UPDATE: If you would like to help me call attention to this, Comcast’s most recent attempt to cheat its customers, please Digg this article.
In a classic Gotcha Capitalism strategy, Comcast in Boston has just informed their VoIP and Internet customers that they are raising their monthly rate by $2 without actually admitting they’re doing it.
Note the text circled in red on my most recent Comcast bill:
Here’s what it says, in case you can’t read the picture (and for the benefit of search engines):
IMPORTANT NOTICE: Effective with your next billing statement the monthly equipment charge for your Comcast CDV and/or Internet modem will increase from $3 to $5, excluding applicable taxes and fees. This change does not affect your monthly CDV and/or Internet service prices.
Let’s translate that into English: “We’re going to start charging you more for your service, but we won’t be charging you more for your service.” Wow, it sounds stupid when you put it that way.
Maybe I’m confused, but I thought that when there was a separate line item on a bill labeled as an “equipment charge,” that line item was supposed to represent the actual cost of providing the equipment to the customer. Since the CDV modem in my basement is the same one I’ve always had, and since the $3/month fee I’ve been paying for it up to now has probably repaid Comcast for the actual cost of the hardware several times over, how exactly is it reasonable for Comcast to raise the equipment charge?
If the charge is not, in fact, tied directly to the cost of the hardware provided to the customer, then it’s not really an equipment charge. Rather, it is part of the service price, and it should be included in the service price rather than listed as a separate line item. But then, of course, Comcast would have to advertise a higher monthly rate, which would scare away some customers. And as everybody knows, if being honest about the cost of your service scares away customer, the right strategy is to be dishonest instead! It’s a standard move for vendors competing in confusopolies.
I called Comcast and asked why they were increasing the charge. The rep put me on hold for a few minutes and then came back on the line and explained that they hadn’t raised that charge in a long time but had to raise it to keep up with increased equipment costs. In fact, the cost of this kind of hardware is probably going down, not up, because the US economy is flat, but I didn’t try to get into that with the rep on the phone.
Instead, I pointed out to her that the this charge was supposed to represent the cost of my Comcast equipment, and since Comcast had not replaced my equipment, nor was there any reason for them to do so since it’s working just fine and replacing it would not provide any new functionality, there was no justification for raising the fee for me.
In response, she said (no, I’m not making this up), “I’m sorry about the inconvenience of your having received this notice on the bill, and I understand that with the economy in the shape it’s in, it can be difficult to deal with increased expenses, but again, we haven’t raised this charge in a while, and we need to raise it to keep pace with new technology.”
In response, I pointed out that since the charge clearly was not directly tied to the equipment provided to me by Comcast, it was not actually an equipment charge, but rather part of the service price, and that listing it as a separate line item was therefore deceptive advertising. She disputed this characterization, and I did not argue the point further.
Instead, I told her that I understood this was neither her decision nor her fault, but I would like her to pass on to her superiors the fact that not all Comcast customers are stupid, and that I intended to file complaints about this backdoor rate increase with both the state Department of Telecommunications and Cable and the Mayor’s office of Cable Communications (which I have since done). She promised to do that.
UPDATE: According to Comcast’s 2008 annual report, they had 14.9 million high-speed Internet customers at the end of last year. If they increase everyone’s “equipment charge” by $2 per month, that’s a $358 million increase in annual revenue, tax free (since it’s an “equipment charge” and since taxes are levied separately on customers’ bills) with zero associated cost. That’s quite a bump in Comcast’s bottom line for doing nothing, eh?