A discursive look at Napoleonic & ECW wargaming, plus a load of old Hooptedoodle on this & that

Monday, 2 September 2013

Hooptedoodle #95 - The Wrong Tariff

I spent some time this weekend sorting out my mother’s account with BT – that’s British Telecom, who provide her with (predictably) broadband and telephone services. She is a customer of BT largely because I am one, and I am one because part of the bewildering network of BT companies – Openreach – provides and maintains the cabling and the communications infrastructure in this corner of the world; I chose to avoid getting stuck in the middle of the finger-pointing exercise which invariably follows any problem with a slow, precarious country broadband service if you have separate suppliers who can pass the blame on to each other.

Apart from my lack of enthusiasm for their customer helplines, I find BT OK. It takes a bit of constant monitoring to make sure we get value for money, but they probably compare favourably at present with our alternative suppliers.

Someone else's mum
My mum’s problem was that she had got stuck in The Wrong Tariff. I myself am in what I consider to be The Correct Tariff with BT, but only because I have the time, the knowledge and the resources to put regular effort into monitoring my bills online, and keep tabs on the constantly changing product names and complicated pricing arrangements which telecoms firms – and much of the rest of the commercial world – use to con us out of our money, not to mention our time. My mum would not know where to start. I know how to do it, but increasingly I begrudge the effort required, and – increasingly – I am not sure why we have to keep up this struggle.

Some specifics – I just know you want some details of my mother’s account.

When my mum got broadband set up – primarily so that she could do her shopping online – we agreed to what was called BT Total Broadband 2, which allowed her rather more data-shifting capacity than she was ever likely to require, and also got her a complementary licence for anti-virus and firewalling from McAfee. For actual land-line phone calls, she was offered a deal called Unlimited Weekends and Evenings, which requires a standing charge of £2 a month, and allows you – that’s right – free calls to UK land-line numbers in defined off-peak hours plus some other discounts on calls to mobiles in those periods.

And, since about March 2008, that contract has been running happily. Every month, BT send a direct debit request to her bank, and convenience reigns withal. This month she got a letter from BT telling her that, since her current monthly debit is not meeting costs, she has run up a bit of a debt, and thus they will be increasing her payments to an amount which surprised me. My mum is 88 and pretty deaf, and uses the Internet about twice a month to get her groceries ordered. So I set up online billing for her with BT, and we had a good look at what’s what.

Wrong Tariff.

Because of her circumstances, she makes all her phone calls during the day. She is (sadly) running out of people she might wish to phone in the evenings, and the concept of a weekend is meaningless when you are 88. My mother is paying full price for all her phone calls. Also, her broadband usage is trivial, and the free McAfee package is so awful that we replaced it ages ago with a free Microsoft product which works better and is less of a nuisance.

Wrong Tariff – and, because we should have spotted it and done something about it before now, I have the additional burden that it is our – well, my – fault. If at any time I had called up BT and complained about value for money, they would have said – quite correctly – that we were getting what we asked for and signed up for.

Quite so
By reducing the service level to basic, no-frills broadband, and changing the phone contract details to Unlimited Anytime (£7 a month), as from 9th September, her monthly costs will now drop from £59 to £35, which is important if you are a pensioner. The infuriating things about this are:

(1) Her use of BT services will be exactly the same, whatever the contract is called.

(2) BT claim that they keep a paternal eye on your account, to make sure that you are in the best-value, most suitable contract and that your payments are adequate. Bollocks.

(3) BT’s focus – in common with everyone else’s nowadays – is the new customer. By definition, anyone who is an old customer is a mug and should be stiffed mercilessly until they notice and complain about it. I call this “The Negative Loyalty Bonus”. It is everywhere – don’t get me started. In the last few years, we have had major fights about pricing with our insurance company, our supplier of domestic LPG, our mobile phone companies, our BANKS (aargh!), etc etc. In most cases, we ended up changing suppliers, and saved a lot of money, but many people don’t, and many people just keep on handing over cash they can’t afford.

I’ll spare you the rant about Aviva, BP, Royal Bank of Scotland and all the others – maybe for another day. This is now business as usual. I hate it. Let me end with two short stories about lightbulb moments in my economic education – I apologise if I come across as unreasonably trusting or naïve in these, but I tell it as it is.

My background includes a lot of study, including some heavy, classical economics, but I come from a druidic, actuarial world in which the prices of things are worked out scientifically with great precision, and the dirty spirit of competition sneaks into pricing only at the last minute, to ensure that one might actually sell something occasionally. The concept of someone getting ripped off is not incomprehensible, but certainly alien to my upbringing.

Story 1 – the Man from Swissair

In the days when I was in salaried employment, and before I made the strategic error of becoming unfashionably old, I used to get sent on what were laughingly described as management training courses. I can only assume they offered my employer a source of tax-deductible expense. The main, maybe the only, attraction of these was that I got to meet some interesting people.

On one course, there was a fellow from Swissair, and he described for my benefit that strange phenomenon which occurs on aeroplanes, where no two people may have paid the same price for their tickets, though they will consume the same food and fuel and arrive in the same place at the same time. Neanderthal that I was, I had never really thought about this before. The most interesting bit came at the end. There is a point, he said, where the tickets sold cover the cost of the flight, and anything at all you can make on any further empty seats is a bonus.

Thus the fact that business class passengers from Geneva to NYC in those days were paying £1400 a pop was irrelevant. Once the flight was paid for, any remaining seats could be sold for almost nothing. If the extra passenger would require say £50 worth of extra fuel and food, then he might fly for £50.50 and you would have made a profit of 50 pence.

Yes, I know that everyone understands this, but for me it was a lightbulb.

Story 2 – Price Guarantees

A kid who was a friend of one of my older sons got a job for six months before he went to college. He worked as assistant manager in a computer game store, on a shopping mall on the outskirts of Edinburgh. He was seventeen and a half, and he knew nothing about anything, but he explained to me how price guarantees work.

In his store there were notices up on the walls, which said something like

“If you can purchase any product from a physical shop within 12 miles of here for less than we sold it to you, we will gladly refund the difference”

And then, of course, they deliberately cranked up their prices by about 5%, right across the board, so they knew they were more expensive than the competition.

If anyone spotted a cheaper product elsewhere, remembered the guarantee, still had the receipt and could be bothered paying to travel all the way out to the outskirts of the city, the shop would happily, smilingly make the promised refund. Have a nice day. However, in reality, hardly anyone ever came back. The deliberately inflated prices made them a lot of extra profit – in some cases doubled the mark-up on specific products.

This applies in big, respectable department stores as much as nerd shops. If your local John Lewis publicizes such a price guarantee, it’s a pretty safe bet (said my young tutor) that they know their prices are high to start with, and they are chancing it.



  1. I recently signed up with a new mobile company because they had the smallest package for occasional users like myself. A month later they came up with an even better plan. Yes you guessed it, only for new customers. So I asked: "If I pay off the balance on my hardware and cancel my account, I can then sign up again with the same phone and get the new, better package."..pause.. "Yes, I guess so".

    ?? huh?? Of course I also thought, "or I could just take my phone to one of the companies using the same network and sign up with them". In the end I just sucked on the hook I had already swallowed because the new plan was $5 more per month for services I would probably not use much anyway.

    1. It's maddening. The joke is that there are very few genuinely new customers for anything (except maybe for undertakers) - the "new" customer is almost always some poor beggar forced to change a supplier because he has become brassed off with the stupid, wasteful, discriminatory practices of his old one.

      Where we once used to train people to make things, or grow things, or repair things, we now send them to school to learn how to come up with new ways of describing the same, tired old transaction so that it sounds like something new, and something more attractive than the identical crap offered by competitors. Entrepreneurs - certainly in Britain - are now confused with people who maggot their way into the fat underbelly of commerce, so that they may suck a livelihood out of providing no value at all.

      I love it. No wonder we're all ****ing doomed.

  2. Before I became 'voluntarily' old (Eric Pickles' new initiatives) I was in local authority procurement (what used to be called purchasing and before that, buying). There are so called professional practices in the commercial world that would make your hair stand on end. Companies get away with murder simply because the consumer doesn't challenge them. There are also perfectly legal commercial activities which are morally indefensible - and I haven't even thought of the financial quagmire yet.

    As regards BT, in my experience they're inept at tendering for work, preferring instead to write direct to an authority's chief executive and elected members offering all kinds of veiled threats and inducements and insinuating that the motives of the authority's officers are questionable. My brother in law is a very senior manager at BT and he avoids the subject like the plague - sensibly, I think.

    1. Hi Gary - I've come across this sort of stuff before, mostly with Scottish community councils. One large city in Scotland includes a great many traditional tenement blocks with a common stair and shared responsibility for roofing, services, building maintenance and so forth.

      If work needs to be done, local bye-laws require residents of a building to submit estimates for the work to the council, who will choose a firm to do the work or else appoint another firm if they are not happy with the quotes. A few years ago, some bright sparks in this particular local authority set up a company which, strangely, won a huge proportion of these contracts, and then subcontracted the actual work back to firms who might well have been the others providing estimates. There was a huge mark-up - sometimes 100% to this phantom holding company. These boys are in prison now, I believe. Enterprising though - crime is the ultimate form of free enterprise.

      There is also an ongoing scam whereby contractors repairing the roads deliberately do it cheaply and badly, so that the next winter will destroy the repairs and require it all to be done again, on the same deal, naturally. This one is still going on, hiding behind lack of funds as the reason for keeping costs down.

      BT? Hmmm. I live quite a few miles from the nearest exchange, and it is a miracle that we can get broadband at all. The miracle is simply explained. One of my near neighbours used to be head of IT in a very large banking concern, and at that time a well-known but nameless telecoms firm laid a special 5 Km aluminium cable from the exchange to a point near his house, so that he could receive a good personal internet service and would thus look favourably on their products and services in his professional capacity. He paid nothing for the cable, it was a voluntary initiative on the part of the supplier, and no-one but the local phone engineers will admit it exists, but you can see it, and it means we get broadband here in the wilds, so it's difficult to feel too bad about it.

      If I ever phone up BT's helpdesk (in India) because our broadband is not working, I get told every time that I live too far from the exchange and cannot receive broadband. Every time. Just our little secret.

  3. Add to the list: Gas, Electricity, Railways, Health, Education. The creeping curse of "competition". Or to give it its other name "choice". All natural monopolies which we never had any choice in but we now allegedly do, and conswequently spend a lot of time worrying about, deciding, monitoring, regulating. Oh and water, but nobody pretends we have a choice there.

    Banks, shops (my own hobbyhorse in particular is Currys) and now telcos are not natural monopoies but their practices are no less opaque. And we really want to commercialise more of our crown jewels and hand over to people like this.

    Sorry to get political but you can't avoid the conclusion.

    1. Absolutely. And in Britain, in the background, runs the constant theme of protecting our mystic-genius paper-shufflers in the City of L*o*n*d*o*n from dirty foreign influence. Sadly, if/when Thatcher's children get us out of Europe, the C of L will become a very quiet place indeed.

      Times are hard - have a look around - I have never seen so many big, new cars for years. We are back to "if you've got it, flaunt it" and "I've got something you need, so I'll bleed you white". Political? - it's all around. Somehow, it appears, we admire these gangsters. It has been suggested to me that if our recently-disgraced bank supremos had been in Germany they wouldn't just have lost the odd knighthood, they'd have been gaoled. In China they'd have been executed.

      And while I'm on this, can anyone please explain how Wonga and their many copyists are allowed to exist in a decent society? Do they have friends in high places? Are they, too, to be admired as opportunists?

    2. Don't get me started on the City. There was a rather good programme on Radio 4 about how we pay for it. That was underlined when I recently had a statement for one of the private pension schemes I'd joined with a past job. Current value of my pot was £x. Projected value at retirement = £x/2 once allowance for their charges had been taken into account. Excellent value these investment managers!

      The pension provider? Yep, you guessed it, Aviva.*

      * Like the BBC, I feel obliged to add that other equally rapacious fund managers are available

    3. You mentioned the concept of choice. When I first travelled to the USA, I was fascinated by their sandwich bars. You went through an astounding number of choices about what kind of bread, what kind of mayo, what fillings, what pickles and relishes, and eventually you ended up with a fresh-made custom sandwich which was one of about 17 million possible combinations.

      What could be a more perfect benchmark for customer service? It took me a while to spot that, if you don't like your sandwich, and since you specified exactly what it would be like, you have no rights and no grounds for complaint at all.

      Aha. Gotcha.

      I have to say the sandwiches were pretty good, mind...

  4. Aviva? You mentioned Aviva, so you did!

    8 months and counting since my car was written-off, and they've just started talking about 'repair'...again. The car - or its remains - still block my mothers drive and I await any settlement!


    1. Aviva - so I did. Years ago I had all my house and car insurance with the Provincial (of Kendal). As the years past, they were taken over by Commercial Union, who were swallowed by Norwich Union, which became Aviva. Every year i got a premium notice which explained to me that my sum at risk had increased by so-much percent, and my new premium would be X.

      Four years ago, X was suddenly £1300. Since I live in a low-risk, rural area, I queried this, and was told it was a mistake and should head read X = 1050.

      Out of interest, I contacted Direct Line, who quoted £420 for a rather better policy. Naturally, we jumped ship. Out of interest, I made a phantom request for a quote as a new customer of Aviva and - guess what? - it was about two-thirds what I had been paying as an old customer.

      I'm sure this business philosophy has a technical name, but it escapes me. Nothing printable, anyway. Screw your existing customers - if they threaten to leave, make them a better offer. Simples.

      Is there life on Mars?

  5. And my thanks to Peter, who correctly points out that the proper term for a Negative Loyalty Bonus is a Loyalty Malus - this should now come into everyday English usage. I shall use this everytime it is appropriate (and probably some times when it is not), whenever I remember (ah, now - that's more of a problem...).