How do you upgrade a product or an industry without alienating your customers?
Consider the pay phone. Pay phones used to work very well, and you could find one nearly anywhere you needed, save perhaps a forest. A call cost just a quarter, meaning you could scrounge up enough money from around the edges of your seat or borrow enough to make your call.
Then, along came cell phones with annual contracts, and the cost of making a call from the road went exponentially up. With most cell phone contracts, the cost of making a call from the road now costs at least $40. With a perfectly working fleet of pay phones owned by local telecoms, how did U.S. phone companies manage to make pay phones obsolete? Simple. They increased the price of a pay phone call, and they stopped maintaining the phones.
If you make a pay phone call now, you are holding up to your bodily orifice, or ear for short, a greasy, grimy, rarely working instrument while standing in a graffiti-ridden box with a broken door and cracked glass walls. It’s hardly a picture of safety. Stepping into a pay phone in the United States is like magically transporting yourself into the bad part of town. You always wonder what you might catch from a pay phone, and you almost can’t help but think of getting mugged.
Once they had curtailed the pay phone profits, the telecoms sold off the equipment to private companies who all charge different usage rates. You never know what a pay phone call will cost now.
In short, the big telecoms invested in cell phone technology, then they made it a total pain in the ass to use pay phones. Which would you rather use? A cell phone in the convenience of your car, with semi-reliable service, or a filthy, hard-to-find pay phone with an unknown cost? In foreign countries, it is commonplace to see businesspeople talking
on pay phones. When was the last time you saw someone in a suit talking
on a pay phone in the U.S.?
Pay phones in foreign airports and streets are clean and lovingly cared for, demonstrating that foreign telecoms care more for their customers, no matter if they are core or non-core. When will U.S. companies catch on? Customer service is one of the cornerstones of profitability. When a new service offering comes along, it allows for differentiation, which allows companies to reach and satisfy a broader base of customers. Alienating customers by bullying them into new services is not the way to foster good customer relations.
This is not an argument against cell phones. Cell phones certainly have their place and their market, as do pay phones. This is just one example of how industries frequently turn a positive into a negative. Software companies do the same thing, and you see this behavior in a myriad of other industries, particularly in the U.S.
U.S. telecoms could have kept a non-core customer sector happy had they simply updated their pay phones and outsourced maintenance. They could have increased profitability by reducing costs. This begs the question: was the planned demise of U.S. pay phones an upgrade or a downgrade?