AT&T set to rake in millions via new 61-cent administrative fee

AT&T Mobility (NYSE:T) has imposed a new monthly 61-cent "Mobility Administrative Fee" for all of its postpaid customers as of May 1, a move that will bring in hundreds of millions of dollars in additional revenue for the carrier. AT&T defended its action, noting that other operators do the same thing.

The new fee was actually first reported in April by DSL Reports but AT&T did not fully explain its rationale behind imposing the new fee until now. AT&T told multiple news outlets that the fee is "consistent with similar fees charged by other carriers." The new fee covers "certain expenses, such as interconnection and cell site rents and maintenance."

AT&T further said that the postpaid customers were given 30 days' notice about the fee and its details are included on every bill, according to the Wall Street Journal. The new charge of 61 cents is on top of a "regulatory cost recovery charge" that averages about 50 cents per line per month to help the carrier ensure it is complying with all federal regulations. AT&T began adding that to its bill "approximately 10 years ago," it said.

While 61 cents per postpaid subscribe per month may seem small, at a carrier as large as AT&T, which had 70.7 million postpaid customers at the end of the first quarter, it adds up to significant revenue. According to a Citigroup analysis cited by the Journal, the new fee could rake in almost $350 million in new revenue for 2013 and around $518 million in 2014.

However, as AT&T noted, and the Journal detailed, the carrier is not alone in imposing such fees. Verizon Wireless (NYSE:VZ) has charged an administrative fee of 90 cents per line, which it lowered this year from 99 cents because of lower expected costs; that fee has been in place since 2005. Verizon also has had a monthly regulatory charge of 16 cents since 2003. Sprint Nextel (NYSE:S) charges a per-line monthly administrative fee of $1.50 and a regulatory recovery fee of 40 cents and has done so since at least 2008. T-Mobile US (NYSE:TMUS) charges a regulatory fee of $1.61 per line, but it doesn't have an administrative fee. The carrier added the regulatory fee in 2004 and last increased it by 20 cents per line in 2011.

All of these fees are so-called "below-the-line" fees which usually appear below service charges on customers' bills "Below-the-line fees are nothing more than a way for carriers to stealthily increase their prices," Derek Turner, research director at public interest group Free Press, told the Journal. "AT&T's administrative fees are no different than the hundreds of other components that go into the cost of doing business."

Through a voluntary program set up in 2011 between the CTIA and FCC, the major wireless carriers are participating in an FCC initiative to send customers usage alerts when they risk incurring overage charges. However, such alerts are for service charges and are not connected to the below-the-line charges on customers' bills.

For more:
- see this DSL Reports article
- see this WSJ article (sub. req.)
- see this The Verge article

Related Articles:
FCC touts progress in combatting wireless bill shock
CTIA, FCC partner on free overage alerts for voice, texting and data
AT&T adds only 296,000 postpaid subs in Q1, but sells 6M smartphones
AT&T adds 780,000 postpaid subs in Q4, sells record 10.2M smartphones

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