him in his capacity as chairman of the Senate Communications Subcommittee during the deliberations leading to the Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association and Qwest Communications. He earned a B.A. in history from Willamette University and a J.D. from Lewis and Clark Law School in Portland, Oregon.