In Praise of Competition

In recent posts about water and about transportation, I came out in favor of allowing private monopolies deal with the production and maintenance of these goods. You might think that I am one of those people who thinks that anything in the name of free markets is wonderful including firms buying up each other and forming monopolies.

Not at all. I am a big believer in competition. Competition is what forces corporations to become efficient, not really the profit motive. I merely stated that sometimes monopolies suffer enough indirect competition that it would be better to keep them unregulated so that they have proper incentive to modernize than to regulate them and reduce prices. Indirect competition might keep them honest and (fairly) competitive.

However, if there is no competition whatsoever, an unregulated monopoly might be the worst of all possible worlds. Such firms will be fat, dumb, and lazy, just like the government, and unlike the government, you cannot vote the bums out. A good example of this might be the cricket board of India, (the BCCI) which, despite having a pool of talent of 1 billion people to draw from cannot produce a cricket team as good as the team from Sri Lanka which has a population of 2 percent of India’s.

There’s nothing like competition. There’s no substitute for it. And one of the clever things that governments in the US have discovered is that they can allow former monopolies to directly compete with each other. Now I have choice in my local phone service between the old phone company and the local cable company. That’s cool. And I was only too glad to dump the old fat, dumb, and lazy phone company. Let me tell you why:

Once upon a time, our family was in the dark ages of Internet usage: dial-up modem. The Internet was a very, very slow place. We wanted to step into the modern age of high-speed Internet. So our local phone company was offering a nice deal on DSL. DSL is an initialism like MBA that might mean many different things to different people, but in our case it did not mean Internet service. We never got DSL to work. Worse, as soon as DSL was switched on, our phone service stopped working.

We called customer service to complain. Oh, where is an Indian call center when you need one! For ages we would wade through the options of the computer menu until we could find a way to talk to a real person. And after typing in our phone number into the computer menu and looking up our records, the first question the operator asks is “what is you phone number?” What was the computer doing? What good was “looking up our records,” if you don’t give them to the operator when she gets on the line?

They tried to diagnose the problem over the phone. They reminded us we need filters on every phone. They had us unplug all of the phones and wait a couple of hours and plug them back in, one by one. The phones worked again (for a while) but then when we tried to access the Internet, everything failed. We were without phone service again. This was frustrating.

So we call again. Again we get the computer. Again they look up our records for no purpose. Again we wait for ages to talk to someone. They agree to send a technician. They warn us that if the technician finds it is a problem with our equipment, it will cost us big time. We know it must be a problem with their equipment because the phone worked fine before DSL was installed. Then they schedule a technician:

“Would anyone be available at home between 8:00 A.M. and 6:00 P.M.?”

What kind of a window is that? Can’t they narrow it down a little more than all day long! As if my wife and I have nothing better to do that to waste all day at home waiting for the repair technician.

So the first technician comes, can’t figure out anything, and leaves without saying anything. I call up customer service (computer, look up records for no reason, wait for ages, talk to human) and customer service says that any other person will come tomorrow.

“Would anyone be available at home between 8:00 A.M. and 6:00 P.M.?”

Fat. Dumb. Lazy.

The next technician cannot figure out anything either. At least he tells me that. He says his supervisor will come the next day. Oh great – I’m missing a whole week of work. I work late into the evenings to make up work I could not do in the day. I’m fuming.

The next technician miraculously determines that nothing is wrong. “It’s an inside problem.” We will have to pay big time. And he cannot do the inside work. I’ll have to call another technician.

ARRRGG!

Fat. Dumb. Lazy.

This is their game: the outside tech says its an inside problem, the inside tech says its an outside problem. The only way to resolve the problem is to buy a maintenance program at jacked up rates that would cover maintenance for months and months. Well, why would we need monthly maintenance after they fix the problem?

So we get another technician to come out. My wife agrees to stay home that day. Technician 4 is clueless and just leaves without telling my wife anything. My wife calls me (luckily we have cell phone service) and tells me to yell at customer service. I call an complain, but I don’t yell, (I’m too polite). My wife yells at me, “You yell at me and (our son); why don’t you yell at customer service?” It’s not her fault that she works for a fat, dumb, and lazy firm, (well not entirely her fault).

This is getting to be a source of real tension. I tell my wife, “Forget DSL, we’ll go with cable modem.” We can get Internet with the cable company. “But that is more expensive,” my wife complains. But at that point, both of us realized that it wasn’t worth the aggravation.

What a difference between the cable company and the phone company. You could certainly tell who was fat, dumb, and lazy, and who was lean and hungry. The cable company would come out in the evening, after work. Unlike the phone company, the cable technician was extremely competent. He got us set up in no time. High speed Internet sure is nice.

Then we found out that we could get phone service with the cable company too. Goodbye fat, dumb, and lazy phone company! We jumped on that opportunity. The technician came in the evening. I didn’t miss work. He knew what he was doing and he was able to fix us up in an hour. When he was done he asked: “You didn’t have phone service before did you?” “Yes we did” “I don’t see how, your wiring was all messed up. But I straightened it out.” It pays to have good technicians.

Moral of the story: competition is a very good thing.

Update: Read Sunil Laxman's excellent post on his similar experience with his cell phone company.