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Saturday, January 05, 2013


not worth the paper they are written on

every now and then when i am listening to the radio i just wish that the presenter or the commentator would just go ‘what? did you really say that? really?’
why only the other day there was the story of alex ferguson accusing spurs of manipulating the price of a player. spurs had apparently baulked at man united’s asking price of £6m, the player was let go to a foreign club for a small compensation fee. now the player is back in the uk and signed for spurs for £3m.
ferguson sees this as being evidence of malpractice.
another way of looking at it would be evidence of man united’s greed over a player they let go cheap, perhaps if they had been reasonable in their dealings with spurs they would have done alright.
yet when the story is reported – no one suggests that perhaps man united made the mistake and because they were greedy they missed out on a deal.

the same is true of a recent story about mobile phone contracts.
at this point i have to say i don’t know squat about mobile phone contracts as i am a billy no mates and just need a pay as you go jobbie.

ofcom are proposing that if your phone provider hikes up the price of your contact while you are in the middle of it then you should be able to exit the contract without penalty charges.
seems perfectly reasonable to me.
it isn’t fine as far as the network providers are concerned.
they are already started to talk about how such a proposal would mean greater upfront costs for users. one reason given is that it would mean more staff and paperwork to track the changes in contracts. why? call me stupid but isn’t it just a case of ticking a box in a database programme that says you pay this amount from now until then. seems simple to me.
another reason cited was that their costs increase and they can’t always afford to absorb the costs. so if british telecom ups the price of a 0845 then the network provider would lose out. that tends to show a weakness in the model and the easy solution would be not to have such long contracts because if you can’t guarantee certainty then you shouldn’t be offering out the promise of it. as energy companies and mortgage companies can manage to deal with fixed or variable pricing you would have thought that the phone companies could do to. obviously not.

a brief piece in the city am (yeah i don’t know why i read it either) champions vodafone for speaking out against the proposal. the piece goes on to say that penalties to break contracts are oppressive – but only to the consumer. the company can break a contract as easy as pie.

the piece goes on to say that the £150m cost that which? magazine says that consumers incurred from fee rises last year only amounts to £2 per phone, there being close to 82 million handsets in the uk. oh that’s ok then just £2 you hadn’t expected (even though it would be more than that as the number of phones includes pay as you go, but why quibble). if it is such a small amount then perhaps the phone companies could absorb it.
anyway, concludes the author, it is unlikely that people will switch anyway – look how few changes banks.
if that is the case then what have the phone companies got to lose? well a £150 million for a start.

you would have thought that in today’s climate of social media whinging that companies would go out of their way to make sure that everything was done to placate the customer and to keep the customer wanting to come back to you.
rather than being a story about how companies are inefficient and unable to provide their customers with the best service possible it has become another of those ‘oh look at how big business is being attacked and being called nasty names’. the phone companies will claim that changes are too complicated (but probably not as complicated as the methods used to avoid tax) or that to make these changes will lead to higher upfront costs.
the problem is: they are not vigorously challenged about their claims.

bottom line is that the lesson to learn from this is that contracts are only worth the paper they are written on when the companies benefit.

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