Exclusive Deals Hurt Consumers

There seems to be a growing trend in America lately with service companies and manufacturers having exclusive deals to bring in more customers. You may have already heard in the news lately how the FCC is investigating mobile phone providers on having exclusive phone models to allure customers. Today we will look into how this new trend is actually hurting consumers.

One of the great advantages of a open and democratic society is that it spurs competition in the market place, meaning you have more choice of products. When you have more choice in products typically the products and services become less expensive as each of these companies try to bid for your dollars. This is a great opportunity for consumers as product quality increases and prices drop depending on consumer demand. But what happens when certain products are only available in certain areas or only available with certain packages that are required in order to use the service? Suddenly choice and price are now locked down and usually not in your favor.

The most recent trend seems to be occurring in the telecom industry with AT&T having the iPhone, Sprint’s Palm Pre, Verizon’s Blackberry Storm and T-Mobile’s G1. Let’s say you want that new and very popular iPhone well then you have no choice but to use AT&T and because of this exclusiveness you are going to pay a serious premium for it. You seem to no longer have a choice of your favorite mobile provider (if you actually have a favorite) when choosing a slick new phone. But it just doesn’t end there, how about cable TV providers it’s been long understood that most cities and communities only have one provider for TV service. It’s only been in the last 10 years that satellite TV has made a serious impact, but mostly that choice is only available for home owners, live in an apartment and your back to one exclusive provider. I’ll give you example that happened to me a few years ago. I was renting an apartment in Los Angeles and when I moved in, I had a unique situation that is not common. I could choose between the local cable provider Adelphia or I had the option of using satellite based provider. Believe or not managment was kind enough to allow it’s tenants to use the roof for satellite reception. So weighing over the costs and benefits I went with Dish Network. In all of my years of renting I never had such a choice but this was soon to be a lost luxury. Nearly a year later there was an incident that occured that required the fire department to access the roof of our building and as you can imagine it was filled with little dishes everywhere. The fire department warned management about the safety factor and the decision was made to take them down. Okay I understand this decision was not the end of world. I called Adelphia and got cable service started, which provided your typical cable co. experience but at least I was not shelling out large amount of cash up front for equipement and deposits. However another year went by and suddenly came home to find my cable service not working, and when I called they knew nothing of the problem which I took as a typical cable co. response, but then I noticed my neighbors were complaining of the same issue. Since this was in the evening management was not available to provide any answers but as I was taking out the trash I noticed a frightening discovery. You see are cable lines from the utility poles are feed into junction boxes located the trash rooms of the facility and what I discovered was that they had all been cut. Every single line in every trash room had been cut. Was this vandalism? What’s going on? Well first thing the next morning I contacted the management office to report the senseless act and was told that that it was done on purpose. Yep, the management company had reached an exclusive aggreement with a another provider. We were sent letters describing the new service, a third party provider of DirecTV. Okay I like satellite service, but here is where the exclusiveness went bad. The letter explained that all customers would have to purchase their boxes at a cost of $300 and require a activation fee of $300 plus pick your DirecTV plan that ranges from $30 to $90 a month plus an additional $20 a month to use the third party providers single dish installed on the roof. Wow! we all just got raped! The cable company was barred from the building and the newcomer was going to take every penny we had to just watch tv. Fortunately I moved into my first home not long after. But I paid through the nose for that service. Several years later I am getting the same feeling with my iPhone. Now I understand the iPhone is a very cutting edge device and that comes with a premium price tag, however the AT&T service is a joke, poor coverage and lousy data speeds. I feel if the iPhone was available to multiple carriers how competition would be forced to improve service and keep the montly costs reasonable, but that is not the case at least today.

So what can we do to inspire competition and make companies think twice about exclusive deals. Send the message with your wallet. If we consciously decided to not buy products and services from companies that offer these services and products exclusively it would change the game very quickly. The thing to remember is that in a lot of cases we don’t need them, they need us. Your wallet or purse is a very powerful tool in getting companies to offer honest services for a honest price. I also like to give congress a pat on the back as well (something I almost never do) for actually stepping in and taking notice of the recent telecoms actions. Asking the FCC to do an investigation and report on how their actions are affecting consumers. Hopefully in time this will be a start to getting our marketplace back on track again. As always I want to know what you think, leave a comment.