Fear of Free

Originally posted on eurorscgpr.com.

New York Times tech columnist David Pogue just wrote a compelling column about a “convenient, mysterious service from cable companies”: free Wi-Fi hot spots for subscribers.

Companies including Cablevision, Comcast and Time Warner have been creating free hot spots for their customers—and each other’s customers—in New York, New Jersey and Connecticut. Cablevision customers, including Pogue, can now use free Wi-Fi from Cablevision, Comcast or Time Warner. And it’s seamless: They can introduce their laptop or smart phone to the network once, then get online anywhere without logging in.

It struck Pogue as too good to be true. “Now, I think this development is fantastic. It hits me where I live. It’s free. It’s fast and reliable. I love it,” he wrote. “But I’ll be frank: I can’t understand why they’re doing this.”

Pogue is a journalist, so he’s trained to ask questions and paid to be skeptical. But he’s not the only one wondering—and worrying—about why cable providers would be giving away something they could be profiting from.

Consumers are savvy and sometimes even cynical. They know how the world of marketers works—they’ve come to expect a catch. Even when they love something, they look for the wrinkle. You can listen to Pandora, but you’ll have to hear commercials; you can read news online, but you’ll have to put up with ads that take over the screen; you can watch TV on Hulu, but you’ll have to watch promotional videos first.

As the old canard goes, there’s never been any such thing as a free lunch. Now that the digital revolution has forced everyone to be more transparent, the trade-offs are clearer. And, in many cases, they’re worth it. People will gladly trade their e-mail addresses for discounts or the chance to win a prize. They’ll live with Facebook’s limited privacy because the site gives them a no-cost way to socialize and more.

But in those cases, people understand what they’re sacrificing and what they’re gaining. With free hot spots, people see what they’re getting but not what they’re giving up. That makes them nervous. Says Pogue, “I don’t buy the whole ‘we just want to offer the best service we can’ explanation.” He suspects an ulterior motive—and not knowing what it is is the problem.

Meanwhile, his followers have posted comments offering all sorts of motives, few of them flattering: The cable companies are scared of Verizon; they’re “paranoid” about G4 service; they want to get people hooked on their free service, then start charging for it.

There’s a lesson here for marketers: If something seems too good to be true, consumers will probably think it is.