Hey! I have an idea: Let's deregulate the telecommunications industry! Everything will be better!

I believe that corporate deregulation has been the death of the free market. Corporate fundamentalists, initially led by Ronald Reagan, play to the basic stupidity of the American public by telling them that capitalism suffered from regulation, and that an unbridled marketplace would make America great. The past 25 years have proven that deregulation has destroyed the free market and capitalism hardly exists in this corporate fundamentalist culture brought to the entire world by M.I.T.'s Sloane School.

We were promised that competition would increase, prices would plummet, service would improve, jobs would flourish, and profits would soar! All of the opposite is the truth.

Right after the failure of deregulation of the media and airlines, the deregulation of the telecommunications industry has been a catastrophe that has led to horrible technology and development, higher prices, no competition, and the worst service known to Western civilization.

I offer you this story . . .

I work for XYZ Corporation, a company with over a billion dollars in revenue, based in midtwon Manhattan. One of the benefits is access to a corporate account with VerizonWireless from whom I can purchase mobile phone service with a guaranteed 8% discount, above and beyond any other discounts offered. It is convenient to use this benefit, because the sales rep comes to the office once a month and will always return messages.

As my daughter has grown, Mrs. Mac finds it difficult to always bring a camera wherever they go. I had a great idea: now that I can by a camera phone that takes 1.3 megapixel photographs, instead of those grainy snapshots you generally see, I thought it might be a nice Mothers Day gift.

I called Mr. Smith, our corporate account rep at VerizonWireless, and his voicemail explained he was on vacation and I should send an email to Miss Jones, who would be handling his accounts. (Names have been changed to protect the slaves.)

I sent this message:

Dear Miss Jones:

I got your email address from Mr. Smith's voicemail. I am an employee at XYZ Corporation, and Mr. Smith is our new rep.

I currently have two phone lines. I would like to upgrade the phone on one of the lines; but I do not know how to go about doing this.

Ideally, I will complete this transaction by the end of the week. Can you help?

Thank you.

I waited a day and received this:

I just returned from a weeks vacation today. I was not aware that I would be handling Mr. Smith's orders. I have over 20 emails for orders. I did receive your email and apologize I have not been able to get back to you. Please give me a little time and I will get back to you. Thanks in advance for your patience.

I was totally sympathetic and wrote:

Welcome back!

Thank you very much for your prompt reply. I hope the day is not too grueling, and that my request will be a small one.

I am interested in purchasing the LG VX8000 as a Mother's Day gift. It would become the phone for the 123-456-7890 number. I have never upgraded a phone during the contract period, but I am happy to extend/renew the contract for a full two years in order to receive the maximum discount.

Please get back to me at your convenience, and I promise to be patient!

Thank you!

This phone was being offered for $150.00 with a two-year contract. I had done similar (but not identical) deals in the past and simply had to extend my contract two years from the purchase date, which was fine with me.

I received this in return, and I was completely satisfied that the deal could be completed:

I will definitely get back to you before the end of business day. 1 weeks vacation means 3 weeks of back up work.

I was sympathetic, and wrote this friendly reply:

LOL! I totally understand! I love time off and always dread the return.

How do they manage to create so much work in our absence?!?!?!?!

I continued with my work and thought little about the purchase (which I thought was an excellent Mothers Day gift).

After a while this message arrived:

This is a 2 year contract. You are entitled to upgrade every 22 months. You are eligible for an early upgrade which means changing to a plan of 59.99 or higher, (900 min) with a new 2 year contract. Please let me know if you want to do this. I will need a copy of your work id and personal id to process this order, The corporate pricing is 179.99 or we can bill you retail at 219.99 and send a 70.00 rebate your final cost would be 149.99.
please let me know how to proceed, thanks

I was confused. Over the eleven years I have had mobile service I have paid for thousands of minutes that I never used. My basic mobile phone bill was always ridiculous! I'd pay for a 1,000 minutes for each of us and web access and txt and all the bells and whistles. I would use about 75 minutes out of the thousand, used web access about twice a year, and hate trading txt messages. So, last year when I signed a new contract, we purchased 400 minutes a month to share with no web or txt service. The most we have ever used in the past year, in a busy month, was 250 minutes combined. Four hundred minutes is still way more than we need! I found Miss Jones' message confusing, because it seemed like I was being required to purchase more minutes just to purchase a phone. The last thing I need was MORE minutes.

I wrote back:

Thank you so much for the info.

Sadly, I must admit that I don't know what all of this means in relation to my current contract.

Do I have to increase my monthly minutes to be eligible for the discount?

What is the cost of the phone if I decide to keep my current plan?

Thank you!

I got a prompt reply:

Yes, the plan must be changed to 900 min, at 59.99 a month to a 2 year contract (does not include your discount of 8%) You have 2 options for pricing, at the corporate pricing its 179.99, or you can take retail pricing at 219.99 and send in the rebate for an additional 70.00 off, making the final retail pricing at 149.99.

This made no sense to me! I wanted to purchase a new phone and I was being forced to increase my service AND choose some sort of rebate plan to get the new equipment.

I did some searches on the web and found the phone to purchase outright for $300 at various non-Verizon sites.

Eventually I had a phone conversation with Miss Jones and learned that the in-store retail price of the phone was $389, and I was welcome to purchase it with no changes to my contract.

I replied:

I appreciate all your help.

A $20 increase in plan cost totals $480 over the life of the contract, then another $150 for the phone means I am paying $630 for a new phone you will sell me for $389. This makes no sense.

I am confused and disappointed about this process. I only wanted to purchase a new phone for my wife and had hoped to do so for dramatically less than $630.

I hope you will pass on to your superiors that I think something is wrong with a process that requires me to pay double for a phone that I think should be automatically discounted since I am already a paying customer.

I appreciate your efforts on my behalf.

I will decline this offer.

Thank you.

Then I learned that not only would I have to purchase 900 minutes, but I would actually have to purchase 1,000 minutes! I don't even need the 400 I already buy!

The primary line will need to be 1000 minutes at 70.00 and the second line 9.99. You are now paying 59.99 total without the discount. The new charges would be 79.99, 20.00 more, please let me know what you would like me to do, thanks again

Now, I was getting irritated!

I will not be making this purchase.

The LG VX8000 phone lists for $400 and I expected to purchase it from VerizonWireless at a discount. The $630 net cost you have quoted is just too much to pay for a telephone.

I am surprised that my vendor is not only failing to sell me this phone for the price listed at the web site, but is actually proposing that I pay more than fifty percent above list.

I appreciate all the time you spent on this today.

The conversation became a circle, I totally understood about the 2-year contract, and had often extended existing contracts. This was no longer an option however! At least Miss Jones agreed that it was too much to pay for a phone.

The 2 year contract should have been clarified by the sales representative that assisted in setting up this number. If you have a 1 year contract you can upgrade every 10 months but for a two year its every 22 months. You can do an early upgrade which consist of an additional 2 year contract with a plan of 59.99 or higher. I apologize that the policy was not explained. I do agree it's a bit too much.

Thank you. I will forward this message to your sales representative, perhaps he can assist once he returns.

Of course, Mr. Smith has never called me back. He knows I cannot be gouged. He is only interested in talking to clients who will pay $630 for a $400 phone. He knows there are no real discounts. He knows that offering me a $400 for $389 is less than a 3% discount when I am entitled to an 8% discount, and any joe-blow vendor will sell it to me outright for a 25% discount which he would never do! Why would he call me?

This is one of the problems with the deregulated telecommunications business: VerizonWireless can pretend they are giving you a discount when they are actually charging you $630 for a $400 phone that can be had for $300! Their advertising is a lie, they know it and they teach their staff corporate fundamentalist newspeak to convince themselves that the sin of theft they are committing is actually just good business (that God never intended to be regulated by government).

I now hate VerizonWireless, because they are liars. I am generally satisfied with their service; but I hardly use it. This process was insulting and I will change vendors when my contract expires.


Dick Mac Recommends:

Lessons from Deregulation
Alfred E. Kahn