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.
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.
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.
Comments
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.
Sure I don’t have the same “national” coverage, but I don’t travel, so it’s a moot point.
Here in the UK none of her phone networks have silly charges like this. Our plans are also a lot cheaper plus give a lot more data, minutes & texts each month.
I wish these carrieres had better pricing at the lower end of the data usage spectrum. Plans here in Europe are not much cheaper for unlimited, but they are for limited. I pay 25 Euro ($30) for 2.5GB a month for two lines with the market leading coverage (comperable to Verizon) all taxes and fees included. On AT&T the closest comperable is $20 per device (so $40 for two lines) and $50 for 5 GB to share. That is $90 plus taxes and fees for two lines. If I up my data another 2.5 GB to compare, it would cost another 20 Euro ($25). So the same 5 GB service that AT&T charges $90+, I can get for ~$55 all fees included. This can be even cheaper if I choose other carriers with less robust coverage.
My gf has 50GB for the same price because she got a switch-now offer from the competition.
US prices are a rip-off that is, maybe, the best demonstration that US-style liberal capitalism does NOT work for the simple reason that big money can easily influence lawmaking. Monsanto-Nestle and AT&T are remarkable showcases for this, but John Oliver's shows have ridiculous amounts of other examples...
does Verizon still charge the $20 "line access fee" for each phone?
One note about AT&T and it's history, remember this is the behemoth that was broken up into the baby bells (landmark case) - btw, that was the second time I believe an antitrust accusation and case was levelled against the company. AT&T is an ugly evil corporation that does nothing except suck the blood out of its customers, legally and illegally, it matters not.
The bad news is that it's only going to get worse.
It might surprise you to know that Americans are not required to be customers of AT&T. I'm guessing the company does provide services other than sucking customer blood. I'm not sure customer blood sucking is a sustainable business model. I was an AT&T customer for many years (started with Cingular before they were bought by AT&T). The fees were generally reasonable and the service was good enough. I switched to T-Mobile a few years ago. Very pleased with that decision. Purely voluntary on my part. Paying $114 or 87 pounds at the current rate for 4 lines of service.
I found that unlimited plans in the UK cost about the same as in the US. We do have some very cheap pay-as-you-go options as in the UK, but many people choose not to avail themselves of that option. If you don't have any money at all, you can even get free cellular service in the US.
Verizon
CenturyLink (formerly Qwest)
all Baby Bells, and the ones of the 8 that survived. They all bought up the lesser babies too...
The breakup of Bell happened 36 years ago.
You can defend AT&T (and other telcos) all you want (and other silly American ways of life - btw, I lived there more than 30 years, was even born there, so I don't need a lesson in all things American), but you're just coming across very defensive and partisan and very apologetic (as in apologism not remorse), if you want to argue that telcos in the US are reasonable in their charges, well, I think you argue an odd position.
My point is that AT&T is not your friend, it's so utterly anti-consumer I'm amazed it still exists. One very good reason (aside from the other one I mentioned earlier): just a few years ago it illegally spied on its (and others') customers, then bribed congress to write a law that would absolve it of past crimes, which it did. Defend that.
(BTW, PAYG and contracts probably aren't fair to compare.)