AT&T is raising an obscure fee on customer bills to make an extra $970 million a year, analyst says

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, before revising that figure upward to $970 million once he learned that the fee hike will also affect tablets and smartwatches on AT&T’s network, not just cellphones. “Some people might not get hit 'til 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.”