I don’t usually comment on my own experiences, but I feel compelled to do so today. Along with being a telecom industry analyst and consultant, I’m also an obvious consumer of telecom services. Over the past few days, I’ve had the most aggravating experiences in trying to establish new telecom service (we’re in the process of moving our offices), that it really makes me wonder about the true impact of competition on the marketplace. What I mean by that is, my experience in trying to buy services from both an incumbent telecom carrier and a national wireless company have been so frustrating and aggravating, it makes me wonder if competition and its impact really exists.
It seems to me that these service providers would have systems in place that allow me to easily spend money with them, rather than with their competitors. But what I found was a bureaucratic mess that put me in an endless loop of phone transfers to customer service reps who were either indifferent, incompetent, unable, or unwilling to accept my monthly check for their services. I find it absolutely amazing that I have spoken to seven representatives (not an exaggeration) from the incumbent telephone company to try to order business DSL service, and I still haven’t been able to get an order placed. This experience is either great news for their competitors or bad news for competition proponents. The great news angle is that if you can create a system that simply allows people to start spending money with you without having to jump through endless loops, you should be in business. The bad news is maybe incumbents have squashed competitors to the point that they can live with these incredible inefficiencies and care less about them. As for me, lesson learned. The next call is to the cable company, who is aggressively pursuing the small business market. Any bets on the number of reps I’ll have to talk to there, before giving them the opportunity to collect money from me every month?
Competition is constrained in the telecommunications industry because there are few providers. The industry is at the very least an oligopoly and for most customers, a duopoly that gives consumers the choice of either a telco or cable company. And for all too many of these, it’s a monopoly since only the telco or the cable company — but not both — offer the services demanded by consumers.
It’s no wonder that product innovation, value and customer service take a back seat since unlike other service industries that have many providers competing against each other for market shares, there are very few.
The primary reason for this market situation is the cost of building telecommunications distribution infrastructure is so high that only well capitalized players can afford to enter the game.
In sum, we presently have the worst of both worlds: a vital service provided by private sector vendors free of true competitive market-based checks and balances that’s not held accountable to customers and the public interest and which behaves more like governmental bureaucracies than private sector vendors.