Does Comcast Pricing Create Its Customer Service Problems?

If you're not being an a-hole, you might paying too much for cable.

Photo | Jeff Fusco

Photo | Jeff Fusco

Comcast’s reputation for customer service — never good to begin with — has hit new lows with the “Asshole Brown” incident. Lobbing profanities at the people who pay you for a service doesn’t really help your popularity.

How to fix?

At LinkedIn, former Comcast exec Frank Eliason offers a number of recommendations, but one seems to have caught more attention than the others: Fix pricing, he says, and you can fix your customer service problems.

“Simplify pricing strategies instead of forcing people to threaten to cancel service just to get a better rate,” he writes. “Stop creating situations where customers have to fight with you.”

That point seems to have created a giant “Well, duh!” moment among some Comcast observers.

Brad Tuttle writes:

People hate Comcast for many reasons — long waits and unhelpful service, inflexible bundles filled with channels you pay for but don’t watch, a dizzying and ever-rising array of fees tacked onto bills — but the biggest, overarching gripe boils down to price. Customers not only feel like the service costs too much, but that the pricing system is absurd and unfair.

After all, this is a pricing system that punishes loyal, uncomplaining customers with bills that start low and then rise and rise — unless you complain and threaten to drop the service. In other words, pay TV providers “thank” their best and most loyal customers by giving them the worst possible terms.

Tuttle adds: “It would be easier to stomach less-than-stellar service if we felt were being treated fairly in terms of pricing. Instead, the perception — OK, the reality — is that we’re constantly being charged more, and rather than the service growing correspondingly better, it gets worse.”

It’s an old complaint. In 2013, Tucker Dawson wrote that Comcast pricing makes customers want to hurl bricks through windows:

“When you purchase any of Comcast’s confusing cable TV and internet packages, they offer a limited promotion at a rate well below the profit maximizing price, then continue to raise rates until you complain or threaten to cancel. Then, and only then, will they offer another promotion or a small discount to keep you onboard. The problem is that customers are required to consistently hassle Comcast to keep prices down, and their efforts don’t necessarily ensure rates won’t continue to rise. In this way, Comcast can get the most out of consumers who give up trying to keep their cable bill from climbing or never attempt to contest price hikes in the first place.”

In 2012, Tim Lee pondered whether Comcast really benefits from this strategy:

Economists would say this is a form of price discrimination. Comcast wants to charge me the maximum amount they can without losing my business. Since they don’t know how much that is, they effectively have me tell them by gradually raising their prices until I start complaining. Of course, once I figure out that that’s their strategy, it’s in my interest to pretend I’m prepared to cancel long before I actually am.

There’s a school of economic thought that says this process is economically efficient. By setting prices in proportion to customers’ willingness to pay, Comcast is effectively making Internet access available to more people. But this ignores the fact that this kind of haggling is not costless. The price Comcast charges me has been creeping up over time. To make my threat to cancel credible, I’m probably going to have to actually cancel and make them beg for me to come back. That will likely mean either a pointless DSL installation or the purchase of an unnecessary CLEAR modem. Either way, real resources will be wasted for no good reason.

Lee added: “People hate haggling … not coincidentally, car and matress salesmen are among the least popular professions in society.”

All of which leads us back to Tuttle:

If Comcast made pricing fair, and customer service agents truly saw their role as providing service rather than keeping customer bills sky-high, it would be able to all but eliminate the possibility of another “A**hole” scandal. After all, the supposed reason a Comcast employee judged a customer named Ricardo Brown to be an “A**hole” was that he dared to call up and ask for a portion of his cable TV bill to be cut.

The other lesson? If you’re not being an a-hole, you might be paying too much for your cable service!