Doug Dawson (POTs and PANs) talks about broadband pricing…
There are three billing practices that are routine for the large ISPs that smart competitors avoid. First is offering special low prices to attract new customers. The second is bundling, which means giving a discount to customers buying multiple products. Third is what has become known as hidden fees, where there are routine monthly fees that are not included in the online advertised price offers to customers.
A lot of smaller ISPs wonder if they should match these same tactics. The argument for copying the tactic is that it allows advertising rates that can be compared to what the big companies advertise. The main argument against matching these tactics is that the practices are deceptive, and customers have made it clear that they don’t like these tactics. Fiber overbuilders tell me that the first customers they win in a new market are those who feel deceived and mistreated by the bigger ISPs.
Big ISP online advertising has felt sleazy for many years. I wrote a recent blog where Charter in Los Angeles offers customers drastically different introductory rates depending upon neighborhood – with the highest rates being offered to the neighborhoods with the highest level of poverty. It’s common to see broadband specials advertised for less than half of the list price. A customer has to click through multiple levels of footnotes to find out the rate at the end of the special – if it is online at all. It’s not hard to think that somebody could be attracted to low rates without understanding that big increases will be coming in a year or two.
I have spent much of my career saying, I want to help people understand the Internet in a way in which I’d like to understand my car. I don’t want to rebuild it but I’d like to drive efficiently and know how much it costs to fix or fuel. I have a mechanic who I’m sure is not the cheapest but I trust him to tell me how much it’s going to be, to stick to that and tell me when it’s time to upgrade. That level of customer service buys you a customer for life. Frankly, most customers would rather stay put that ride out change after change to save a few bucks.