Friday, March 07, 2014

Free market in telecommunications?

A free market does not exist in telecommnications.

Consider that a free market
– Has many buyers and sellers
– Both buyers and sellers are free to enter and leave the market
– Both buyers and sellers have all the information they need to make a decision
– All costs are covered in the transaction, that is, there are no externalities

Let’s start with the last because it has some relevance to current politics.  What are the externalities of telecommunications?  There are the overhead lines, the underground cables, and the radio waves zipping through our bodies.  Most of us don’t seem to be concerned with the last; we’ve had radio, TV, and radar signals going through us for decades.  The overhead lines are not very aesthetic but we put up with them.  Similarly, the underground cables don’t seem to be a problem until one has to be dug up.

The externality that is raising the most discussion is the use of copper wires.  However, this need is being reduced by the use of fiber optics and wireless communications.

The telecommunications market certainly has more sellers than it used to, some in competition with one another for the buyers’ business.  Still, given that the buyers’ choices in any given area are limited to less than a dozen, the market is more of an oligopoly than a free market.

A few of us could go off all the nets and save a bundle of money.  But most of us depend on telecommunications for communicating with friends, family, and emergency assistance.  Few businesses would succeed without telephones and Internet access.  They need it for marketing, sales, and customer support.

All the information you need to make a buy decision?  Hah!  You really have to dig around to get a detailed quote on what a particular package of services will really cost you.  Ads are all over about Internet service for $19.95 for five years guaranteed.  But do you know how much you’ll pay for installation, service fees, and taxes?  Do you know how fast the service will be?  Do you know how much faster service will cost?  Even if you sign up for service, the customer service department can’t tell you how much service fees and taxes will be.  Gosh, if the billing computers have this information, why don’t the customer service computers have this information?

About the only company that is upfront about the costs of services is Consumer Cellular.  Its web page has the cost of the basic service, the cost of each upgrade, and you can do it all online.  Like all others, they don’t have a calculator for service fee and taxes.

As with much of my writing, this examination was started by my own recent experience.  I’ve wanted to have faster Internet speeds for some time, I wanted caller ID on our home phone because probably three-quarters of our incoming calls are junk calls, and I wanted better Internet access at our cabin.  I thought our best arrangement would be to drop CenturyLink for phone and Internet at home, get a Home Base phone from Consumer Cellular, and get a portable modem from AT&T.

Well, the AT&T modem didn’t deliver much speed at our house and so I returned it.  I use my Consumer Cellular iPhone to periodically check the AT&T speed.  That speed has improved but is not consistent; sometimes it is way better than the CenturyLink DSL speed, sometimes it is worse.

What if I upgrade my DSL speed?  How much does it cost?  Well, the “free market” CenturyLink won’t tell me on their website.  I am supposed to call for that info.   Once upon a time in the days when we had Qwest, the website offered three different speeds with prices.  When we got tired of 256kbps, we made a few clicks and we had faster speed in a day or two.

Finding the prices elsewhere is a bit of a chore.  Over half the hits are for CenturyLink web pages or for CenturyLink reseller pages.  I think on the second search page I found a site that gave detailed pricing (without taxes and fees, of course).  It would cost us “$5.00” more to go from a nominal 7Mbps to 12, “$15.00” to 20, and “$25.00” to 40.  My wife balked at even the upgrade to 12Mpbs because she thought things were fine.

As for the cost of getting caller ID, it is the same story.  One cannot get just caller ID, but has to get a package of many unneeded features.  Could I find the cost?  Of course not!  It’s a “free market” and companies are free to do as they please.

As I was reviewing the many pages that I had opened in my quest, I found one with a long list of entries complaining about CenturyLink service.  Of course, those who are satisfied don’t post on such sites, but the number of instances of overbilling, not sending any statement, having a collection agency demand payment, of undelivered service, of repeated calls for non-functioning or poorly function service, and on and on.  Do I even want to make even a small change in my service?

My final set of changes for telecommunications was to have my Consumer Cellular iPhone become a hotspot (no charge, done in about 15 minutes) and upgrade to the max of 2GB of traffic.  That should allow us to use our iPads at the cabin to read the newspapers.  Or even write this column at our cabin and send it before the deadline.  When it gets warm enough for my wife to want to go there again.