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Comment by larrys | Hacker News Reader

"Our company has also started ripping people off in similar ways (like a $50 fee to downgrade internet speed) "

Explain why you feel that is a "rip off".

More specifically if this company came to you as an employee (I assume you are an employee) and they said "hey we aren't making money and we need to reduce your salary" how would that fly with you?

Anyway I'm asking a serious question. I'd like to know the exact metrics of how you have come to determine that the company charging $50 to downgrade internet speed is ripping people off. Is it because nobody else does that? Is it because it doesn't cost them anything but a button click to downgrade?

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It's for a few reasons.

One is, as you mention, because it's nothing more than a button click to downgrade. Less than a 1 minute call with a CSR. How they can justify $50 for that is anyone's guess.

The second is they're saying things like "it's to cover the cost of having CSRs, printing bills, etc." But actually, the $110/mo charge covers that, and always has.

Third is because the company is making plenty of profit, but the parent company wants more, so they're pushing it to do stupid stuff like this.

A large percentage of employees are looking for work elsewhere, it's just unfortunate there are not many options where we live (quite remote)

"How they can justify $50 for that"

They don't need to justify. The only reason they would even think about this is if the detriment didn't outweigh the benefit. If perhaps x% of people think that it's a ripoff and 90% don't or don't even know or think everything is a ripoff anyway then why not get the extra revenue?

My guess is that the amount of people that even have any understanding of what is involved is quite small.

"But actually, the $110/mo charge covers that, and always has."

What do you mean "and always has"? Are you saying because they consistently turn a profit then you have decided they have enough to cover their fixed expenses and they shouldn't try to add to the bottom line? Not to mention that off the top with a billion dollar corporation you really don't know what is going on there anyway.

"Third is because the company is making plenty of profit, but the parent company wants more, so they're pushing it to do stupid stuff like this"

In a capitalist system there is really no such thing as "plenty of profit". The mere fact that you feel like it's up to you (or anyone else who makes comments) to decide "ok that's enough" really does not make any sense. I mean you've never seen profitable companies go out of business or bankrupt that at any point in time someone would have said "they make plenty of profit". (We can start with General Motors, Chrysler etc.)

"A large percentage of employees are looking for work elsewhere, it's just unfortunate there are not many options"

I'm unclear what the amount of employees looking for work matters with respect to what they charge. Are you implying that things like this make employees want to leave? I somehow doubt that.

You are the reason I look forward to municipal fiber. Hello utility regulation.

> In a capitalist system there is really no such thing as "plenty of profit"

The telecommunications industry in the U.S. is anything but capitalist. Furthermore, people don't really have a choice regarding their internet service, so ripping them off for another $50 is pretty low.

> The mere fact that you feel like it's up to you (or anyone else who makes comments) to decide "ok that's enough" really does not make any sense.

Actually it does. Consumers are allowed to make decisions about purchases on any grounds they choose, including whether they feel that a company is taking too much profit, or that the company is violating some ethical standard.

Consumers are also free to call for boycotts or otherwise persuade others to not purchase products. If we think that a company should be transparent and justify their pricing so that it's proportional to costs, then that's what we think. If we think that companies shouldn't exploit the technical ignorance of consumers, then that's what we think.

In a capitalist system, we're free to debate these questions, make purchasing decisions based on them and start competing companies to serve dissatisfied consumers. If we have more technical knowledge, preventing non-technical consumers from being exploited by sharing information with them is an ethical good. Most advocates of free markets argue that these capacities make the system work.

The only thing that wouldn't be permitted in a pure capitalist system is if these ethical claims translated into a demand for government intervention, which no one has done so far. Even so, it's easy to argue that these arbitrary fees are a market failure caused by information asymmetry between Comcast and consumers and could require government intervention. The issue is not the price. It's that Comcast is misrepresenting the charge as technically necessary, which could be seen as discouraging consumers from evaluating competitors (assuming they exist) by implying that there are technical rather than business decisions behind the charge.

All of what you are saying I agree with.

I guess it just bothers me that the crowd of people who try and influence others (and yes you are correct that this is fully their right) either have no skin in the game (in other words they only have one interest in mind) and additionally may not really fully understand how business operates.

I guess I just react very viscerally to things being worded "ripoff" because it's so easy for people to throw that around and pass judgement.

To me "ripoff" means take advantage and you could argue that in business there is a fine line between what is acceptable in terms of "taking advantage" and what is not. And you know what each of us has a different line. (It's just like religion and cheating on your taxes. Anyone who does more is "really religious" anyone who steals more is "a big crook").

Everyone draws the line at a different place. There are many people who believe that YC takes advantage of young people. You know all those "should I go to Harvard or to YC" would be seen by many people as totally taking advantage of someone (and may or may not be depending on the circumstances of the particular individual and what the particular person with the opinion really knows about YC).

Are you trolling? In an industry that is not regulated as a utility due to monopoly issues, profit margins are irrelevant. But in an industry that activity stiffles local competition with monopoly powers, this is all the info I need:

http://finance.yahoo.com/q/ks?s=CMCSA+Key+Statistics

The serious answer to your question is that the price a consumer pays should reflect the value of the service they are receiving and should be proportional to the cost of providing this product/service. If the business is subsidizing loses in one area by overcharging in other areas, then the model is broken... especially if you are punishing your customers that are looking for better value and have no other options because you lack competition. That is the very reason that we have protections from price-fixing schemes. It's the same issue as the Banks' overdraft charges. They are making huge profit off the most vulnerable of their customers.

>should be proportional to the cost of providing this product/service.

I'm sorry, but I can't agree with that as a general principle. In this specific instance, with Comcast et al who benefit from monopolies, sure. But as a general principle, the 'value' of a product or service is whatever people are willing to pay for it. If I buy widgets in Asia for $1 each, and Americans are willing to buy them for $1,000,000 each, than that's their value.

Threads like this always bring out people on HN and elsewhere that simply don't think like business people.

You can choose "value" as your strategy and sometimes that can work in your favor. But many times the public is easily duped by your competition and what they have advertised as "value" and it's not that simple.

Laughing at 'don't think like business people.' If you believe that the primary goal of business is supposed to be 'make profit at any cost,' then yes, I don't think like those people and you should take some time to re-evaluate the purpose of business. If you believe that the primary goal of business is supposd to be, 'make a product or provide a service that is valuable,' then I think our humane values are in-line with our work.

Cases in point: Ponzi schemes, monopolies and cartels, price-fixing schemes, 'pump and dump' securities fraud, insider trading... need I go on? All of these things are illegal in the US--the supposed mecca of free market capitalism. Do you think these should be legal? Or you are simply arguing that everything that is legal is ethical? If you believe that, then I think you put too much faith in our legislature.

Edited to remove an inflammatory statement.

Well nothing in my statement says 'as a general principle.' In fact, I specifically said that in a genuinely free market, profit margin is irrelevant (it could be 2% or 100%). I agree, but they aren't working in a free market.

In a functioning competitive market, though, prices should trend towards some function of risk-adjusted costs, unless there is a barrier to competition like a patent, legal cap on supply, or other monopoly-type situation. That's supposed to be the whole advantage of capitalism, the invisible hand reallocating resources optimally to meet demand and everything. A large profit margin is just a market inefficiency, and should be rare and fleeting.

> More specifically if this company came to you as an employee (I assume you are an employee) and they said "hey we aren't making money and we need to reduce your salary" how would that fly with you?

This does happen. And at that point, you get another job. Unfortunately, the analogy doesn't hold up with ISPs because there are many areas where there isn't another ISP.

The only real answer is that a company should seek to charge the price that maximizes their long term profitability. If that's $50 to click a button, that's $50 to click a button.

But this rule completely breaks down when you're dealing with regional monopolies like Comcast. In that case, you do have to introduce the concept of pricing fairness to avoid someone abusing their monopoly - as Comcast appears to be doing in this case.

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