Uncharted Territory

October 5, 2009

Screwed by Virgin

Filed under: Business practices, Consumer gripes, Economics, Inefficiencies, Regulation — Tim Joslin @ 5:15 pm

They say moving house is one of life’s more stressful experiences. It’d be a helluva lot less stressful if it was not for the numerous bureaucracies you have to deal with. Telecomms providers must be among the worst.

A final straw has been added and I have to let off steam.

My fun and games with Virgin Media started before I even moved in. I had the affrontery to attempt to close the account I’d had for 5 years at my previous address. I thought I’d take up an introductory offer when I moved. Maybe I’d remain faithful to Virgin, maybe not. I’d dared to think I might have a choice as to who delivered my bits and bytes. Well, as someone famously said, in a democracy you may be free once every 5 years when you cast your vote, but as a Virgin Media customer I discovered I was even less free than that.

My mistake was that I had changed the package I received 10 months before I moved. I’d been using phone, TV and internet, but wanted to restore the 24 hour news channels I’d given up some time before. I’d understood it was part of the Virgin offering that you could change your TV channels from time to time. Virgin’s twist is that they’ve invented various discounts. Even though the only change to the service was to add some channels and the bill increased by a few pounds each month, it seems I moved from “Ultimate Double 2”, to “Ultimate Triple”. Apparently, just because I’d moved from one bundle “offer” to another, this required a “new” 12 month contract. I have to take Virgin’s word that such a thing exists because I don’t have it on file. I found I was locked in to Virgin and had no real choice but to arrange to use Virgin at my new address. And guess what? I’m now locked-in for another 12 months.

It’s not something most consumers spend a lot of time thinking about but I’d be very surprised if the management of service-providers don’t employ a few MBAs to devise subtle ways to lock in their customers. A high degree of lock-in – that is, high switching costs for consumers – is actually in the interest of ALL incumbents in an industry. At the expense of consumers and new entrant providers. Think about it. Or just trust me, I’m an MBA!

Don’t get me wrong. It’s logical for a provider to require a period of commitment by the customer to cover up-front costs – think mobile phone contracts, or in this case the cost of sending an engineer to carry out the cable installation. But I hardly think a call to change the TV package constitutes a major up-front cost.

Theory would suggest that service will in general be poorer, the higher customers’ switching costs. I’ll leave the reader to judge whether such a conclusion is supported by my experience with Virgin. Here are a few of the straws that have been heaped on my back since I moved:

  • Letters about my new contract were sent to the new address where an installation had been arranged in 2 or 3 weeks time, not the old one where I was actually living. One was returned to sender since other tenants didn’t recognise the name!
  • Even more irritating was that the cardboard box Virgin sent for the return of my old set-top box – which lived at my old address, of course – was also sent to my new address. Duh. So, rather than post it back, I had to pack and transport Virgin’s set-top box. And take time as soon as I’d moved in to find where the Post Office keeps undelivered packages around here… – Still, on the plus side, Virgin’s engineer did turn up for the installation…
  • …but left before the internet was working. He’d rung up, found there was a 20 minute delay before some gobbledegooky thing would happen (even though this appointment was made several weeks before) and gone to his next job. He did leave a mobile phone number, though. So when Virgin’s software asked me to ring up to “register the modem” (what does that mean?) yet their help-line couldn’t, um, help me, I rang him. He’d done his job, he said. Surreal. I went out for the rest of the day, rather unhappy, of course. When I came in, the modem had clearly managed to “register” itself and soon I was happily surfing away…
  • …until last Thursday. No internet from around 5pm until sometime between 12 and 1pm on Friday. Call me a ninny, but I consider that a significant outage. My direct costs were £30.18 and my indirect costs £29.99. £30 because I’d received an email including a half-price offer for something I wanted to buy anyway. By the time I tried to buy, it was sold out. 18p because I’d been in the middle of registering a temporary Tesco club-card, which was still next to my PC when I was next in Tescos. £29.99 because I went out and bought a 3 mobile broadband USB device and £10 credit for next time this happens.

… …
I’ve tried getting compensation from Virgin before, and it’s not worth the effort. As I recollect, they will only pay from when you ring to report the problem – which you don’t bother to do when you hear the recorded message about the problems in your area – and only pro rata, i.e. they refund one day’s broadband charge per day of loss of service. This is pathetic. You’re paying for continuous, not patchy service. Consumers on their own are isolated and not in a position to change supplier behaviour. Government should represent the mass of consumers and impose sensible terms. In the case of broadband supply, outages of more than 12 hours should trigger automatic refund of an entire month’s charge; more than an hour or an hour cumulatively over a month would cost the supplier at least a couple of day’s charges. Of course, such outages would become very rare – this is called setting the right incentive. (Did Virgin work through the night last Thursday to resolve the problem affecting my service as quickly as possible? I somehow doubt it). If broadband internet is so important that we need a tax on landlines to subsidise its supply, then it’s important enough for companies to be compelled to provide a reliable service. And for customers to be compensated for something approaching the costs of non-performance by suppliers.
… …

  • And we haven’t even reached the final straw yet. I’d opted (at my old address) for Virgin’s “eBill” service. This might be convenient if the bill was actually attached to an email. It’s rather irritating that you just receive an email telling you to log on to Virgin’s site to find your bill. Still, you pay £1.25 less (surely rather more than the bill costs to produce – we allow Virgin to create an incentive for us to do the right thing and save paper, whilst failing to give them sufficient incentive to provide a reliable service). OK, £1.25 won’t even buy a skinny latte these days, but it’s still an unnecessary expense. You’ve probably guessed by now that a few days ago I received a paper bill, complete with £1.25 “Paper Bill Charge” at my new address…
  • Nope, there are more straws. Clearly I’d need to re-register for “eBilling”. But first, I thought I’d check my old bills. Doh! Of course, Virgin have given me a new account and deleted the old one (or at least made it inaccessible via my email address and the PIN provided). So the closing bill for my old account – only recently paid by Direct Debit – is inaccessible. How do I know I’ve paid the right amount? E-billing is all very well. It’s the future. It’s potentially efficient. But companies need to be compelled to keep data available. Again, government needs to step in and set some rules. I hate to say it but maybe it’s not really in suppliers interests to have consumers checking their old bills. Maybe when they’re not thinking about how to keep you locked in, some of those MBAs are working out how to keep you in the dark about charges…
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1 Comment »

  1. Hello, So you’ve been on the move with da Internet off an’ on. Well, Good luck. Hope it’ll all work out, new place an’ all. I was ‘a wonderin’? Been a while since ‘Confident in Copenhagen’. Good blog, good points. All the best. /Albatross

    Comment by Juri Aidas (Albatross) — October 6, 2009 @ 9:57 am


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