One important part of service governance, and most modern thinking about governance under 'comply or explain' is that a company should work to be a good 'corporate citizen'.
Is sharp practice against good corporate citizenship?
Clearly much 'sharp practice' is not illegal, but legality is not the only test of being a good corporate citizen.
Think of this example. You've probably encountered it. A supplier of a fairly intangible thing such as air time or data download sells it in bundles.
So far so good. There's nothing wrong with bundling things up and selling them in bundles for convenience. It'd be really painful if spaghetti wasn't sold in bundles.
But you pay for spaghetti in arrears - you get the bundle of spaghetti, then you pay for it.
With one of these intangibles you have to pay in advance.
Also, spaghetti takes a long time, several years, to go off, so, if you buy too much, it just takes longer to use it.
Bundles of things like air time, though, never have to 'go off'. In fact, they can't 'go off'. If you bought a minute of air time in 1995 it would have been a lot more expensive than now, but, there's no reason why the company you bought it from, if it still existed, shouldn't honour your purchase and give you the minute today.
But these bundles are given an artificial 'expiry date' after which they won't be honoured - often as short a time as a month.
If you run out of a bundle, then you can buy another one.
This is where the problem starts. Not all bundles are equal. Sometimes there's a minimum bundle size and small bundles cost more than big ones. Sometimes there's a much more expensive flat rate that you have to pay if your bundle runs out.
What is going on here is the basis of the sharp practice. Companies who sell like this are not wanting to sell the commodity fairly. They actually want to cheat their customers out of either money or the commodity (which is money). It works like this:
1. If you're a small user, you buy the smallest bundle - but you don't use all of it. So it 'expires'. That is the company steals the remainder from you. That's theft in the common law sense - because you signed a contract agreeing that they could 'expire' it on you, it isn't counted as theft because you signed up to be robbed.
2. If you are a large user, you buy a big bundle to get the discount, but, if you go over that usage, because you have to buy in advance, you have to pay the flat rate - which is often many times higher than the lower rate.
The selling company is actually gambling with you. It is hoping that either you won't consume all of what you've bought, so they can steal it, or that you will consume more than you estimate, so they can charge you a punitive rate.
The companies would say that this is not dishonest, as the lawyer would say, because the contract allows for exactly this form of cheating.
It is, though, sharp practice. Instead of selling the commodity to make money, the company is making money on our inability to predict our consumption accurately.
Is it fair to penalise people for having uneven patterns of consumption?
Should a company that's a good corporate citizen be ripping off its customers because they have difficulty predicting their usage?
The argument that companies bring to continue the practice is that 'everybody else does it'. Is that a good argument against acting responsibly towards your customers?
Let's say that one company broke ranks and said, you can by the commodity from us for one single price, let's say X per unit. It doesn't matter if you consume 10 units or 1000 units, it's the same price.
That price would be easy for it to work out. It would simply take the total income today and divide it by the total units.
Would that company do better or worse?
It would attract more small users - they'd have less to pay.
Would it attract more big users? I think it would. As a big user, you'd prefer to pay a known rate, perhaps a bit bigger than the apparently tempting bundle price, but less than the far too expensive flat rate.
If you, as a customer, had a choice between an honest flat-rate company, and one that used sharp practice against its customers, wouldn't you choose the good corporate citizen yourself?
Is there any big company out there prepared to try this and make the results known?
If so, please try it. Maybe it could usher in a new era of good corporate citizenship.
If not - wouldn't that let us know just how much is made from the penalising of customers for not predicting the future? Might that not then be a good reason to press for legislation to make this rip-off illegal?
