AT&T raises most customers' fees by $1.23, adding $800M revenue | Hacker News Reader

AT&T raises most customers' fees by $1.23, adding $800M revenue

cnbc.com

151 pointsaaronbrethorst88 comments

“This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers."

That’s literally what the main monthly fee is for. Covers all costs of providing service.

This is the way it works now. With hotels in Vegas you often pay more in resort fee's than the actual hotel price. Cell phones will start raising prices via the admin fee rather than the monthly bill, airlines do it via the "fuel surcharge".

The goal is to make the consumer think they are paying less then they are with the added bonus of making it extremely difficult to compare prices.

Otherwise known as fraud.

I've seen this called a Confusopoly.

Rental cars also - especially if you have to buy liability insurance.

Has gone from a waiver for first $500 or $1000, rest was covered, to unlimited liability to the customer.

Finish my thought:

All this to allow a cheap price to be advertised, what you end up paying may be a lot more.

"Oh, it's standard? Well ok then."

"First, thank you for being a loyal customer for [X] years!"

Must be nice being in an industry where you can basically print money by levying completely arbitrary fees and nobody is willing to stop you (i.e. because you've already used those fees to pay off politicians in both political parties in all of the legislatures in the land).

Aren't we talking about fees for cell phone service here? It's a robust market with quite a few major competitors. What does paying off politicians have to do with anything?

It's the additional fees above and beyond the base service. Carriers don't have to advertise these, which makes it incredibly difficult for the average consumer to reasonably compare plans side-by-side. Consumers sign a multiyear contract at a "$100 unlimited" plan or whatever, only to find out it's not actually unlimited and there's all sorts of additional surcharges. And now they're locked into a contract. Competition doesn't really help much at this point.

From 2011-2016 the FTC [1] and FCC [2] took significant action against mobile carriers for spurious charges, unadvertised fees, etc. These resulted in hundreds of millions in fines against the carriers and portions of that being returned to customers.

The amount of enforcement by these regulatory authorities changes significantly over time due to shifting political winds.

[1] https://www.ftc.gov/news-events/media-resources/mobile-techn...

[2] https://www.fcc.gov/enforcement/orders/1849

Before you sign that contact, you are entitled to read it.

That’s a given. But I think we have to split the difference on this one and argue that these practices are deeply anti-consumer. If a contract is, in essence, an agreement that one party is free to do effectively anything, and that the other must simply pay whatever the other party demands, subject to change at any particular time, that is less of a contract than it is a pair of handcuffs and a ball gag.

Except of course that in that contract it does not spell out the surcharges that they add without you being any the wise until you receive your bill.

They reserve the right to alter the deal. Pray they don't alter it further.

The contract was drafted by a team of expensive lawyers over a period of weeks or months. You, a complete legal novice, are going to read it in five minutes. Who’s more likely to win?

Furthermore, the economy presumably has more productive uses for everyone's time than expecting them to be amateur lawyers...

Being able to advertise price X while billing price Y after locking someone into a 2 year contract.

Don't virtually all the major carriers routinely run deals where they make it extremely easy for you to buy out of a competitors contract?

The lock in from these contracts is quite weak.

I’m a little troubled that consumers would have an expectation that they may have to rely on that as a result of arbitrary rate increases. Do the vast majority of consumers know about those opportunities?

I’m definitely for consumers being wise about what they get themselves into, but I’m also of the opinion that a reasonable contract would preclude the addition of arbitrary fees. If I contract you to work for me at $80/hour, for example, I would not be particularly happy if you turned around and forced me to pay you $85, or be forced to pay some kind of fine.

Yep. It's definitely the contract part of this that is wrong. A price change should trigger a no-penalty renegotiation of the contract.

I'm more troubled by spectrum "auctions" than by anything else. If it were up to me, I'd dig up the bones of whoever was in charge of this asinine decision and have them hanged, quartered, and drawn. Then, I would nullify existing contracts and return all their money.

There has to be a better way than to grant a single company monopoly over the spectrum slice for a market.

Yes. Shared network, transparently operated by all the service providers. (See also: in response to a similar what to do comment - https://news.ycombinator.com/item?id=17417243 )

That's not a solution to bait-and-switch.

Are 2 year contracts still common in cell phone plans? I've used att for years and never was presented with the option of signing a contract like that.

Technically they are gone. But now the popular option are device payment plans spread out over 2 years so it’s essentially a contract as if you were to cancel your device the remaining amount is due immediately.

Another gotcha are how they discount $200 off a phone. The bill credits are applied over those 24 months so if you cancel early you don’t end up getting the full $200 off the total price.

I love Tracfone.

It is a great pleasure to swap the Verizon card for AT&T when coverage requires it, with no change to my billing or rollover minutes/data.

AT&T will not be charging me this fee. Let them try.

>It's a robust market with quite a few major competitors

If 4 is what you consider quite a few.

The way the mega mergers are going down, "quite a few" will be 3 here soon.

> It's a robust market with quite a few major competitors.

There are FOUR major competitors (AT&T, T-Mobile, Sprint, and Verizon) and this is soon to be 3, assuming the Sprint - T-mobile merger goes through. (Which it most likely will)

I have not found that T-Mobile has enough coverage to be useful. That is, a mile or two from the center of a city, there seemed to be no reception for me. I am skeptical that Sprint is any better based on what I've heard from others. And I think Verizon requires different phones, so I feel for practical purposes I am locked in to AT&T.

This is dumbing down the whole thing Sire. Why did ATT increased the fees by $1 and not $10 then ? Also you can literally chose from many many other telecom operators. I use T Mobile and my car has ATT. ATT is way better than TMobile for coverage may be the extra fees help them give better coverage ?

(Also what is the alternative ? Trump controlled government servants to decide how much fee they can raise ? At that rate we will be like UK where you need a license to own a TV).

The question is simple economics, specifically game theory.

What's the contract between the parties? Is it one sided, and allows arbitrary modifications by the service provider? (Check.) Is the telecoms market currently in a pathological (unhealthy) state, due to lack of sufficient number of competitors, due to gigantic barriers to entry, due to regulatory capture? (Check.)

Infrastructure is typically something that benefits from standardization and economies of scale. The original network effect. Therefore it's very much a "natural monopoly". But combined with spectrum auctions, it's a proper state sanctioned monopoly, or in this case oligopoly.

The solution is to separate the raw technical network operation from all the other shit, and make it a true common carrier. The hard problem is of course the network evolution (maintenance, tower allocation [add new or remove old, what kind of tower, where, when], backbone management [buy new fiber optic or sell old, or downgrade, what kind, from where to where, and when]), but this should be financed by the operators, and it could very well be operator contracted (when one operator feels they would benefit from a new tower, they would request that from the shared raw network provider, and pay for it).

Of course, there could be incentives to help the roll out of new towers (so, let's say the operator that pays for it gets 1 year exclusive access on that tower), or that the operators must finance at least X new towers every year or pay a fine (but this must be formalized so they must spend X % of their revenue on extending the network to new customers, and at least Y% on upgrading the existing network), etc.

Ultimately, it's a simple question, that leads to a hard problem, with very good approximate answers. We know this shit, it's the economics of a market of fungible service providers. It's the shit that got people Nobel-like prizes in Economics, because it's easy to model and show what's going on.

If you have to make that complex verbal gymnastics to explain "simple economics" you probably don't get it at all.

If you think that's complex, I think it's time to hear some bad news about other aspects of our lives.

If you have substantive criticism, questions, or other addendum, I'm interested and open to discussion.

I can only imagine the conversation that went into this decision:

Raising revenue is as easy as “1,2,3”. Brilliant! We’ll raise everyone’s fees by $1.23

So, a company can just advertise any low price and add on a bunch of arbitrary "fees" to pad their numbers? Sounds perfectly sane.

Simplest solution: Switch to a much cheaper prepaid plan. If everyone did it, industry-wide revenue would tank, the stocks would tank, and a cornucopia of slime bags would be fired.

If you are under contract, contact their legal department about the unexpected rate increase. When they reply, threaten small claims court / arbitration.

Simply paying a lawyer to call your bluff will mean they lose money on hiking your rates.

Glad I'm an AT&T shareholder, but sorry I'm an AT&T customer.

The only real solution here is to go out and buy a bottle of very expensive Whiskey to drown your sorrows.

Or enough shares to buy that expensive whiskey off of the ~$2 annual dividend yield.

"This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers"

I'd hate to have corporate communication job for telecom, healthcare, finance, and pharma industry.

just switch to t-mobile. no taxes / hidden fees added to the advertised subscription price.

Don't forget though, T-Mobile was one of the first carriers to use zero rating as a marketing ploy (with Netflix IIRC) which is exactly the kind of shady practices that net neutrality was supposed to defend against. But everyone thought T-Mobile was great for being an "un-carrier". Really they are just as hostile to net neutrality as all the others

They don't provide zero-rating for their prepaid accounts so you can remain "pure".

Trickle up

That's actually clever.

This is the result of AT&T's massive debt and the corruption of US politicians. AT&T is able to bribe the state and local governments to prevent any broadband competition and has gone far into debt to gobble up competition.

> The change is estimated to impact about 85 percent of AT&T's 64.5 million postpaid phone lines in service, making for about $800 million in additional annual revenue.

85% * 64.5 million * $1.23 = 67 million

Where did the other 733 million come from?

Edit: Ah monthly fee; Annual revenue.

$67 million a month * 12 = $804 million. I am assuming it is a monthly increase.

Annual revenue, monthly fee.

is it monthly? because then the math works:

>>> 0.85 * 64.5 * $1.23 * 12

$809.22

It would be more tolerable if they offered good service. I am moving to a city with one of the largest universities in the US and the fastest internet AT&T even offers is 12 Mbit/s down and 0.5 up.

up to 12Mbps. You won't actually get that.

That's $6.5M revenue per $0.01 fee increase.

Crazy that they would institute this just after it was revealed that many of their buildings are hosting NSA spy ops.

The existence of the AT&T spy buildings were public knowledge years before the Snowden leaks happened.

Maybe the renewed publicity around it was a not-so-subtle reminder that they know exactly who the regulators and congress (and everyone else) are sleeping with.

Did they name the locations before?

I really can't remember.

Prism has been common knowledge since the outing of closet 641 A, ~15 years ago. Even the MSM ran the stories... and most people still couldn't give a shit.

Who paid any attention to that? And how is this going to do anyhjng except pick a few million pockets successfully?

It was all the rage on Slashdot. You didn't get the memo?

I suppose that's the bet that the AT&T execs are making, isn't it?

The lower prices due to increased competition are on their way, America! Just wait a little bit longer for the consolidation synergy and those massive corporate tax cuts to really kick in.

I just switched from Verizon to Comcast (xfinity mobile). I now pay no monthly line fee, and just $12 per gig. If I go above 3gb, they charge me $45 for the month and I get unlimited access (throttled after 20gb). Much lower price, and same Verizon network.

They used to require you to buy the device from them, but now it’s BYOD also. And unlike many carriers, they don’t charge setup or device upgrade fees.

It seems that competition is here already.

In Israel you can get unlimited minutes + text + 30GB data for $10 a month. If you want to include around 200-300 minutes to call out of the country you can get to $13 dollar. The premium packages cost $30 and include calls + data when abroad. All that on an LTE network.

My roughly equivalent US plan on AT&T is ~10x that.

Don't get me started on the international. $60/GB for a pass or insanely $2,050/GB pay-per-use without a pass [1]. The rate is higher than that in some cases too [2]. It really should be illegal. Of course this is on top of the normal data plan charge.

They also have another day pass plan for $10/day that allows you to use your normal data plan internationally [3], however, only a subset of AT&T plans are eligible for it.

[1]: https://www.att.com/offers/international-plans/world.html

[2]: https://www.att.com/offers/international-plans/ppu-calling-m...

[3]: https://www.att.com/offers/international-plans/day-pass.html

That's a fairly recent development, though; they recently broke up the cell phone cartels that were charging outrageous rates in exchange for very poor service.

This is something we desperately need to do here, but I don't much faith we'll do it anytime soon.

Bell got 50+ years to extract incredible amounts of cash from their customers (who had, quite literally, nowhere else to go). Then it was broken up and prices fell dramatically, which sounds close to what happened in Israel?

Unfortunately, we clearly didn't learn anything from this, and we let the small companies formed from the Bell breakup buy each other up -> consolidate the industry again -> eliminate most of their competition, and we wonder why we're getting screwed again.

This sounds really expensive! Are all contracts similar in the US? In Italy I pay EUR 5.99/mo for 30gb and unlimited calls including to any European country and some international countries too.

It was an example of a cheap plan in the US.

I switched my wife first because she wanted Verizon's network and at that point you had to buy a new device from Comcast. After a couple of months, I ended up buying a used phone compatible with Xfinity Mobile and have been very happy with it.

We took our phones with us to Mexico and roamed for a week for about $9 over the usual bill. That was almost entirely Google Maps, with a little "Find Friends", but it was so much nicer than swapping SIM cards.

I was in the process of setting up BackBlaze and ARQ to back up everything at home offsite when Comcast implemented their 1TB/month limit. That was not pleasant. And every year Comcast makes me do the "we're doubling your price for internet unless you threaten to leave" every year and having the cell phones with them makes it harder to move. It's another $10/month per line if you don't have service with Comcast.

So I'm not thrilled about having more eggs in their basket but the service has been really reliable. My wife wanted Verizon because she travels to the boondocks and she wouldn't have service with Ting, which is what we were using before.

I have wondered if it would make things hard on me when it comes time to threaten to leave and keep my cable internet bill low.

On the other hand, I'll be saving $100/mo versus Verizon (big family plan), so even if I have to eat a $20 increase in my Comcast bill, it will be well worth it.

I also get access to xfinitywifi hotspots, which I previously didn't have because my Comcast internet is below the required tier (60Mbps).

From my time with prepaid on T-mobile, most of these fees are imposed on post-paid connections.

I am seriously considering AT&T prepaid to avoid these gimmick fees. for 2 lines 50/mo plan i'll end up paying 70 - https://www.att.com/prepaid/plans.html

Huh so $12 per gig times 3 and then when you go over its an additional $45... so $86 a month for unlimited data?

Im on a ATT family plan I pay $50 for unlimited data. Xfinity doesn't sound like a deal to me and it's Comcast(uggh, yuck and i worked for them for too long hearing customers yell at me because Comcast give no craps about customers).

Nope, if you go over it’s just $45 — not an additional $45.

AT&T offers unlimited for $50? I’m seeing “$70 and up” on their website. There’s no line access fee or anything?

That $50 number is misleading or not inclusive of fees. My grandfathered original iPhone unlimited plan is ~$80–100/line total bill cost all in for unlimited data on a handful of lines.

I’m in a family plan... get your family and or a group of friends into one account and you’ll save a good amount. We have Direct TV now as well which I don’t think any of us use.

That may actually be cheaper than tracfone. I pay ~ 12.50/month/line for more minutes + texts than I use (they roll over...), and 500MB of data. Additional data is $10/GB. You can choose between the big three networks (at&t, verizon, sprint), and they support BYOP.

Yes but now you have to deal with Comcast. Have fun if you ever have even a trivial issue.

I pay $30 / month for my phone bill. That's it. I don't use a lot of cell data, but I have more than enough for some light streaming, GPS, price checking, etc. When I'm not at home or the office (on wifi).

Oh, and there's no arbitrary limitation on tethering either.

Yes, competition is delightful, but sometimes you actually have to try.

I pay $10 / month for the same. And when I was in the UK, I paid less than $30 a month for unlimited data.

You don't know what competition is.

In this case, the differentiator between my current option and the lower cost ones is the level of cell service living out in the sticks (aka 45 minutes out of the metro area). More would be nice, but rural life typically has fewer options.

That is really changing though, on all fronts, as technology does.

/s?

s/lower/higher/

s/increased/decreased/

A browser plugin that expands "/s" to "synergy."

Oh good grief, have you ever paid a French phone bill?

that's a fuck you fee!! because we can, what you gonna do about it!!

> After a costly acquisition of Time Warner, AT&T may have found a new source of revenue.

Is charging more fees really a new source of revenue? It’s not exactly rocket surgery...

Reply on news.ycombinator.com