Overcoming Inertia

Xfinity's WiFi is 5-10x the speed of AT&T's U-verse.

Inertia is a fundament of physics. It's also a powerful behavioral phenomenon. Businesses rely on customers' inertia when prices are raised, and politicians impose tax surcharges and toll increases just below the threshold where the governed take action.

As I noted in April, over the past 15 years AT&T through acquisitions became the sole provider of all four of our communications systems (landline, cellphone, television, and WiFi). The total cost doubled to $500 per month without improvement in service. It was time to do something about inertia (the ancients called it sloth).

Earlier this week we replaced AT&T's television and broadband service with Xfinity's offering. The basic TV channels are about the same, while the WiFi is 5-10 times quicker; the speed improvement is especially noticeable when streaming movies or updating apps on iPhones and iPads. The monthly combined charge is $129, $47 less than AT&T.

The big savings will occur this fall when we move our cellphone account. I had thought that by switching carriers for four lines, we would save perhaps $60 per month. But the cost reduction could be much higher. [bold added]

telecommunications companies are losing their power to raise prices for using their networks, in part because the U.S. cellphone market is nearing saturation. That has kicked off a vicious price war among the four national wireless carriers.

Offers from wireless providers are becoming increasingly extreme. Sprint this month launched a short-term promotion to give away a free year of wireless service to new customers who supply their own mobile phones. The move comes months before Apple Inc. is expected to introduce its newest iPhone, which is when carriers typically roll out discounts.

The competition grew so intense during the first three months of this year that Verizon, the largest national carrier, suffered its first-ever quarterly subscriber loss. AT&T Inc. and Sprint also lost customers, and the industry’s total revenue growth slowed to 1% from a year ago, its lowest-ever rate.

I don't love any of these cellphone companies, especially AT&T; however, I do love capitalism.