Comcast: the squeaky wheel gets the discount

Business & entrepreneurship, Personal finance

Much ado has been made about how people have gotten better rates on their high-speed internet with Comcast by calling them and threatening to cancel their service. Well, it appears to be true.

When we moved to our new home 3 months ago, Comcast had a special 3-month promotional rate for new customers of $24.95 per month for their high-speed internet service. Once this brief promotion was over, our internet service was to increase to the regular rate of $42.95 per month. Having seen so many at&t ads for $12.99, we just couldn’t ignore the price difference. I called Comcast and spoke with their service cancellation department, explaining that we were thinking of cancelling our service once the promotion was up and switching to at&t instead given that it was over 70% cheaper.

The rep said he could cancel our service that day, or, he offered, give us Comcast’s current promotional rate of $19.99 for six months. Not only that, but he also said that if we were willing to call right before whatever rate we were on expired, he’d be willing to give us the next promotional deal that was then available, ad infinitum. In the end, we decided to stick with Comcast at the $19.99 promo rate: it was even cheaper than our old one and we’ve been pretty happy with our cable internet service so far.

Still, this got me pondering about how businesses really sacrifice long-term profit for short-term gain. To me, that Comcast can continue to charge $44.95 for high-speed cable internet because their customers don’t realize they can leverage competition to get a better deal is akin to winning at chess because your opponent, distracted by something, turned away from the chess board, and didn’t notice that you’d just moved your queen right to a juicy attack position. It’s not classy: you want to win out of skill and integrity, not sneakiness.

My guess would be that they’d be able to retain and maybe even gain customers if they’d lower their $44.95 rate to something more reasonable, but instead, they’re trying to get as much out of their high rate while they still can. I don’t mind paying a extra for better service, but it really does seem that great customer service is as rare as hens’ teeth these days.

I hope some financial manager at Comcast has conducted an elasticity study on their pricing situation and that he or she came to the right conclusion. Comcast is among Warren Buffett’s larger holdings, but they aren’t behaving like I’d expect a Berkshire Hathaway company would. Perhaps Buffett picks his investments and his companies based on different merits?

Or is it a matter of comparative advantage, and ?


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