Saturday, September 08, 2001

NEWS FLASH: Verizon says, "You're Too Stupid to Understand Basic Economics!"

Verizon Communications is the latest company to announce that they will raising their payphone rates to 50 cents per call. The culprit being blamed for the "necessity" of this hike is everybody's favorite new villain; the cell phone.

Too many people are using cell phones, which has cut into the payphone business by as much as 25 percent. The phone companies are all claiming it's a matter of simple economics, pointing out that when demand goes down, they've got to raise their prices to make up for the loss.

Except, if you've ever taken even the most basic course in economics, you know that that is not how the laws of supply and demand work. Prices go up when there is a shortage of an item that is in high demand - it is a "seller's market" and they set the price. When you have a product in abundant supply, but low in demand, that is a "buyer's market" - prices should be dropping to encourage us to use payphones. At the very least, prices should remain stable.

Gene Kimmelman of Consumers Union in Washington DC may have caught on to the reasoning behind their lies: "They're just trying to migrate people from using pay phones, which are often very inconvenient and with unlimited calling once you've made the initial 25- or 35-cent payment for a local call and move them over to wireless where you pay by the minute."

So, the problem isn't that too many people are using cell phones, as Verizon claims; the problem is they want Everybody using cell phones where their profit margin is even higher. See, I told you economics was simple.

Blame Pay Phone Hike On Cellular

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