Feeds

AT&T adds 61¢ 'Mobility Administrative Fee' for users

Nickel and diming customers because it can

Security and trust: The backbone of doing business over the internet

US subscribers to AT&T's mobile network are getting an extra 61¢ "Mobility Administrative Fee" on their bills beginning in May.

That's not a lot of money for individual users, but it adds up to over $40m a month in additional revenue for AT&T – around half a billion each year. The company has reportedly said its administrative charges are lower than rivals Verizon and Sprint, and that they will cover maintenance and cell-tower rents, although we're still waiting for details on that.

The fee comes alongside AT&T's monthly "regulatory cost recovery charge", which covers the cost of complying with government regulations, and adds around 50 cents a month to customers' bills. Verizon charges 90 cents for this and Sprint 40 cents, while T-Mobile charges $1.61 but doesn't include other administrative charges.

"Why would AT&T do this? Because they can," wrote Joe Hoffman, principal analyst at ABI Research. "Now that AT&T is comfortable with their shiny new pricing tools and flexibility that comes with them, looks like someone in the Executive MBA program has discovered Price Elasticity of Demand."

Hoffman predicts the plan will be a success, since subscribers are unlikely to dump AT&T over a charge that's so small, even if the profits it reaps will be huge for the company. Adding this in as an additional charge also makes it less likely to be noticed when people pay their bills.

"For now, $500 - $600 Million will flow right to the bottom line," Hoffman wrote. "Brilliant! No fancy software tools, no focus groups, no high priced engineers and programmers, and no iPhone subsidies. Just a raw, brute force price increase. In six to 9 months, add another fee, then rinse and repeat a few more time. Marketing beats engineering every time!"

AT&T has learned from the experience of Verizon, which in 2011 slapped a $2 "convenience fee" (yes, it actually called it that) on customers who paid their bills online or via telephone. After massive public outcry, the company dropped the charge within 24 hours – it seems it's easier to get people's backs up if you break that dollar barrier. ®

Beginner's guide to SSL certificates

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
This flashlight app requires: Your contacts list, identity, access to your camera...
Who us, dodgy? Vast majority of mobile apps fail privacy test
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.