Technology Service Providers Could Learn Something from Retailers

Commentary by Bill Bittner, President, BWH Consulting

I have worked with retailers throughout my professional career. Retailers understand customer service. They understand the need to identify customers "wants and needs" and then to develop a service structure that satisfies them. Retailers understand that the same products are available at a competitor's store and, if they cannot meet the consumer's requirements, their competitor will.

Technology companies, such as phone and cable providers, have completely missed the point. Instead of viewing their business as a consumer service, they view it as a way to "monetize their capital investment." The goal is not to provide the best possible features for the least cost, but rather to maximize revenues from their sunk investment in the network infrastructure. This leads to the bundling of services and artificial limitations on performance to create a tiered pricing structure so that additional charges can be assessed. Internet service providers, such as the cable companies, also enjoy political support as recent legislation has reinforced their right to decide who can have access to the network.

The classic example of the technology companies' attitudes was the cell phone number system. For years, it was "Impossible" to transfer your number to another provider. This technical hurdle was finally surmounted, not by an electrical engineer working hard into the night to discover a new switching algorithm, but by a legislature that finally had so many complaints from individual constituents. The legislature had to ignore the huge political contributions from the service providers in order to pass legislation that required them to develop the capability (which probably always existed, but maybe not).

Moderator's Comment: What do you think? Is there something that phone companies and cable companies can learn from retailers? What have been your experiences?

I really believe there has to be an effort to put more competition into the internet service environment or, at the other extreme, monopolize it and control it as a public utility. "Net Neutrality" is the buzz word right now regarding tiered pricing on the internet. The debate is whether cable and phone companies should be able to charge "content providers," those folks who maintain websites such as Google, Yahoo, and your favorite garage band's server, different prices for internet access or even refuse access if they don't like the content. The Internet Service Providers (ISPs) want to be able to charge different amounts because it is another source of revenue for their sunk infrastructure investment. I wonder how the legislature will vote?

If you have a broadband connection, here is a good video explanation of the debate:
Net Neutrality - YouTube.com