Andrew O'Hara
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.
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.
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Charles Martin
Malcolm Owen
William Gallagher
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31 Comments
Another change effective this month... they now charge a late fee the day after your payment is due. They used to wait until the next billing statement, which was in effect a 10 day grace period. No more.
this is how they increase their stock value. they can’t innovate, so they bleed their customers to death. maybe it’s time to switch.
If this isn’t enough to convince you, maybe the fact that at&t is in bed with the NSA will convince you. It is a well known fact that they (the NSA) occupy an entire floor in the at&t building in San Francisco.
This is just the start, AT&T customers. This change might be fairly painless to most customers, sure, but it doesn't even cover the first billion of that $85B they spent. Their total debt is IIRC around $180B. Pay up suckers!
Agree with anti-SBC sentiment above. They are an abysmal corporation with the absolute worst customer service. I finally ditched AT&T last year after almost a decade of using their service. Took advantage of Virgin Mobile’s deal - $1 for an entire year of service. I’m billed 8¢ every month.
Sure I don’t have the same “national” coverage, but I don’t travel, so it’s a moot point.