Why Are Some Companies Hated By Consumers?

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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Comments

  1. says

    Hi

    My most hated company is also a communications group (a UK-based one). They used to be called NTL but are now Virgin Media.

    I hate them because they are the most incompetent company I have ever dealt with. They are unable to fix any fault and will sometimes leave you on hold for 40 minutes before you get to speak to anyone.

    Unsurprisingly I no longer use their service!!

  2. KD says

    I hope you do understand that your cell phone usage is not mainstream but on the fringe. Most (young) people dump or never a get a landline now and use their cell phone as the primary phone. Considering the number of minutes you get, especially unllimited mobile to mobile minutes and the subsidy you get on the phone, $40/month is reasonable. In addition, a large subset of people get discounts on their cell phone bill thanks to corporate tie ups, usually 10 to 20%.

  3. says

    Why is some price discrimination detested and some we don’t mind as much. You hate the price discrimination of BlackBerry and other communications firms. Do you hate the fact that you paid more (or less) for your plane flight than your row-mates just because you bought on a different day?

    I’m not challenging your right to feel this way (how could I?) or suggesting it is wrong to feel this way (feelings can’t be “wrong”). I’m raising a question as to why we have different feelings about different kinds of price discrimination. Maybe we don’t all have different feelings. If I’m honest with myself I find that I do. Do I have a biased sense of justice?

  4. Helixso says

    It’s possible to use Blackberry with work e-mail in some cases without purchasing the BlackBerry Enterprise Service. If you work offers standard Outlook web access (mail.XXXXX.com/exchange), you can get e-mail on your Blackberry. However, for your calendar and address book, you’d need to physically sync it with Outlook while at work.

  5. AM says

    I’m sorry TFB, but saying that iPhone and AT&T tie-in should be illegal is taking it too far, and uncool. You have plenty of choice in phones, and you have some choice in wireless carriers (AT&T, T-mobile, Sprint, Verizon, plus some regional ones occasionally). Do you have a god-given right to an iPhone at a certain price? Does your life depend on it? There are many things I would like to have but choose not to because of not only the initial price but also all manner of associated costs.

    Of course, you are free to hate AT&T and not do business with them, there is nothing wrong with that.

    BTW, do you hate Apple too? They are just as guilty of the tie-in as AT&T, no?

  6. Don says

    Microsoft is on my list. Their software is good (now) but it wasn’t for years. They used mean and illegal tactics to make themselves the dominant player in operating systems. They have the dominant system and they intentionally make it difficult for other software to interact with theirs. Perhaps it is good business, but definitely this is in the interest of Microsoft and not in the interest of their customers.

  7. Robert says

    Intuit. Quicken/Quickbooks do annual “new” versions with only minimal true updates – it’s a ripoff – most of the new things are just marketting crapware – leaving the bugs to fester.

  8. says

    @AM – I agree with you I have plenty of choices in both the phone and in wireless service. I hate AT&T because of the adversarial rules they created, the exact kind of rules identified in the HBR article. I don’t mind paying for what I use. If it’s $599 for the phone, $30/month for data plan, any available choice for voice minutes, AND I can freely pick and choose among the three components (phone + voice + data, phone + data + a la carte voice, phone + voice + no data), then it’s fair pricing.

    I don’t hate Apple because they only chose their distribution channel. They didn’t mandate voice + data bundle.

    I don’t know if you got the update I posted later in the morning. Financial Times reported that both the DOJ and the FTC are investigating the exclusive arrangements between Apple and AT&T: Department of Justice launches review of handset arrangements. Apparently there’s something to it, not just my layman’s hunch.

  9. AM says

    @TFB – I’m sure there is something to the investigation. One reason just might be that govt lawyers ran out of real crimes to prosecute but still need to justify their salaries. Just my oversimplified layman’s hunch :)

  10. fern says

    1. Banks (can you say, “economic crisis?”)
    2. Insurance companies of all stripes (Like a bad neighbor, not there when you need them)
    3. Credit Card companies (Can you say, “Rip me off again, please?”)

  11. Ted says

    How about utility companies? They can charge whatever they want, add any new fees they want. You have no choice.

    How about hospitals and doctors? The system is so obfuscated that you cannot get a reliable price for services. In some instances, you can’t even shop providers. My son had a surgery. We picked the surgeon but had no say in the anestheseologist. The anestheseologist bill was more than the surgeons by 2 times. Same goes for imaging or lab test while your in the hospital. They can charge you anything they want (and pretty much do) because you have no choice.

  12. Donaldo says

    1) Comcast. Worst at virtually everything, from install billing, to ripoff policies, to even normal billing. U-Verse is coming to my area soon and Comcast will be just a bitter memory. (AT&T isn’t great but Comcast has set the bar for miserable customer service.)

    2) All banks except Wachovia. I especially hate BofA.

    3) Our ‘justice’ system. The lawyers care far more about the billing than helping their clients, the court system to hear your lawsuit is so incredibly inefficient that you can spend $750/hr for your two hack attorneys, wait aroun for your appointed turn sometime in the afternoon (but make sure you get there by 9 AM or you have no shot!), and then the other lying shysters who said their cases would take “15 minutes tops, your honor” wind up taking too much time and you get moved to sometime the following MONTH. Your attorneys get paid, the judge gets paid, and you get the shaft. Don’t honor or respect attorneys – despise them.

    4) The Finance industry. Anyone who pays Merrill, MS, Jones, AMEX, etc. to ‘watch out for your interests’ is an idiot, as has been transparently proven during this fiasco. I hate Barney Frank with a passion but I’d vote for ‘say on pay’ in a heartbeat to keep these crooks from the gluttony they’ve shown they’re incapable of avoiding on their own.

  13. jack says

    AT&T. I called them early this year asking for the possibility of getting new cell phones to replace the two broken cell phones of the three bought from them via a 2 year contract. My request was clearly based on terms like free and with my contract unchanged because I believe a products like cell phones were supposed to endure a two year usage. Actually they stopped working a little bit over one year.
    I was told by the representative I was eligible for only one on terms of no new contract and free, even free shipment. I was eligible to apply for the 2nd one three month later on same terms. And yet I could not be more wrong. By activating the new cell phone, I was automatically signed into a 2 year contract. I realized I was talking to a trained professional cheater. I called back and asked them to check the record of my talk but no body would listen. I chose dump ATT Wireless even on penalty
    I would not complain ATT’s unreasonable charge for services I never ordered or used, I would not complain their charges for over-minutes over my basic level minute limit. I think a more reasonable way to show ATT is an honest enterprise treating its customers was to send an alert. As a phone company that couldn’t be easier if they want. Surely no body want pay hundreds of dollars for over-limit fee instead of upgrading to high level.
    Based on their unfaithful deeds, I bear strong suspicion that ATT deliberately triggered the defection of the cell phones they sold, simply to keep their customers.

  14. smileon says

    As you all have said these telecom companies(ATT and VZW) are making their rule on people grave. they have made it mandatory data plan for all smart phones. They say that it is done to recover the price of handset but even if you buy it off market and activate the phone they will include data plan in there. So if our FCC cannot see this and control this than what are they going to control. Also every where monopoly is taking place so how can there be a competition. most of the smartphone users are just paying extra money because they are totally helpless in front of these Telecom companies. Thats why the they are called American Greed , “always live on peoples hard earn money”.

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