Wednesday, 5 August 2009

The Blank Face of Service Providers

These days what I am going to describe is such a common event that it seems weekly to fill consumer advice programmes on the radio and television and columns in the newspapers, without anything fundamentally changing. As this blog is about expelling thoughts and tensions from myself, I make no apology for running through the example that I have just had a brush with and added it to the millions of unheard cases that should be condemning so many service providers but they seem able to ignore with impunity.

The key problem of service provision in the UK is fixed contracts. They cover everything from rent to power and water to mobile phones and televisions and even services to those things such as mobile phone ring tone downloads. Of course, it is a given that if you can tie in a customer for a long period of time it is beneficial for your business. Their payments only marginally decline over time given the current low rate of inflation, but your cost per customer falls every month they are locked into you. The biggest cost to a company is the set-up so if you can spread that cost over a year, then it is better for you. We are supposed to be living in an era of consumer choice, but to a great degree this is a fantasy. There are numerous price comparison websites for all kinds of goods and services even telling you where you can get the best rate for your gas and electricity, but switching is made as hard as humanly possible.

Business over the past decade has recognised it can get away by having contracts that make it very hard for customers who want to leave. Again this stretches right from individual landlords right up to multi-national companies. Their ideal situation is when you are compelled to pay for a service you are no longer receiving. In my life I have been fortunate to encounter this only a few times, being expected to pay rent on a house even after other tenants had moved into it or it had been sold to someone else and to pay for a television service even when I had moved 190 Km away from the television to an area where the company does not provide a service. For a company this is an easy way to make money and if the customer simply stops paying you, well then, you hand it over to a debt-collection agency who wrecks the customer's credit rating and piles on additional charges. This is an excellent deterrent for the service providers who feel no guilt over taking money for no service. The story is such a common one of contemporary Britain that it must be known in every household. Yet what choice do we have? If we want energy to our houses, if we want to watch television, in many areas we have to sign up for such contracts, let alone if you simply want to rent a house. The options are limited and it is difficult to avoid getting locked in such a contract. Back in the 1980s this approach was reserved for time-share salesmen in Spanish resorts and was condemned in all quarters and yet by the 2000s such techniques have become mainstream for service companies.

The thing that makes it even harder is that when you try to leave a contract even when it is coming to an end you face a blank wall. You find you cannot get the numbers for the company to cancel your contract. There are numbers of how to set up an account and in some cases I have had to pretend to be starting a new account just to get into the system and then be re-routed to the correct number for cancelling. Call centre staff are robots. They are locked into a pattern which means they can take no initiative, they can only simply take you down paths that their bosses allow and often this does not include cancelling contracts. Feel sorry for them, they are simply the human extensions of a harsh machine. The companies want you to give up, to keep paying for a service you are not receiving, that is great for them. I have not seen any analysis, but I do wonder how many millions of pounds are paid each year by people for services they no longer want or, in fact, in many cases can no longer use. Think about it, if many service providers need this 'free' money, how bad is their business actually doing? Of course few bosses in the UK run businesses to be successful and to thrive, they simply run them in a half-hearted fashion to generate enough cash to drain off for their bonuses. Back in the 1980s they said the average British company lasted 40 years, these days the average must be a lot shorter. As figures around leakages from water pipes have shown yet again this year, you can make huge profits pretending to provide a service and in fact doing it very poorly. The UK economy rewards inefficiency and poor customer service very richly.

So, what is the recent case in my own life that has triggered off my complaint today? Well, back in the early 2000s the woman who now lives in my house bought a TiVo, which was one of the first hard drive video recorders. They came from the USA and apparently 32,000 units were sold. You had a subscription with the company which sent downloads over the telephone to permit you to know what programmes were coming on. It had some novel features that later systems have not included such as the 'wish list' which meant that the machine recorded all programmes, for example, featuring particular actors or comedians or movies by specific directors. TiVo faced increasing competition in the UK once the Sky+ system was introduced. From 2003 TiVo stopped supplying their set-top boxes in the UK but there is a vibrant owner community and second hand market. Ironically the technology developed by TiVo was taken up by Toshiba and Sony and Sky bought out TiVo's service side in the UK, partly to eliminate even its ailing rivalry to their own system. You do not have to look far on the internet to find people singing the praises of the TiVo system and even people who dumped Sky+ in favour of it. Of course, Sky has the clout and TiVo is dying in the UK, it is the case of VHS beating Betamax again, in the UK the worst system always seems to win out. Fortunately Freeview boxes now come with a hard drive and this is all that is stopping the UK having another monopoly based on poor service and less sophisticated equipment. Sky the child of tycoon and manipulator of countries' politics, Rupert Murdoch, is always the worst company to allow to have a monopoly.

Anyway, coming back to TiVo, now handled by Sky. The box belonging to the woman in my house was second hand when she bought it back in 2002 and had had constant use in the seven years since (even TiVo fans said it was one of the older ones with capacity a fifth of the later ones). So back in April it broke down entirely and rather than persist with it she switched to a recordable Freeview box supplied by BT. Then she tried to cancel the subscription with TiVo/Sky. The customer service number has been disconnected and even searching the internet repeatedly for numbers all she could find was ones that connected her to Sky (naturally there is no physical address you can write to). Of course, that should have been simple, but if you ring Sky about accounts you have to enter a Sky account number, which, of course, being a TiVo customer and not a Sky customer, she did not have so her calls never even got near a human. Sky had not thought to write to TiVo customers to tell them of the changes or how they could contact people about their accounts; not even, quite surprisingly, to suggest they switch to Sky+ perhaps because they knew no TiVo user would willingly make a switch to a worse system.

The woman then simply cut off her payments to TiVo hoping they would just terminate her contract. This is where the fixed contract problem kicks in. She no longer has a TiVo machine (I threw in on the municipal dump for her) and has not downloaded any of their services for three months; since the machine broke she has been unable to do so. However, Sky keep demanding the payment and this has run up payment-refusal charges by her bank to her. In addition, knowing that such companies ramp up debts for unpaid bills quickly and then send in nasty people to collect, she was terrified, desperately searching the internet for some clue as to how to cancel her contract. Finally today, by pestering Sky customer services down phone numbers that do not need you to enter a Sky account number she was able to get a TiVo phone number and finally after three months effort stop the contract (or she hopes she has, we will have to see if this the case). She has had to pay up for the three months' bills outstanding, which are paying for nothing as she has received nothing at all in that period from the company, plus the charges levied by the bank. Of course, having a blank face, making it impossible to contact them, works in Sky's favour. All over the country people are paying for services they are not receiving and cannot get out of. This may seem like ingenious business but in fact dents consumer confidence and simply fuels bad business practices.

If I was in Peter Mandelson's position, I would have brought forward a raft of consumer protection legislation. In fact I would go back to Margaret Beckett, back in 1997 when she became the first Secretary of State for Trade and Industry under Tony Blair (Mandelson briefly had the role in 1998 before it went to Stephen Byers) and say that New Labour, with its consumer-focused, modern party attitude of the era of service sector industry, needs proper protection, especially as back in the late 1990s new areas of trade notably via the internet were expanding. All companies should be compelled to make it easier to extract yourself from contracts. They should be compelled to have physical addresses you can write to, in order to do this. No company should be allowed to charge for a service that the user can no longer access. There should be a limit on all fixed-term contracts, such as you should be able to get out of any contract with 3 months' notice. I know rental contracts that even if you give immediate notice you want to leave the house, you will have to pay for a further 11 months for a house that you are no longer living in and most often has other tenants in it. This set of measures would have made a nice punchy package of legislation for the new government to show the people of Britain it was on their side. It is not revolutionary and actually would have encouraged good companies. Instead bad, nasty, greedy companies have been allowed to come to the fore and the blank face approach is a key weapon in their arsenal in squeezing every last drop from consumers in return for poor service and in fact, increasingly, often, for providing nothing at all.

Of course, this is not even a 'what if?', it is a fantasy, it was never going to happen. Blair only got into power with the backing of Rupert Murdoch and Murdoch's reward was to not to have to face any legislation that would have hampered the intimidationg business practices his company seems to relish. How close Blair and Murdoch were has often been revealed, for example:
Even as prime minister Blair was flying out to address Murdoch's News International as if he was a private citizen that you can hire for after dinner speeches rather than leader of a country. Do not even get me started on how Murdoch has more control over legislation in the UK than the average government minister:

You could tell that no minister under Blair would go anywhere near true consumer protection with such a businessman who loves underhand business approaches in such a strong position in regard to the British political scene. Thus, twelve years on, millions of UK citizens are suffering from being manhandled by service companies that feel it is fine to take money for services they are not providing and to make it so difficult for customers to escape from contracts. This is not going to change in the UK while politicians are so shackled to unscrupulous business people. Ironically Murdoch does not like David Cameron, because Cameron inherited his wealth rather than made it himself. Trapped between the interests of inherited wealth and wealth through hard-pressure techniques, the average British person is simply something to be squeezed into debt. On this basis there is no choice at all at the next election, neither of the leading parties will do anything to help you as a service consumer.

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