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AT&T more than doubles 'administration fee' on post-paid phones, tablets and smartwatches

AT&T could add some $970 million to its annual revenue by increasing from 76 cents to nearly $2 an "administrative fee" that shows up as a line item buried deep in customers' monthly bills.

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The charge started at 61 cents per line back in 2013 and has stayed largely the same over the past several years, only increasing by 15 cents until a steep hike in April. That is when some eagle-eyed customers noticed the admin fee jumped to $1.26 before once again increasing to $1.99 in June.

As noted by BTIG Research analyst Walter Piecyk on Wednesday, the increase affects roughly 85 percent of AT&T's 64.5 million post-paid phone lines.

This fee not only impacts monthly cell phone subscribers, but those using cellular service on watches and tablets as well. That includes users of the new Apple Watch Series 3 with LTE support that debuted last fall. Pre-paid phones will not incur these new charges, AT&T said.

When AT&T introduced the controversial fee, it said the funds help "defray certain expenses AT&T incurs, including but not limited to: (a) charges AT&T or its agents pay to interconnect with other carriers to deliver calls from AT&T customers to their customers; and (b) charges associated with cell site rents and maintenance."

In a statement to Fortune AT&T doubled down on this rationale saying, "This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers."

What is perhaps more likely is that AT&T is looking for new ways to increase revenue after spending $85 billion to acquire Time Warner, then turning around to spend more to acquire digital advertising company AppNexus.

"It's hard to believe that interconnection costs have increased in the past 6 months enough to justify this fee increase," Piecyk said in a blog post. "In fact, wireless operators have been crediting LOWER interconnection costs when explaining why their cost of service was in decline."

While AT&T peddles the ideology that such fees are standard in the industry, T-Mobile CEO denies the sentiment. "Another example of @ATT putting their wallets ahead of their customers," John Legere said on Twitter. "Declining YoY service rev for 16Qs in a row will make you do some really terrible things to your customers."

T-Mobile dropped similar fees and taxes as additional line items on bills last year.