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Friday, May 13, 2005

Better Business Models

My goal today was to downgrade my cable service. I have one of those bundles with cable TV and internet service, and they have quite a racket. If you have the bundle, you get a discount on cable modem service. When I called to say “no more” to cable TV, the representative reminded me that the price of internet service goes up if you completely cancel cable. Ah, but here’s the zinger.

If you have no cable TV service, the price of the internet service rises by $13. Which is EXACTLY the same amount as the basic cable service. In other words, there is absolutely no reason to cancel cable.

As a bonus, this “customer service” representative, while polite, also reminded me that to re-up cable TV service at a later date would require an installation fee of $15.99, to remove the filter. Nice. So it’s free to have the filter installed to downgrade my service, but it costs money to have them basically remove the plug. What a business model!

It made me think of other remarkable business models out there. Such as electronic filing for taxes in Minnesota. Unless you use a tax preparation service, it costs you EXTRA to file electronically, which incidentally saves the state money in processing your return. So a real penny pincher is actually more motivated to file a paper return, which in turn costs everyone more to have some bureaucrat file the form. Brilliant.

Next entry – another fascinating look at consumer society: Why we wait in line to pay for things (thanks to KMR for this idea).

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