I'll admit it: I hate fees. I hate getting nickel-and-dimed for every last little thing. I hate 'em because they're sneaky, and I hate 'em because they're almost always deeply regressive.
So when I read about the outcry about Verizon Wireless's proposed $2 fee (30 December New York Times story by Ron Lieber and Brian X. Chen, here) , I was quite pleased -- even though the vitriol seemed a little excessive.
After all, as the article pointed out, the fee would only apply "to people who make a one-time credit or debit card payment of their monthly bill on the phone or online. Subscribers who write checks or have the company charge their credit or debit cards or deduct from their bank accounts each month will not have to pay the new fee."
Part of the outrage came from Verizon's stunningly-stupid naming of the charge as a... (drum roll, please) ... "convenience fee"! Part of the outrage came from the general lack of real news in the Christmas-to-New Year's week. Part of the outrage came from the sense of victory from getting Bank of America to roll back its $5 monthly fee to customers who used debit cards. But a huge part of the outrage undoubtedly comes from the you're-holding-me-hostage-with-a-two-year-contract feeling that cellphone customers feel.
This is especially true if you think about who is most likely to make a "one-time credit or debit card payment of their monthly bill on the phone or online."
Is it going to be someone who's got $50,000 in the checking account? Or is it more likely to be someone living paycheck to paycheck, and worried that if she writes the check today, that most recent paycheck won't have cleared and the Verizon check will bounce?
“They are punishing people who need to wait until the last second,” said David O’Neill, who recently lost his job at a Borders bookstore that closed. He is a former Verizon Wireless customer but took to Twitter anyway on Thursday to argue that the company’s move helps the 1 percent get richer, since it rewards Verizon shareholders.Lieber and Chen quoted a market analyst who said that "it made sense that Verizon was charging for over-the-phone payments, because carriers typically must pay a third-party service to handle those transactions. But Internet payments do not require a third party, he said." But, hello, what is Verizon Wireless anyway? A phone and Internet provider, right? So if anyone can handle over-the-phone or over-the-Internet transactions, it ought to be Verizon.
I keep coming back to the feeling of being a hostage to a Verizon contract as the real motivator for the vitriol. Yes, I know: if you really hate the hostage feeling that much, you can always pay real money for your cellphone, instead of getting it "free" or at substantially reduced price in exchange for the contract. (Full disclosure: I'm one of those tied-by-the-contract Verizon Wireless customers.)
Remember what I said about hating fees for their essentially regressive character? This is another example of that. People who can afford to pay the full cost of a smartphone can avoid the fee; at the lower end of the economic scale, you probably don't have a choice. Perhaps you're a recent college graduate, trying to pay off student loans, minimally furnish your first real apartment, and eat regularly, all while proving to your boss that you're really committed to this job that -- itself amazing enough -- you managed to land in a horrible job market, and so you need to be reachable at all times. You need that new phone. And you definitely can't afford to pay $300 up front for it.
All that said, Verizon did a terrible job of introducing the fee. It didn't make it immediately clear who would, and who wouldn't, be affected. It didn't explain why a fee was necessary in the first place. Even members of Verizon's own "consumer advisory panel" weren't informed of the fee ahead of time.
I'm delighted that it took Verizon only a day to recant their fee. But the Internet and Twitter outrage may have only been part of the reason for that decision. Today's New York Times reports, in an article by Ron Lieber, that "the Federal Communications Commission put out word earlier Friday that it thought the company’s actions merited closer scrutiny."
I hate fees; I love sharp-eyed regulators.