Huffpost Detroit
Timothy Stenovec Headshot

Why AT&T And Verizon May Start Charging You More Fees

Posted: Updated:
ATT VERIZON FEES
AP

Don't be surprised if you start seeing more and more fees on your wireless bill.

That's one of the takeaways from a new report of the U.S. mobile market, according to Tero Kuittinen, a mobile analyst and vice president at Alekstra, a firm that works to reduce companies' phone bills.

Because fewer new customers are signing up for wireless plans, giants like AT&T and Verizon are looking everywhere they can for additional revenue, which means charging their existing subscribers more, Kuittinen wrote on BGR.

Only 1.1 million new wireless accounts were created the first three months of 2013, according to the report from Chetan Sharma Consulting, a firm that specializes in mobile trends and strategy. This represents a whopping 60 percent decline over the number of new connections in the same quarter of 2012.

That's a huge problem for the wireless industry, which thrived in previous years as new customers signed up for mobile subscriptions.

In the year 2000, wireless companies derived more than 20 percent of their revenues from new subscribers, according to a slide in Sharma Consulting's presentation. Now, that share is hovering around 2 percent.

"They don't have much choice but to increase revenue from existing subscribers, which obviously from a consumer point of view sucks," Kuittinen told The Huffington Post.

As an example, Kuittenen points to a $0.61 "Mobility Administrative Fee" that AT&T started charging last month. That may not sound like much, but that means an additional $775 million annually for AT&T.

And that fee is only the latest in a series of moves the biggest U.S. wireless carriers have made to extract more revenue from their customers. Earlier this month, AT&T said it would no longer offer early device upgrade discounts to its contract holders, and extended its upgrade period to 24 months. Verizon made a similar policy change in April.

So that means if you find yourself in need of a phone and it's been fewer than two years, you'll have to pay a penalty because you're not yet eligible for an upgrade.

And speaking of upgrades: last year, both Verizon and AT&T increased their upgrade fees.

So the question remains: Is there any hope of curbing expensive -- and increasing -- smartphone bills?

Chetan Sharma, who leads the consulting firm, said that if T-Mobile and Sprint, the two carriers that have for years lagged behind AT&T and Verizon, were to merge, then customers would have more options.

"If you just have two players who are dominant and the other two are struggling, then consumers might not get the choices that three players bring to the market," Sharma told HuffPost. "It's important for a third strong player."

But for now, AT&T and Verizon control a massive 65 percent of the U.S. wireless market.

"It's a duopoly," Kuittinen said. "It's clear when it comes to consumer prices, competition isn't working."

Click here to read Kuittinen's full post on BGR, and here for Chetan Sharma Consulting's presentation.

Earlier on HuffPost:

5 Countries With Better Internet Service Than America
of
Share
Tweet
Advertisement
Share this
close
Current Slide

Suggest a correction

Around the Web

Verizon vs AT&T vs T-Mobile vs Sprint: Which to Choose For iPhone ...

What Does it Cost to Switch to The Verizon iPhone? - iPhone / iPod ...

Comparison of iPhone ownership cost on AT&T, Verizon, Sprint and ...

Weekly Telecom Notes: Verizon's LTE Advantage, AT&T Hikes Fees ...

AT&T vs Verizon vs T-Mobile vs Sprint: Which iPhone 5 carrier ...

Weekly Telecom Notes: Verizon's LTE Advantage, AT&T Hikes Fees And Sprint's ...

AT&T Follows Verizon's Lead, Changes Upgrade Cycle to 24 Months

Apple Data Throttling: Verizon, AT&T And Sprint Accused, But Is Everyone Guilty?

AT&T's New 61-Cent Fee Highlights Wireless Nickel-and-Diming

AT&T Imposes New Monthly Administrative Fee for Wireless Users