Barely a month goes by when I don’t read about a colossal failure of customer service by one of the big ISPs. The latest comes from Comcast, and the company seems to have broken a major promise made to customers.
When Google Fiber announced in 2016 that they were coming to Salt Lake City, Comcast decided to compete against Google Fiber by offering ‘lifetime’ prices for various bundles. For example, there was a triple play bundle at $120 per month plan that included broadband, cable TV and a telephone line. In anticipation of Google coming to the market, Comcast engaged in a door-to-door sales campaign that marketed the lifetime special and other discounts on Comcast products in an attempt to lock down customers before Google Fiber hit the market. Ironically, Google Fiber changed their mind and never made any significant investment in the market.
The lawsuit alleges that Comcast doorknockers promised customers the lifetime product and backed this up in writing that their price would be good for as long as the customer kept the plan. Customers were assured at each step of the process that they were buying a lifeline plan and that rates would never be increased. For example, Comcast customer service reps on the phone repeated the assurance that the prices would be good forever. The lawsuit asserts that as many as 20% of the 200,000 upgrades sold during the sales campaign in Utah were sold as lifetime plans.
As you might expect from the title of this blog, after a few years Comcast raised the prices on the lifetime plans. At that point, Comcast customer service denied any knowledge that these were lifetime rates and said they had never heard of such a plan. Comcast enforced the rate increases, some of which were substantial.
It’s hard to imagine that any company would sell a guaranteed lifetime price for a bundle that includes cable TV. The cost of buying wholesale programming has been increasing at 10% – 15% annually for many years. In a decade, any lifetime plan would be massively underwater. Additionally, Comcast is now in the mode of annually increasing broadband prices – but that’s not something that was probably discussed inside of the company in 2016.
It’s not hard to figure out how this could happen in a big corporation. I’m just speculating, but I expect the marketing campaign included an outside sales team. These sales teams get most of their compensation from completed sales and are famous in the industry for making outrageous claims to customers. I always caution my clients about hiring sales companies that bring entire sales teams in from out of state. While these companies will get sales, the worst of them often leave a trail of unhappy customers behind them. I would expect that this sales staff had some role in choosing the message of lifetime rates – something they know they can sell.
However, it had to be more than a rogue sales team that pushed the lifetime rates. Comcast customer service at the time was also telling the customers that the plans were lifetime rates. I’ve talked to several Comcast customer service reps over the years and they describe the customer care process at the company as chaotic. From what they’ve described it’s not hard to imagine the specific customer care group supporting the sales campaign also supported this effort because they also could make sales commissions. Many of the horror stories coming out Comcast customer care over the years have involved employees engaging in bad behavior to chase sales commissions.
But there also had to be local management buy-in of the plan. I’m sure we’ll never know, but it would be interesting to know if this was strictly a local management decision in Salt Lake City or if there was corporate buy-in. Comcast seems to have overreacted to Google Fiber elsewhere and it’s possible that this was a corporate plan.
This lawsuit highlights the difficulty in operating a huge ISP. Many big companies have seen sales commission plans gone awry. Inevitably, some employees find ways to maximize bonuses through bad behavior. We saw something similar from Wells Fargo bank last year and it’s hard for any giant corporation to strenuously push sales campaigns while also policing that employees don’t take advantage of the plans.
This story offers a few lessons for other ISPs. I am a huge believer in the efficacy of door-to-door sales plans done well. But there are unscrupulous outside firms that will sell anything for a high-enough commission. The best sales plan involves local people trained and managed by an ISP directly. The other lesson is that sales commission plans for non-salespeople must be carefully designed to not promote bad behavior.