Friday, December 30, 2011

Verizon may have pulled back on that $2 fee for paying bills online, but this is a battle that's only begun


Companies like Verizon and Time Warner Cable don't need masks and guns to rob us, as long as they have pricing power over us.

"It’s not just about the money (though if you’re like me, you don’t have extra cash to be sending to a giant phone company in order to pay your own bills). It’s that Verizon thinks it can do anything to its customers, and that we’re powerless to stop it."
-- Molly Katchpole, in a e-mail (see below)

"At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time."
-- Verizon CEO Dan Mead, in a statement

"Pricing power is the ability to raise your prices beyond the inflation rate and expect that most people will pay. It occurs in monopolies and oligopolies and in necessities during crises (how much is a loaf of bread worth if you'll die without it?)"
-- Ian Welsh, in his post "You don't get the payroll tax 'cut' "

by Ken

By now I'm sure you've heard about Verizon's latest plane -- already rescinded (we'll come back to this in a moment) -- for sticking its hand in our pockets. The plan was to slap on a $2 fee, as of January 15, every time a customer makes a one-time payment by credit card or debit card, either online or by phone. I had a feeling this wasn't going to happen, that the uproar would be too great, and indeed before I could even write about it, Verizon has pulled back ("Verizon scraps $2 fee to Pay Bills Online").

But you can be sure they'll be back -- Verizon and everyone else who's in a position to stick their hands in our pockets. Which is why the e-mail from Molly Katchpole of seems to me every bit as pertinent now as when she sent it out.
Remember when together we beat Bank of America -- and the whole banking industry backed away from charging us just for using our debit cards?

Well, it’s time to get the band back together. Verizon just announced a new fee for paying your bills online. Really. Even though paying via internet is fully automated.

It’s not just about the money (though if you’re like me, you don’t have extra cash to be sending to a giant phone company in order to pay your own bills). It’s that Verizon thinks it can do anything to its customers, and that we’re powerless to stop it. (Spoiler alert: We’re not.)

By the way, I found out that a recent report says Verizon paid zero federal income tax from 2008-2010, and actually got almost a billion dollars in rebates from taxpayers. So they definitely shouldn't be nickel and diming us.

As a Verizon customer, I've started a new petition demanding that the phone company drop the fee for paying bills online. I'd be grateful if you signed it. You can click here to add your name. [Bear in mind, again, that Verizon has already rescinded the payment fee. -- Ed.]

We can win this. And, if we do, we’ll save a lot of money for millions of people, many of whom are like me - not exactly swimming in a billion dollars of rebates.

But we’ll also prove again that times are changing. People like us have real power when we organize together! Lots of people will see this petition, and maybe some of them will start their own, realizing that they can change something in their own community.

First things first, though. Let’s stop Verizon from charging us a fee to send them money. Click here to sign my petition.

Thanks! And happy new year!

- Molly Katchpole

As it happens, I'm not a Verizon customer, even though Verizon is my local phone company. I'm not a Verizon wireless customer either, simply because when I finally had to get a cell phone to maintain contact with my declining mother a thousand miles away, I picked a provider more or less blindly, and it was someone else. However, in the years when I was taking care of my mother's bills as well as my own, I came to depend heavily on online bill-paying, which was actually a godsend. Nowadays I probably pay 98 percent of my bills that way.

Which of course, multiplied by all those millions of other online billpayers, has contributed so much to the financial crisis of the Postal Service. I mean, with two sets of bills to pay by mail I used to feel as if I were buying first-class stamps by the truckload. Now that the USPS is out of the billpaying picture for so many of us, the people who collect our money are now in a position to soak us.

They don't even bother trying to pretend that they're just making up for costs incurred in processing these newfangled payments. As we all know, there aren't any such costs -- they're saving money, and I'm guessing tons of it. We're now plugging our payments directly into their computer systems. Why do we think they encouraged the transition to begin with? But as I say, they don't even pretend to have a rationale, at least not seriously. (I wouldn't be surprised if there was some lame-ass assertion to that effect buried somewhere in the original Verizon announcement. I didn't bother to dig into the innnards of it.)

No, as Molly says quite rightly in her e-mail, Verizon unveiled the plan because they thought they could get away with it. And while this time there was plenty of pushback, I wouldn't be surprised if they anticipated that, and already have Plans B through J ready to roll out when the times are ripe. Just the way the banks have been adding new sets of fees every month, based not on costs incurred or even necessarily their financial needs -- it's all based on what we can get away with.

As it happens, there's a standard economics term for this: pricing power. It's not something most of us think about, but for some time now as I've eavesdropped on my economically more literate friends and colleagues, it's a term I've heard come up a lot. And by chance Ian Welsh just wrote about it again. And as it happens, the example he uses, the case in point that set off this post, concerning the incessant price increase of Time Warner Cable, does strike me personally, because I am a TWC customer -- for cable TV, online service, and phone service. And for years now I've been watching my TWC bill soar, despite everything I've tried to do to control it, short of canceling the services, which I'm afraid I'm pretty well addicted to. The result is a love-hate relationship with the company -- they actually provide some pretty good services, which I rely on heavily, and yet I always feel that their only interest in me is how much more money they can squeeze out of me each month.

Because what am I going to do, cancel my cable (remember, in Manhattan we basically don't get TV reception without cable), online access, and phone service?

Anyway, here's Ian's take.
You don't get the payroll tax "cut"

2011 December 27

by Ian Welsh

There has been much ballyhoo about how there is a payroll tax cut and that an extra $40 per paycheck (every two week) will make a big difference.
Sure, if you get to keep it (via Americablog):
Some rates will be significantly higher, such as a 27.4% increase to $17 from $13.34 just to receive local broadcast channels. Others will be modestly higher, such as a 9.5% increase to $69 from $63 for broadcast plus basic cable channels, or a 7.3% increase to $58.99 from $54.99 for the digital video package. Compare that with a 3.5% annual inflation rate as of October. "The cable industry maintains a near-monopoly over television services," said Doug Heller, executive director of Consumer Watchdog, a Santa Monica advocacy group. "Their prices are completely disconnected from the real lives of their customers."

Pricing power is the ability to raise your prices beyond the inflation rate and expect that most people will pay. It occurs in monopolies and oligopolies and in necessities during crises (how much is a loaf of bread worth if you'll die without it?)

American consumers and workers, as a group, do not have pricing power and they do not have alternatives. They cannot charge more for their labor, because there is a huge surplus of workers. Because almost every major industry is an oligopoly or a local monopoly, as consumers, they cannot move from one company to another, as the companies are almost all in collusion and raising prices more or less in lockstep. There is no real competition on price in most industries (certainly not in telecom).

Until Americans have the ability to opt out, things will not get better. And tax cuts will do NOTHING. If you give money to ordinary people corporations with pricing power will take it away. If you give money to corporations or rich people, they will use it for leveraged financial plays (job destruction), offshoring or outsourcing (job destruction) or on luxury consumption like $50,000/night hotel rooms and private jets (some job creation, but destroying the quality of services you get.)

What the US needs right now is a massive tax increase on the rich and corporations. They are not spending their money usefully, and in the case of corporations are sitting on billions. In fact, every extra dollar of profit makes things worse, not better. If corps and the rich can't use money to create growth, and in fact are using it in destructive ways, you take it away and use it to create growth (assuming the Obama administration knew how to do that, which it doesn't. But theoretically, assuming competent individuals of good will in power. Yes, you can laugh hysterically now.)

If you're not accustomed to thinking in terms of pricing power, the way I'm not, now is a good time to start. It really is essential to trying to understand the world around us. Not that, in the grand scheme of things, there's much you or I can do about it. At the least, though, we can be vigilant for more schemes like this Verizon one, but I don't kid myself that we can do more than stick a finger in the dike. Still, maybe -- and I really mean maybe -- there's some value in knowing how our guts are being squeezed out of us.

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At 4:14 AM, Anonymous Lee said...


I am a Verizon customer although not for cell. I have their triple play ( Fios internet and tv plus phone) I hate them and they are sick of hearing from me complain about their out dated business model. Along with this 2.00 I have seen other sneaky ways to squeeze more money out of us like charging 10.00 a month for virus protection.

I fully expect the next fight is going to be over charging more for customers who use more bandwidth.The cable/phone companies HATE streamng. Why should I buy 4.99 to Verizon On Demand ( or more) for new movies when I can stream them over at Amazon Prime for a dollar less? And if I pay that fee AND have a Kindle Fire I can watch movies on multiple devices without paying extra. I wouldn't be surprised if Amazon bought Net Flix.

At 7:02 AM, Blogger KenInNY said...

The encouraging thing here, Lee, is that you're still groping for ways to scrape together a counterweight to Verizon's pricing power. I just worry that with most of the power on "their" side, we wind up just switching from one pricing master to another. Resistance, especially over the long haul, is feeling more and more futile!


At 11:16 AM, Anonymous Anonymous said...

Your post is so inconsistent...contained within it are the facts about what Verizon was charging for...then followed by the completely false reactionary junk that everyone is spouting. You talk about online bill pay somehow without realizing that the fee they proposed HAS NOTHING TO DO WITH online payments. This is a lie I've seen all over the internet and it is driving me up the wall. I encourage you to sign the only truthful and logical petition out there, mine which asks Verizon to re-instate the fee!


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