Wednesday, March 16, 2011

Sprint and the Beauty of Competition and the Free Market

Last night we finally gave up waiting for our family's cell phones to auto-update for daylight savings time and I made the call to Sprint customer service.  After waiting through the obligatory "Para Espanol, marque cinco" and several other prompts, I was directed to a very nice man who noted I was a "Premier Customer" and indicated that he would be especially enthusiastic about resolving my issue.  

After I explained my problem to him and he offered a solution that he was not sure would work, he let me know that I would be receiving a survey about his customer service by e-mail.  He asked me if I would be comfortable answering that yes, he had resolved my issues.  "Yeah....I guess," I mumbled, not quite willing to commit, not knowing yet if my problem was going to be resolved, yet knowing he had been polite and seemed to be trying his best to fix my problem.  "Ma'am....I can see you are hesitant about answering "yes."  Is there anything I can do to help you that would make you more likely to answer "yes" to the survey question?"  I told him that I understood there was nothing else he could do at this point and that I felt he had done his best.  He seemed mostly satisfied with this answer, but reminded me he would be sending me an e-mail with further information and that I should feel free to e-mail him if I had further questions or needed any more help.  We said, "I love you" and "goodnight" and hung up.  OK, that last part didn't happen, but you get the idea.

Before I go on, I have to say that I have had some completely lousy service from Sprint.  I feel like I have wasted entire days of my life on the phone with inept customer service reps in foreign countries who did not have a good grasp of the English language.  However, almost to a person, they have been almost desperate to do whatever it took to keep me as a customer and get a good rating on their surveys.  They've offered me free minutes, discounts on my bill, and even gave us an Airrave when I let them know we were thinking about taking our business (with our four phones) elsewhere because we had such a poor signal at our house. 

This is what happens when the free market and competition are at work - people work harder and give better service.  Contrast this to step-increases or seniority pay, where there is little incentive to improve one's performance or go above and beyond the minimum requirements.  Certainly, there are decent people whose work ethics propel them to give excellent service, whether or not there is an incentive, but the majority of employees will work harder and give better service when their pay and promotions depend upon it.  It's clear that these Sprint employees are rewarded for good reviews from customers.  An ad for a Sprint call center representative says:

  • Starting base pay rate is $10.38 - $12.99 per hour ($21,600 - $27,000 per year), plus commission.  Pay is based on related customer service experience.
  • Commission is based on meeting goals for customer retention and selling products and services. Individuals meeting their goals can earn up to $3,000 per month in incentives, in addition to the base pay.

Prices and innovation are also affected by competition. I grew up in Ohio in the 70's where you could use any phone service provider you wanted, as long as it was Ohio Bell, which was in cahoots with long distance provider AT & T.  At that time, Ohio Bell had a monopoly on phone services and equipment in Ohio.  You rented your phone from Ohio Bell when you ordered your service.  If you wanted an extension in another room, you paid extra for it.  If you wanted to upgrade from a rotary to a push-button phone,  you had to pay an extra monthly charge.  Mechanically inclined customers knew the tricks to disabling the ringers on the extra lines so the phone company didn't know you had an extension.  Don't ask me how I know this.  And our younger friends might not realize that all of our phones were tethered to the wall.  We had an extra long cord that would stretch halfway around the house and out onto the back patio, but even that would only get you about twenty feet, max.  Some families, to save money, had a "party line."  This meant that you shared a line with a neighbor - it worked like an extension.   My friend across the street had a party line and I always thought there was something exciting and mysterious about picking up the phone and hearing the voice of the neighbor across the gully.

If you wanted to call long-distance, everyone knew that you called on Sunday nights after 8:00 p.m. because the rates were cheaper.  In 1970, the price of a 3-minute (unassisted!) call was 70 cents on Sundays.  Adjusted for inflation, that would be $3.82 in 2009 dollars.  When I was away at college,  I was allowed to call home once a week, on Sunday nights.  All the girls in my dorm would line up at our floor's only pay phone to call their parents.  Because most of us didn't have ten dollars or so in change to plunk into the pay phone, we called collect.  Our family had a "code."  I would call the operator and ask to make a collect call to my parents. The operator would get my parents on the phone (as I listened in) and they would refuse to accept the charges.  The operator would apologetically inform me that my parents refused to take my call and after hanging up, my parents would call me back on the pay phone.  Of course, for this system to work, my parents would have to be at home, waiting for my call. We'd talk fast because it would cost over $10.00 to make a 30 minute call.  My parents liked me well enough, but they just wanted to know I was alive and that the 1976 Ford Maverick was still running.  This was the world before the deregulation of the telephone monopolies. 

A lawsuit in 1982 ultimately resulted in splitting the Bell companies from AT & T and began the process of  breaking up the government-supported phone company monopolies. This opened the door to lower prices for consumers and paved the way for innovation we couldn't begin to imagine in 1984. 

While it's still not a completely free market (take a look at your phone bill sometime and see all the state and federal regulatory fees),  it's a vastly different world than 1982, when I started college.  My son started his freshman year at Hillsdale College this fall and he carries a cell phone everywhere he goes.  In fact, everyone in our family does.  Long distance is included in our plan so we can call anytime and talk for as long as we want.  Of course, we all know that actually talking on the phone is so 1982!  Most days, the best I can hope for is a text or a  Facebook message from my busy son, but still, if he wanted to call home and chat for two hours, we wouldn't have to take out a second mortgage on the house!  
In addition to cell phones, there is, of course, e-mail, and a magical thing called Skype, where  I can have a live video chat with my son using the little spy camera that came pre-installed on my Google Chrome OS Notebook computer.   I can look into his eyes and see how clean his dorm room is (or not). The other night, my friend, whose son is also a college freshman, was able to "watch" him online via his cell phone's GPS tracking feature as he traveled back to school across several states.  Don't judge her. We still worry about our boys!  If not for the deregulation in the 80's, we might still be tethered to the walls rather than enjoying the fruits of the technological boom that was unleashed in the aftermath. 

The bottom line is that competition tends to make things better.  We need competition in education, healthcare, and technology. None of these areas are properly the domain of the federal government.  As we saw with the phone companies,  when the government stopped playing favorites and got out of the way, amazing things happened. 

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