While telecom service is rated poor by almost every independent source, the notion that “Telecom Customer Service Can Afford To Be Terrible Because Switching Costs Are High” is wrong. Telecoms most emphatically cannot “afford” to provide poor service without creating an opening for competitors to displace them.

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My favorite example of how innovation can displace market incumbents began seven (7) years ago in San Francisco at Uber. Before then taxi service was similarly terrible. Switching meant choosing between one company with bad service and another. (Sound familiar?) By resting on their relative market strength, and ignoring service, convenience, transparency, and flexibility, taxi companies practically begged to be displaced and Uber obliged.

By my calculation, telecoms are begging for the same thing. At this moment, upstart companies are trying to solve the problem of reducing switching costs. At some point their solution will become convenient and cost-effective so that current telecom “advantages” become disadvantages. When that happens, expect telecom lobbyists to hit pay dirt as they try to erect artificial barriers to entry!

I’m not suggesting that improving service alone will protect incumbents from competitive forces and potential obsolescence. Nor am I suggesting that companies should ignore their strengths. After all, holding onto market advantages makes sense.  But defending the advantages while ignoring customer needs tends to make companies blind to how the market is evolving.

The pivot point is that by paying attention and responding to market shifts even behemoths can adapt to new business climates. “Affording to be terrible” is a sign that your company has already started on the slippery slope to extinction.

Is Bad Service Affordable?
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