AT&T is following Verizon’s lead and hiking its activation and upgrade fees.
Starting tomorrow, users who upgrade or activate a device on AT&T’s network will pay a $25 charge, up from the previous $20 fee, as Droid Life reported. A spokesman for the carrier confirmed the move, saying AT&T is “making a minor adjustment” to those fees, but didn’t comment further.
Verizon earlier this month made a similar move, raising its activation and upgrade fees from $20 to $30. That increase came as Verizon announced it would no longer offer two-year service contracts to new and existing customers, dropping handset subsidies in favor of its equipment installment plan (EIP).
The price hikes from the nation’s two largest carriers come amid an increasingly competitive market in which both T-Mobile and Sprint are gaining market share. Verizon lost 36,000 postpaid net phone subscribers in the third quarter of 2016, and its retail postpaid phone churn was up two basis points year over year. AT&T, meanwhile, lost 268,000 postpaid phone customers during that quarter, marking its eighth consecutive quarterly decline.
Rather than fight to retain market share, AT&T has honed its focus on maintaining high-end users—both postpaid and prepaid—and monetizing them as effectively as possible. That strategy appears to be paying dividends: The company posted third-quarter revenues of $40.0 billion, up 4.6%, alongside net income attributable to AT&T rising 11.2%. Cash from operations reached $11 billion during the quarter.
AT&T surely sees its $5 increase as a way to pad its bottom line as it continues to monetize its customers as effectively as possible, Verizon’s earlier—and larger—increase gives the company some cover. And the relatively small price hike isn’t likely to prompt many customers to flee to T-Mobile or Sprint.