Kevin Hunt: AT&T Wireless Customer On 'Administrative Fee': What Is This?


A newfound "administrative fee" on a phone bill is the sole entry in today's edition of "Is It Just Me?" — where no question is too small for The Bottom Line.

Q: "Here's the text from the end of my AT&T bill describing a 61-cent monthly charge: 'an Administrative Fee on consumer and Individual Responsibility User (IRU) lines to help defray certain expenses AT&T incurs, such as interconnection and cell site rents and maintenance.' What is this?"

J.S., Wethersfield

A: It's not new. The fee is so small, the description so obtuse, that you probably missed it when AT&T started charging it in May 2013. Any outrage ultimately vanished because, really, who's going to war over 61 cents?

But calculate what it means to AT&T. The 61 cents per month, per line, from each AT&T wireless subscriber is expected to produce more than $500 million in revenue this year.

Such "below the line" charges often float below the radar, too, because customers either don't notice them or don't care about such small amounts. Yet they effectively grant carriers a rate increase as they advertise lower plan prices than they actually charge. It's like surprise check-in fees travelers often encounter after booking a bargain-rate getaway online.

Some subscribers argued the new administrative fee, in fact, represented a rate increase that would enable them, under AT&T's customer agreement, to "terminate this [contract] without paying an early termination fee or returning or paying for any promotional items."

AT&T said it wasn't a rate increase and they couldn't terminate their contract without a penalty. So a customer could sue AT&T, request arbitration or pay the extra 61 cents each month.

The charges are legal — the Federal Communications Commission so far has not objected — in an industry with minimal competition. AT&T defended the new fee last year by pointing to other carriers charging similar fees. Sprint charges its subscribers a $1.99 monthly administrative fee. With 55 million customers, that's $1.3 billion in administrative fees in 2014. Sprint's 40-cent "regulatory recovery fee" will add $264 million in revenue this year.

Verizon charges its More Everything and Nationwide plan customers 88 cents per line each month. Data-only customers are billed 6 cents. Verizon does not break down the number of customers in each plan, but a spokesman says as of April 1 the carrier had 97.3 million retail customers.

Earlier this year, a Bottom Line reader asked about a Universal Service Fund fee increase on his cable television bill. Wireless carriers also contribute to the USF, established by the Federal Communications Commission to make phone service available and affordable to all Americans. (The government does not require carriers to pass their share of the costs to their customers.)

On your phone bill, it appears as the Universal Connectivity Charge. On others, it's Federal Universal Service Fee.

Still want to decode the Administrative Fee?

"The language reflects administrative fees we assess to help support our network and cell sites," says Meaghan Wims, an AT&T spokeswoman.

Remember, it's not just you. Other people want to know, too. Send questions, large or small, to The Bottom Line at khunt@courant.com.

Featured Stories

CTnow is using Facebook comments on stories. To comment on ctnow.com articles, sign into Facebook and enter your comment in the field below. Comments will appear in your Facebook News Feed unless you choose otherwise. To report spam or abuse, click the X next to the comment. For guidelines on commenting, click here.

CONSUMER COLUMNISTS

Kevin Hunt - The Electronic Jungle

Kevin Hunt: Review: The T-fal OptiGrill (Watch Out, George Foreman) - October 14, 2014 - If a George Foreman indoor grill had a brain, it might use an optical sensor to detect the thickness of steak and automatically cook to...

Gail MarksJarvis

Eurozone troubles weigh on investors - October 21, 2014 - If a new bout of recession and deflation takes hold in the eurozone, investors worry the U.S. could be infected too.

David Lazarus

Lured by Verizon into giving up cellphone privacy - October 23, 2014 - Eric Purtell, who has been a Verizon Wireless customer for nearly a decade, had every reason to think the company was rewarding his...

Korky Vann

Weekend Discounts Include Kids' Consignment Sale In Simsbury - October 16, 2014 - >>Latimer Lane PTO's consignment sale Saturday in Simsbury features like-new children's fall and winter clothing,...

Advertisement

...