AT&T’s wireless customers are expected to pay almost $1 billion in new fees every year to the company after it increased a monthly “administrative fee” this spring, in a move that went largely unnoticed, according to an industry analyst.
The analyst, Walt Piecyk of BTIG, initially estimated that AT&T could pocket roughly $800 million more annually from the higher fee. He later revised that figure upward, to $970 million, once he learned that the fee hike also will affect tablets and smartwatches on AT&T’s network — not just cellphones.
“Some people might not get hit till next cycle,” Piecyk said.
The higher fee reflects a 58 percent increase over its previous level of $1.26 per line. The fee is now more than three times what it was when AT&T first introduced it in 2013.
It does not apply to prepaid customers but affects the vast majority of AT&T’s roughly 65 million postpaid subscribers, Piecyk said.
“Presumably the administrative fee is another way to help AT&T fund its network build and Time Warner acquisition going forward,” wrote Piecyk in his note airing the discovery.
AT&T declined to say whether the fee would be allocated toward defraying its merger costs.
The company said in a statement that the fee is a standard practice across the industry, and that it “helps cover costs we incur for items like cell site maintenance and interconnection between carriers.”
A page on AT&T’s website also says that the fee is “not limited” to covering cell site maintenance and interconnection.
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Like the country’s other wireless carriers, AT&T is moving aggressively to build out a nationwide successor to its 4G LTE data network, an endeavor that is likely to cost billions.
It also is spending $40 billion — and could receive more than $30 billion from the federal government — to construct a new wireless network for first-responders.