May 24, 2013
AT&T Adding New ‘Below-The-Line’ Fee To Wireless Bills
Brett Smith for redOrbit.com — Your Universe Online
Bad news for AT&T wireless customers who feel like they are being nickel-and-dimed to death: check your bill - there´s another new fee to pay.AT&T´s new Mobility Administrative Fee of 61 cents began appearing on contracted customers´ bills starting May 1 and, while that may only add up to $7.32 per line over the entire year, it will translate into hundreds of millions of dollars in new revenue for the carrier due to the size of its subscription base.
Referred to as "below-the-line" fees, wireless carriers typically list these types of charges at the bottom of a phone bill, after listing the fees for actual service. While these fees can help to boost a company´s bottom line, consumer advocacy groups say they allow carriers to advertise prices that are lower than what they actually charge.
"Below-the-line fees are nothing more than a way for carriers to stealthily increase their prices," Derek Turner, research director for public-interest group Free Press, told Fox Business. "AT&T's administrative fees are no different than the hundreds of other components that go into the cost of doing business.”
According to a statement from AT&T, the new fee will "help cover certain expenses, such as interconnection and cell site rents and maintenance."
The new fee is in addition to a "regulatory cost recovery charge" that charges about 50 cents per line on average. That fee is said to cover the cost of conforming to government regulations, which the company added to its bill "approximately 10 years ago.”
AT&T is not alone in its charging of below-the-line fees. Verizon Wireless charges 90 cents per line as an administrative fee, which it lowered from 99 cents earlier this year, and 16 cents as a regulatory fee. In late 2011, Verizon quashed plans to charge a new $2 monthly fee for those who pay their bill online after hearing catcalls of disapproval.
Other carriers have tried their hand at tacking on regulatory or administrative fees. About five years ago, Sprint-Nextel instituted a monthly administrative fee of $1.50 and a regulatory recovery fee of 40 cents per line. T-Mobile added its monthly regulatory programs fee in 2004, increasing it by 20 cents to $1.61 per line in 2011.
For AT&T, the new fee is expected to bring in an additional $350 million in new revenue from its 71 million subscribers for this year, according to CitiGroup. The new revenue would bring in about $518 million in 2014 if subscription levels remain constant. The new fee is consistent with recent signals from the company about its intent to continuing improving wireless profitability.
Advocacy group Public Knowledge told Fox Business that some special fees are justifiable because regulatory costs can differ between states. However, a spokesman for the group called the new AT&T fee a simple price increase.
John Bergmayer, an attorney at Public Knowledge, blamed the industry´s lack of competition and lax regulators for the proliferation of below-the-line fees.
"Imagine if McDonald's advertised hamburgers for 75 cents, but then required you pay a $3 bun fee," he said.