Personal Soap Box: Insight Communications, Inc & the “bundling” trap

I have subscribed to Insight Cable, telephone and internet for a number of years for services at my home. Over a year ago I asked if they would allow me, as a loyal customer, to add the unlimited long distance they were advertising for new customers to my phone service for the advertised rate (free). They allowed me to do this, never explaining that I would now be bundled into an introductory service plan. I thought they were just doing smart business by rewarding a long time customer. Nope – after a year I was informed that my “introductory package” price was being jacked up an extra ten dollars. I discovered a new line on the bill that showed “unlimited long distance” as costing me $11.95, an astronomically high amount with today’s options from VOIP (voice over internet protocol) companies.

Since the $11.95 was a line item, I thought I could merely call and cancel that particular service. Again – NOPE! Sure, I could drop down to basic phone service at $23.00 per month, but my internet and cable charges would jump up higher than what I would be saving by losing the unlimited long distance. I was TRAPPED by Insight’s bundle. Not only that, I walked into it blindly by not being told and not realizing that I was being put into an introductory offer. I am currently pondering the legalities of this. Specifically, if nothing on the bill and no contract exists that says the prices listed are only because they are bundled together, is it unlawful (civilly or criminally) to refuse to drop a single, unwanted service. If enough of us are frustrated by this practice, we could apply market pressures and possibly explore the viability of a class action lawsuit. Beyond that, though, there are some lessons here that are a tenuously about economic justice.

First of all, Insight is engaging in poor business practices in that they effectively punish people who become loyal customers. Their marketing is targeted only to getting people to switch away from some other provider. Unfortunately, they know that most people do not make changes readily and will continue on with them even in the face of mounting charges on their bills because of the effort it takes to change. The second lesson then is that our reluctance to change is our enemy. We must fight against that lethargy and be willing to reject deals such as these that promise short term savings, but cost more in the long run.

The third lesson is that when a company gets large enough, they no longer have to reckon with the individual customer. They can use their economic clout to make the customers conform and even force billions of dollars in welfare type loans and incentives from the government. This became even more evident when I called to talk to Insight about canceling certain services. I spoke with a person who appeared to be inflexible both by nature and training and who gave me the most ludicrous explanation for the charges. They insisted that they simply put $11.95 down for the long distance charge as a random number and it could have been placed on any other particular item so the cost of the phone service was just $35.00 no matter which way you worked it. Again, $35.00 for phone service is ridiculously costly in this day and time. When possible, go small. Smaller companies have to be responsive to individual customers to thrive.

Tying this personal soapbox back into the theme of justice is pretty easy. Those without resources need to band together to have a voice and to be treated with justice, especially in these economic times of trouble.

Oh, just so you know, I canceled the long distance, canceled cable, plan to go to a VOIP company for phone service and will look at Windstream’s prices for internet.

Small Firm = Big Value

It amazes me how high the operating costs are at mid-size and big firms and how low the profit margins.  As I reflect on my experiences with mid-size and big firms I can see why.  On average, for every two attorneys there is one secretary and one paralegal plus a number of runners, file clerks, and receptionists.  There are huge and incredibly versatile state of the art copiers and computers.  The offices are plush so as to impart the appearance of wealth and status to clients.  And, large amounts of money go for marketing. 

These arrangments work well as long as the attorneys are churning out 8 or more billable hours a day – it does not matter if the work needed to be done or not.  This is not quite as hard as it appears since one partner at a firm told me that he started out working 10 hours a day to bill 8 but now he could work 8 hours and bill 10. 

This is called “value billing” and it is not only tolerated but expected in the insurance defense industry.  One would spend 2 hours creating a motion for one client.  When a similar issue would arise, that motion would be revised in about 45 minutes but the 2 hours would still be billed (the motion had a value of 2 hours).  In exchange, the attorney bills his time at a lower hourly rate.  Exactly how this saves money remains a mystery but I suppose the hourly rate draws more attention than the number of hours.

On the plaintiff side, contingencies of 40% or 45% are now standard with the fees and expenses coming out of the plaintiff’s award after the contingency is paid.  I just wonder how many plaintiffs would pursue their claim if they knew they would end up with barely more than they started with after liens are satisfied.

A small firm can do the same or better quality of work.  This is because we can keep those operating costs to a bare minimum.  This frees us up to focus on the quality of the product rather than churning out hours for the sake of meeting some annual requirment.  We can bill for only the work we actually do and we can set more reasonable contingency fees.  Personally, I prefer starting with a low percentage for any settlement prior to filing a petition and graduate to a more traditional percentage if it goes to trial.

Lastly, we do not have to spend a fortune on marketing because the quality of work leaves clients confident to recommend us to others.