AT&T Taps Its Customers for an Extra $350M – 61 Cents at a Time
AT&T keeps finding ways to charge its customers more for the same service, by adding small fees and hoping they wont notice. This time it is only $0.61 more a month, but it's the principle that should worry consumers, according to CIO.com blogger Bill Snyder.
What’s an extra 61 cents a month? Not much, on its own. But if millions of people each gave you 61 cents, you’d be quite wealthy. That’s why AT&T last month added the little charge to your wireless bill. By the end of the year, AT&T could collect as much as $350 million from the fee increase, and more next year, according to The Wall Street Journal.
AT&T wants you to think the new fee isn’t a rate increase at all. It is a “Mobility Administrative Fee,” according to Ma Bell, that will be used to “help cover certain expenses, such as interconnection and cell site rents and maintenance.” Whatever that means.
The charge is listed at the bottom of AT&T customers’ wireless bills along with a bunch of charges and taxes mandated by the government. But the new fee isn’t mandated by any agency. It is simply a rate increase that AT&T quietly added to its monthly charges.
I don’t think 61 cents is, by itself, a big deal. But the fee is representative of AT&T’s questionable business practices. To begin with, wireless billing is anything but transparent, and it’s already hard to understand why your bill is as large as it is. If you add up all the taxes and charges on your bill, the total is much more than the advertised monthly price of the service.
Airlines were forced to include taxes and things like landing fees in the published price of tickets to give consumers an easier way to compare costs. That happened because the airline industry gets a fair amount of scrutiny from federal regulators and Congress. The wireless industry gets no real scrutiny from state regulators and very little from the Federal Communications Commission.
Wireless carriers in the United States generally lock customers in for two years, so unless you’re willing to pay a hefty early termination fee (ETF), cutting off your carrier before a contract is up is an expensive indulgence. Will you pay an ETF over 61 cents a month? No, probably not. And AT&T knows it.
“For some time some of our competitors have been assessing this type of charge… Until now, AT&T has not charged such a fee, but it will help defray a small portion of certain expenses and we are using a name for the fee that has become common in the industry.”
This is essentially the same as a child telling his or her parents that it is okay to break curfew because everyone else is doing it.
That said, AT&T is telling the truth; everyone is doing it. Wireless service in the United States is dominated by four carriers. In many areas of the country, people don’t even have that many choices, so consumers are sometimes forced to put up with underhanded tactics and subpar service from wireless carriers.
A few writers have noted that this new fee may give consumers the right to break contracts because it represents an increase in the monthly service charge, and AT&T contracts specify that they can be terminated, without penalty, for such an increase . AT&T says that the mobility fee is not an increase in the monthly service charge, though. If you disagree, AT&T may see you in court.
San Francisco journalist Bill Snyder writes frequently about business and technology. His work appears regularly in CIO.com and the publications of Stanford's Graduate School of Business and the Haas School of Business at the University of California at Berkeley. He welcomes your comments and suggestions.