Verizon (NYSE:VZ) has a less-than-stellar reputation with consumers.
The company, along with its rivals in phone, wireless, and Internet service, continually ranks at the bottom of the 43 categories tracked by the American Consumer Satisfaction Index. Verizon does rank, however, at or near the top as both an Internet service provider and as a pay TV company, but that's sort of like being the best-reviewed Adam Sandler comedy.
Being among the most-liked companies in a staggeringly disliked field is not an accomplishment. Verizon has long shown if not disdain then at least disregard for its customers and its latest move is more of the same. The company, which in a changing market where consumers are increasingly seeing new options for wireless and pay TV service, if not Internet access, remains oddly tone deaf.
That's the only way to explain the legal but customer-unfriendly tactic it's using to keep landline customers from decamping for cheaper Internet-based phone service.
What is Verizon doing?
If a customer has a Verizon landline and DSL Internet service, the company will not allow the user to cancel the landline while keeping DSL. Similarly, Verizon won't let new customers sign up just for DSL. In both cases, the company forces the customer into paying for an old-school landline as a condition of getting DSL Internet service.
"Verizon hasn't offered stand-alone High Speed Internet (DSL) service for more than three years," spokesman Harry Mitchell told USA Today in an email. "So, if a customer with HSI and voice service wants to disconnect his voice service, we will disconnect the voice service and the HSI service."
Mitchell told the newspaper that tying the two services together "enables us to continue to provide competitively priced services to our customers."
What do other companies do?
DSL was originally marketed as a service that piggybacks off traditional landlines. That has changed, however, as AT&T, Verizon's closest rival in providing offers stand-alone DSL Internet service without requiring a voice line. In addition, Frontier Communications, which has acquired phone and DSL customers from both Verizon and AT&T in recent years, also does not require users to keep a landline in order for them to have DSL service.
Why is Verizon doing this?
The company said above that it's about offering competitive prices, but it seems like a crass way to keep people tied to an outdated phone product. That's a good tactic in the markets where customers have no other choice for broadband access than Verizon DSL.
While we debate which woman belongs on the $20 bill, here are 4 villains who definitely don't. pic.twitter.com/HpNoKAK4K3— Verizon FiOS (@VerizonFiOS) July 7, 2015
Is this a good policy?
While it's easy to see the short-term gain for Verizon in forcing people to keep landlines, it seems like a bad customer service move that will eventually come back to bite the company. With an estimated 61% of U.S. homes served by only one (or no) ISPs, companies like Verizon can continue to get away with nonsense like this.
The problem for he company comes when new technology or expanding rivals brings user choice. When that happens -- as we have seen in the pay TV space -- people will not put up with being forced to pay for products they don't use.
Verizon is still thinking like a monopoly when its days in that role are ending. If the company wants to keep customers, it has to stop thinking about the near term and focus on what it can do to retain people when they actually have other choices.
Daniel Kline has no position in any stocks mentioned. He does not have a landline. The Motley Fool recommends Twitter and Verizon Communications. The Motley Fool owns shares of Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.