Published on Sunday, June 17, 2001 in the Boston Globe
Consumer's Friend: Regulation
by Robert Kuttner
IT'S ALMOST SUMMER and time for an annual update on my three least favorite industries. That would be airlines, telephones, and Microsoft, an industry unto itself.
Microsoft controls upwards of 95 percent of the market for operating systems via its wretched product Windows. Clinton's Justice Department sued Microsoft, but the Bush administration doesn't believe much in antitrust, and the case, now on appeal, is likely to wither.
My office just got me a new computer. It came with a new version of the widely loathed Microsoft Word, which our magazine nonetheless uses for word processing because Word just happens to be compatible with other Microsoft applications. Funny coincidence, that.
This latest Word makes it harder to perform ordinary tasks. The geeks who design this stuff must sit around thinking up gimmicks that most users don't want or need, thereby charging computer makers (and consumers) more for the new factory installed software. Nice little racket, that.
The program thinks it can read my mind (you can just hear the geeks telling each other, ''Neat!''), and it's a hassle to turn these unwanted features off. Learning how to use this latest program is just not a good use of my time. Next year they'll invent another generation with even more unwanted features. I dumped this latest version and went back to the previous one.
For my own writing I use a vintage 1986 program called Xywrite. It has far fewer complex features and is much easier to use. Imagine if makers of other consumer products, such as autos, behaved like Microsoft. Every time you bought a new car you'd have to learn how to drive all over again. And the new, unwanted features would consume so much power that youd have to keep buying new cars long before they wore out. Clever concept, that.
At least you can shop around for cars, which keeps competitors crudely honest. That's the problem with the Microsoft monopoly and the rationale for antitrust regulation.
Or consider the airlines. The latest proposed merger, between United and USAirways, would eliminate direct competition on many routes. Though the airlines have advertised the convenience of more flights that don't require a change of airlines, the real point of the merger is market power. If an airline has the only point-to-point flights on a route, it can gouge consumers to its heart's content.
This brings me to another airline outrage, the
e-ticket (e for evil). The airlines promote this as a convenience - no paper ticket to worry about, just trust the computer.
But the real value of e-tickets is to the airlines. On a few routes there is still some head-to-head competition. However, an e-ticket makes it just a little harder to change to a competing carrier if your flight is delayed or your schedule changes. The e-ticket exists only in the ether of the airline that issued it and can't be readily transferred to a competitor. Some airlines will print you out a transferable paper ticket and charge you for the privilege.
Then there's the latest telephone company evil rate-and-switch. A few years ago, long-distance companies sometimes changed consumer's carriers without their permission. This abuse was nicknamed ''slamming,'' and the FCC actually issued antislamming regulations.
Now the long-distance companies have invented a kind of internal slamming. You sign up for a rate plan - say, a flat 5 cents a minute - but mysteriously you find after a few months that you're being charged over a dollar a minute. ''How did that happen?'' you ask. ''Beats me,'' says the customer service rep. If you make enough of a fuss, they'll retroactively rerate your bill, but maybe you won't bother.
Price competition has cut into profit margins, and rate-and-switch smells suspiciously like a deliberate business strategy. The FCC has the power to require phone companies to honor a published rate for a given period of time. But the FCC is moving in the opposite direction, trusting competition (and consumers who presumably have infinite spare time to haggle) to keep phone companies honest.
Space precludes me from mentioning two runners-up for industry of the year - the oil companies and the deregulated electric power industry.
Political conservatives contend that government regulations originate in pointy-headed bureaucrats. But every single consumer regulation on the books stemmed from some corporate abuse and reflects a political struggle.
Yes, competition can help keep business honest, but not in every industry. That's why regulation is still the consumer's best friend, and don't let organized business or its economist allies tell you otherwise.
Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.
© Copyright 2001 Globe Newspaper Company