I wanted to share some thoughts on the role of bigness and monopolies in our lives today. I want to preface this by noting that what you’ll read here are things that many of you have almost certainly experienced yourselves. They are most definitely what we call ‘first world problems.’ My point in sharing them is not to say ‘woe is me’ but to describe some basic and recurring experiences which illustrate a larger point.
Let’s talk about buying cable and Internet service, shall we?
TPM leases two offices – one in New York and one in DC. We’ve been in the New York office for just over eight years. For maybe seven of those years we got our Internet connectivity from Time Warner Cable’s business class service. (For clarity, nothing to do with the TPM website is tied to this office. It’s not housed on a server here. What we’re talking about is purely how the staff in this office accesses the Internet.)
The service was quite simply a disaster – a slow motion seven year disaster. It frequently went out. Or it got ridiculously slow for no reason. We’d call and be told it was out neighborhood-wide when we later learned it was a problem with our connection. Or a problem supposedly with our modem was actually the whole block. Or we’d be told it was a routing station down the street that was being worked on only to find out from higher ups that they didn’t even know our connection was down. Suffice it to say we routinely had problems with our connection and when we’d call to get help we’d routinely be told a different things by each person we talked to. It was less than fun.
To be clear, this wasn’t the connection you have in your home. This was a business class and rather pricey connection. It’s also not in the boondocks. This is in the center of one of the most wired parts of Manhattan, surrounded by numerous tech companies and digital journalism outfits you’ve heard of. It’s probably fair to say that we are in one of a handful of the most tech-centric and wired neighborhoods on the East Coast, probably in the country.
The problem for us as a business was that our Internet needs for this office are really not very complex or great. So it simply made no sense to upgrade to the kind of connection that say a brokerage making live trades or a medical facility might have. It meant an order of magnitude more money and would add things we simply had zero need for. Could we just pay two or three times the money and get better service? We would have happily done that. No. This is the service.
Even so, about a year and a half ago we decided the situation was intolerable and we decided to spend a lot more money and get the next level of service. Since we had zero confidence in Time Warner Cable we decided to get the service from Verizon, the only other telecom who offered service in our building. I have Verizon FiOS at home. And it’s pretty good. But Verizon stopped installing FiOS in new places when the regulatory heat was lifted. So it wasn’t in our building. (New York City is currently suing Verizon over breaking its promises about wiring the city with FiOS.) But obviously, a huge part of our work experience and efficiency is tied to having reliable and reasonably speedy Internet. So we decided to make a change. It would cost us a lot more money – maybe seven times what we’d been paying. But it seemed worth it.
It was a joke.
The process entailed the following: 30 days to schedule installation, an additional 60 days to do the installation, and finally an additional 30 days for “testing.” That sounded nuts. But we were desperate for the cold sweet water of reliable connectivity. In the event, the process took roughly six months – August 2015 to March 2016: August to December to get it installed; December to March to try to make it work.
If I recall correctly, we were originally told that three separate visits to the location would be required to manage the process of installation – mainly looking at our office to see how to do it. Stage two of the process was literally this: install a four foot by four foot piece of wood on a wall. Once a contractor installed the piece of wood, a another person from Verizon would come at to look at the board. We’re having an installation conversation across continents dealing with multiple visits to inspect the installation of a technology that is at least 10,000 years old. For reasons which I don’t completely remember, our building wanted us to have a board slightly smaller. That wasn’t okay. We end up doing it anyway. In the event, they didn’t seem to notice that it was a 3.5 x 3.5 foot board. There was maybe six weeks tied up with the board issue.
The process was managed by a person at a call center in Manilla, who tried to be helpful but was hampered both by language difficulties and time zones. The person who sold us the service left Verizon after a few months. Through all of this, I would say it’s a fair estimate that half the scheduled appointments no one showed up for. Here’s a list from TPM Executive Publisher Joe Ragazzo’s inbox not of emails but email chains with the representative in Manilla. He was only one of three or four different people we dealt with.
None of what I’m describing here is an exaggeration. I could write three more pages of nonsensical details.
Six months after the decision to make the switch, we had Verizon Internet service. It didn’t work. It was slow, went out as often as Time Warner had. They actually had a billing error in which they started charging us for service before it was installed. That went on for months trying to get our money back.
It was, in short, a comical disaster that cost us thousands of dollars and six months.
Now here’s the funny part of the story. During the Verizon Long March, the super in our building mentioned to me that another company would soon be wiring our building. Supposedly it was cheap and fast. Whatever … Too late for us and I’ll believe it when I see it. We had already paid upwards of $10,000 on a mix of contractor fees and deposits to Verizon. So it seemed like we’d sunk way too much money to switch again. But after we had the ridiculous Verizon service that was terrible, we figured “Let’s try. How bad could it be?”
As it turned out, it was pretty good! It cost probably 20% of what the Verizon service cost. It was fast. It was always on. On the rare occasions when there was an outage it never lasted more than a few minutes. We hear from the company immediately by email when an outage happens. And we actually get small refunds for those outages.
It’s frankly amazing.
But it’s not really amazing. We pay a reasonable fee for a service. It’s reliable. We pay the bill. We have Internet. It’s still what we use. We even installed their modem on the Verizon mandated board.
The point, I trust, is clear. No company like Time Warner Cable (now rebranded as ‘Spectrum’) or Verizon could possibly stay in business if they weren’t monopolies or duopolies in which customers are essentially captive. It’s not the people. Everyone I’ve described in this post, comical as they may sound in context, was a great person working in a ridiculous system. It’s the system.
Let’s talk about banks.
For roughly a dozen years, TPM has done its banking with a large national bank whose name starts with the letter C. When we first started banking with them, we had an account representative, a very nice and conscientious older woman. If anything she was kind of a bother to me since in banking terms, TPM is a pretty simple business. We didn’t need most of the products C bank had to offer. But she routinely emailed me asking if there was anything we needed. She was easy to get a hold of. At some point, she either retired or stopped being our representative. She was never replaced by someone new.
I try to keep hold of the business card of whatever the latest person who helped me with something so I’ll have someone to reach out to next time. Usually they’ve left the branch or the company within a few months.
The most recent person I work with has, I think he told me, over 1000 clients and has to move between several different branches. He told me it’s hard for him to get to things because he’s so strapped covering so many clients. But he’ll do his best. He’s a nice guy. He seems genuinely strapped. Again, not him. He’s doing the best he can in an organization that puts a very low priority on customer service.
My first contact with him happened like this.
One morning sitting at my desk I got an email seemingly from C bank. The email read as follows …
It is important that you get in touch with me as soon as you can to prevent closure of your business account due to new government regulations that need to be met.
You can contact me at the information below…
Now, how stupid am I? This is the kind of phishing email you’re amazed your grandfather falls for. Obviously, some clumsy attempt to scam me into getting TPM’s banking information.
Nope. It was real!
I got a hold of the contact who’d helped me with something most recently at C bank a month or so earlier. Mail bounced back. No longer with the company. After checking the thing twenty different ways since it was obviously a scam, I realized it wasn’t a scam. Or maybe wasn’t. I actually walked over to the branch to talk to a person at the C bank location to make absolutely sure I wasn’t being scammed because how could this not be a scam?
This was the story.
In the post-9/11 era banks are under various regulations which require them to do some basic due diligence about their customers to prevent money laundering, especially for things like terrorism and drug smuggling. So they’ll pick a client and ask them to fill out a few forms about who owns the company, who controls it, various pretty mundane facts about how the business runs etc. It’s relatively easy to do. Getting people’s birth dates, current addresses, some technical information about how the company is incorporated, blah blah blah. Whether this kind of scrutiny is necessary, it’s not terribly surprising and not wildly onerous.
TPM is a people simple enterprise in terms of inflows and outflows. Over 3/4 of the money goes to salaries and rent. Money comes in from a relatively small number of advertisers and advertising networks. There also memberships but those are in small dollar amounts and they come through a fulfillment company that is one of the largest in the world. Still, a couple hundred grand or so goes in and out each month. So they wanted us to fill out the forms.
That all makes sense.
The problem was that no one at the bank knows us anymore. So no one told us they wanted us to fill out the form. According to the guy who eventually sent me the email, he’d called twice in the previous month because our account was about to be shut down. The problem was he was using a number that we don’t use anymore and haven’t for years.
Again, remember, we don’t have a rep anymore so it’s hardly surprising that the guy found a number we no longer use.
So basically a comedy of errors, the upshot of which is that now I’m sitting in the local branch with a guy I’ve never met before handing me half a dozen forms telling me he’ll ask the people in another office in Texas not close our account that day.
Him: Definitely fill them out as soon as possible so they don’t close your account, okay?
Me: How long do I have?
Him: Is tomorrow possible?
Me: Is there any way for me to talk to the people who are threatening to close our account?
Him: No. They don’t talk to clients. But you need to get them the forms as soon as possible.
Me to myself: How can this be happening?
Me out loud: Okay, I need you to contact them and make sure I at least have a few days to pull together this information. This is the first I’m hearing about this and if you close our account without notice our company will at least figuratively and perhaps literally explode. Certainly my head will explode.
Him: I’ll see if they’ll give you more time.
Needless to say I was able to get hold of the information, submit the forms and our corporate bank account wasn’t closed. I’ve considered switching to a smaller bank that has service and I’m still considering it. But in this part of Manhattan it’s all C bank and its big competitor. There’s one other bank that starts with a T but I doubt they’re any different from C bank.
There are lots of little complications in running a small business. These were the most first world of first world problems. I live a blessed life. My point in telling these stories is that they’re somewhat comical – except when they’re happening. But because they’re comical I think they help to illustrate a basic and not at all comical point. These businesses could not exist, they could not stay in business run as they are, if they did not function as monopolies or in monopoly settings where consumers have little ability to take their business elsewhere. Are these just examples of bad luck or bizarre stories? No, they’re just particularly amusing (now) examples. I could tell you literally a hundred more. They are examples of what I’ve seen change even over the last decade and a half. The industries we work with get more concentrated, the service gets worse and more expensive.
The telecom and banking industries are among the most concentrated and monopolistic in our economy. Our current Internet service provider is that rare exception that proves the rule. They provide really good service at a reasonable price – not because they’re nice or moral but because their business is not based on coerced consumption.
They’re not a monopoly.
If this were just a matter of annoyances with cable service, it would just be another of life’s many minor annoyances. But these anecdotes are examples of something much larger. We are living in a new era of monopolies and one in which anti-trust enforcement is all but doesn’t exist. Monopolies provide bad service at high costs. They stifle innovation. We’re used to this kind of anti-sclerosis, anti-bigness rhetoric coming out of the tech world and Silicon Valley. But two of the biggest monopolists are Google and Facebook. Their monopoly power shows up in different ways. But they’re ways that are no less negative for the economy in general. As we’ll discuss in the coming days, there is also a growing body of hard evidence that the growth of monopolies is one of the drivers of wealth and income inequality.
These are problems that require policy solutions. But they’re solutions that are still far from the actual policy discussions in Washington. The good news is that awareness and activism around this problem (monopolies, not annoying cable companies) is growing. We’ll be talking about it here more.