Why Are Some Companies Hated By Consumers?

TFB — Wed, 08 Jul 2009 08:35:00 +0000

Why are some companies hated by consumers while other companies are loved? That sounds like something Harvard Business Review would write about. And indeed, it has. In Companies and the Customers Who Hate Them, Harvard professors Gail McGovern and Youngme Moon said a company is hated when it sets adversarial rules to extract value from its customers, rather than to provide value to them.

Firms taking advantage of customers through such tactics, whether deliberate or unintentional, trigger a backlash: consumers retaliate — with lawsuits, mass defections, and company-specific “hate sites.”

I would add that in addition to providing a bad product or service, a company is hated by the consumers when consumers don’t have a better choice. If you look at the Worst Companies in America 2009 list at Consumerist, you will see many companies on the list are near monopolies in their market segment. By popular votes, the four Worst Companies in America 2009 were:

AIG
Comcast
Bank of America
Ticketmaster

AT&T, formerly Cingular, got on my hated companies list recently. It looks to me everyone and their brothers have their cool iPhone. Everybody knows that in order to use an iPhone, you must have AT&T wireless. That’s fine, I already use AT&T. I use their prepaid service.

Can I buy an iPhone on eBay and add a data plan to my prepaid service? No. You have to have a voice plan, which starts at $40/month, plus tax and fees. I pay $8 a month for my prepaid service right now. To get the iPhone experience, even if I pay the full $599 unsubsidized price for the phone, I still have to pay extra $32/month for voice service I don’t need. That’s extracting value.

Isn’t bundling iPhone and data service with voice service illegal tying, like the famous Microsoft Internet Explorer case? If it’s not, it should be. I see that question has been asked ever since iPhone first came out two years ago.

Does Apple’s Tightly Controlled Ecosystem Strategy Constitute an Illegal Tying Arrangement?

[Update] I also read this headline from Financial Times yesterday: Department of Justice launches review of handset arrangements.

Somebody gave me a used BlackBerry. Can I add a data plan to my AT&T prepaid service and use the BlackBerry? No. AT&T used to offer a prepaid data plan for $20/month, until they killed it in December 2008.

Can I get a data-only plan on the BlackBerry? Yes, AT&T has one for $35 a month, but I can’t get the BlackBerry to synchronize with my work e-mails, calendar, and address book. AT&T’s $35-a-month data plan is called BlackBerry Personal, which only gives you access to personal e-mails and web browsing. To use it with corporate e-mails and calendar, you have to buy AT&T’s BlackBerry Enterprise service, which is $50 a month. Come on, data is data. I also don’t want to carry two phones.

I signed up with T-Mobile. They offer a data plan for $40 a month, with voice minutes billed à la carte at $0.20 a minute. T-Mobile does not charge extra for connecting to a BlackBerry Enterprise Server (BES). That’s fair, except I don’t get signal from T-Mobile in my office. It works fine at home, just not in my office. I had to cancel after a few days.

I end up not using the BlackBerry I got. And I hate AT&T. Which companies do you hate and why?

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Software picked, likely related articles at The Finance Buff:

IRS Taxing Employer Provided BlackBerry or Cell Phone

TFB — Tue, 09 Jun 2009 14:15:00 +0000

Does your employer provide you a BlackBerry or cell phone or pay for your wireless service? Do you use that device for personal purpose too? The IRS is considering three ways to tax you for that.

Certain employee benefits, like health care, are not taxable. Personal use of an employer provided BlackBerry or cell phone is not one of them. The IRS published Notice 2009-46 on June 8. It’s on pages 13-15 in Internal Revenue Bulletin 2009-23. They are asking for public comments about the three methods it’s considering.

1. Minimal Personal Use Method. There are two proposals under this method. Under the first proposal, if the employee can show to the employer that he/she carries another personal cell phone and uses that phone for personal matters, then the employee won’t have to pay taxes on the company provided BlackBerry or cell phone. Under the second proposal, there would be a threshold of say X minutes. If the employee can show he/she used the BlackBerry or cell phone for personal purpose for no more than X minutes or he/she used it only for certain exempted types of calls (emergency for example), the employee won’t have to pay taxes for such personal use.

2. Safe Harbor Substantiation Method. Under this method, instead of getting proof from the employees or tracking how many minutes were used for personal purpose, the employer just uses an IRS-specified percentage for everybody, say 75% for business use and 25% for personal use. Employees will pay taxes on 25% of the fair market value of the service.

3. Statistical Sampling Method. Under this third method, the employer is supposed to take a sample and do some statistical analysis to figure out the percentage of personal use versus business use. Then the employer applies that percentage for everybody and adds the proportional value of the service to employees’ pay, on which the employees will pay taxes.

For more information, in case I misinterpreted something, please read Notice 2009-46 on Internal Revenue Bulletin 2009-23. If you have something to say to the IRS about these proposals, send your comments to them by mail or by e-mail. The addresses are on the last page in the notice. Be sure to include Notice 2009-46 in the subject of your comments.

What about company provided laptops or on-site fitness gym? I also wonder when the IRS will make employees account for soft drinks and snacks and team lunches.

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Software picked, likely related articles at The Finance Buff:

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Why Are Some Companies Hated By Consumers?

IRS Taxing Employer Provided BlackBerry or Cell Phone