The gratuitous imposition of “administration fees” that have no resemblance to reality is one of the many things that make Americans hate their internet companies, but according to one new report, AT&T is taking the art of the hidden fee to a whole new level.
Read more BGR: The biggest reason you should install iOS 12 public beta on your iPhone
Analysis from BTIG suggests that AT&T’s wireless revenues could increase by $800 million as a result of new administrative fees this year. The boost to AT&T’s bottom line is thanks to a $1.99 “administrative fee” that the company is applying to lines, according to users complaining on AT&T’s own forums.
Read more BGR: Verizon’s new MVNO keeps insisting it’s not an MVNO
The fee used to be $0.78 per line, but has increased to $1.99 per line over the first half of 2018. According to an AT&T customer support representative, “the administrative fee is used to defray costs AT&T incurs to use other carriers equipment to deliver calls, and also helps offset cell site rental, and maintenance fees” — exactly the kind of thing that you’re paying AT&T for with your monthly plan, you’d think. But, since extra fees aren’t included in the plan costs that carriers advertise (or that are used to compare one carrier to another), they often go unnoticed.
Read more BGR: Tesla just made the Model 3 cheaper, despite burning record amounts of cash
An AT&T spokesperson said it was a “standard administrative fee across the wireless industry.”
But, as BTIG points out, they can work out to be big bucks over the course of a contract. $1.99 per month works out to nearly $50 per line over the course of a 24-month device installment plan, and across all of AT&T’s lines, BTIG estimates the fee can bring in nearly a billion dollars of revenue. That revenue can be leveraged to finance around $10 billion in additional debt, which is useful since AT&T is already heavily leveraged thanks to its acquisiton of Time Warner, and still looking to expand even further.
For customers, a $1.99 administrative fee on a $75 line doesn’t seem like the biggest deal, but extrapolated out to a two-year deal, it’s a worthwhile amount of money. From AT&T’s perspective, it’s a cheap and instantaneous way to generate new revenue to help keep the company afloat as it tries to become the biggest player in a rapidly-concentrating market.
Shares