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Verizon DSL Takes The Cake

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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12 Responses

  1. Kaimi says:

    Awesome, Dave. Out of the government’s pocket, and into Verizon’s. Either way, it’s a dollar twenty you won’t be keeping.

  2. KipEsquire says:

    So are you yearning for the days of cost-plus regulated pricing? Because that’s what it sounds like.

  3. Verizon (or perhaps its suppliers) has just tipped its hand that its pricing is driven much more by demand than by costs. I wonder whether this move was cleared with Verizon’s lobbyists. It certainly sends a message that could be considered, well, inconsistent with the claim that the government needs to lower taxes and regulatory requirements on broadband in order to make access cheaper for consumers.

    Then again, Verizon has been known to establish ill-considered customer-service policies and repent at leisure. In April, they announced that they’d be eliminating the option to pay your bill by credit or debit card, in favor of recurring direct debit or payment through a third-party charging a hefty per-transaction fee. (In net, they were trying to shed the proccessing fees associated with plastic and make the consumer bear any such fees.) Presumably in response to a groundswell of consumer rage at a move that would have made payment significantly less convenient, claiming that the “notice was sent to you in error,” a claim that is plausible only a fairly strained reading of what it means to send a notice in error. It wasn’t an accidental email never meant to be released; when I called to object, the person I spoke to seemed perfectly aware of the new policy and tried to justify it as making things easier for me.

    In any event, I think I will quite enjoy calling Verizon to cancel my DSL and phone service.

  4. David S. Cohen says:

    “We’re raising our price but calling it something else.”

  5. Bruce Boyden says:

    Nice. We recently cancelled Verizon DSL and phone because we moved, but we were not sorry to see them go — both were technologically sub-par, and the friendly tech support people were utterly powerless to do anything about it. It will take extremely bad cable service to make me switch back (although I’m sure some cable companies are up to the challenge).

  6. Frank says:

    Bruce–I tried to switch from Comcast to Verizon, and despite having ordered the latter on July 20, I still don’t have service. I wish I’d stayed with Comcast, despite the very high prices.

    As for the general point: all I want to know is: does the money collected go toward expanding service or innovation? or is it just pure profit? if there were some reliable accounting for the figure, i might not object to it.

  7. Paul Gowder says:

    Ahahahahahaha. This is beautiful. It’s the corporate babblespeak equivalent of “The marketplace for our services isn’t competitive, so we’re just going to raise profits by yanking up the prices. Don’t bother looking elsewhere. Suckers.”

  8. Dave Hoffman says:

    Paul, I don’t know why you think that the marketplace for high speed internet connections isn’t competitive. (And I doubt that for antitrust purposes dialup is a necessarily seperate market.)

    What is interesting about this notice is the fact that Verizon deigned to send it out written in such a (for them) clear way. Usually, this kind of price rise is much harder to figure out. I see the notice as a bit of preemptive consumer impression management.

  9. LM says:

    I’m not sure what would impress customers more: that Verizon was open and honest about their profit scheme (presumably, there is no quid pro quo for the new fee; an expansion of services doesn’t appear to be the goal), or that Verizon opted not to charge that extra $1-2 per month at all.

    Personally, the latter would leave a better impression on me, but maybe it depends on the customer (and his or her respective wealth). I’d assume that most internet customers are of moderate wealth anyway, so $1-2/mo. is a drop in the bucket.

  10. Matt says:

    Let me suggest Speakeasy (at http://www.speakeasy.net). I’ve not been with them long but already I like them massively more than Verizon.

  11. Salil Mehra says:

    Dave said: “(And I doubt that for antitrust purposes dialup is a necessarily seperate market.)”

    It may be a tangent, but I for one wouldn’t switch to 56K dialup from a 768K DSL line if the latter raised its price by 5% (about $1.50/mo.), ceterus paribus.

    My guess is that a properly defined market includes DSL and cable.

  12. raoul says:

    I hold the Associated Press responsible. Their initial press release (which gets copied endlessly all over the world) referred to the price increase as a “surcharge.” The fell right into the Verizon P.R. trap.

    It’s NOT a surcharge; it’s a price increase. And yet Verizon continues to advertise their prices not to show the price increase.

    Let’s say I advertised a car at $1,000. When you went to pay, I said “Sorry it’s #1,200, there’s a $200 surcharge.” You could sue me for false advertising.

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