AT&T sees Frontier’s two buck phone suck, then raises TV prices by $5

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It might be the least surprising telecoms story of 2018: AT&T is raising prices in a sneaky cash grab similar to what Frontier did last year. AT&T raised the “administrative fee” it tacks on to bills from 76¢ to $1.99 per month. That’s on top of whatever price it tells consumers they’re going to pay.

According to a story by Aaron Pressman in Fortune, AT&T’s explanation is that it pays for “items like cell site maintenance and interconnection between carriers”. In other words, standard costs of doing business. Which is what your monthly rate supposedly covers. But AT&T can tack two bucks onto your bill by burying it in the taxes it’s obligated to collect, so you think it’s something they’re required to do.

They’re not. AT&T figured out that that by scamming customers out of a couple of dollars a month they can add a billion dollars a year to the bottom line.

Some of AT&T’s price increases are upfront. The company just raised the price of its DirecTv Now online subscriptions by five bucks. AT&T’s explanation to Brian Fung at the Washington Post was “we’re bringing the cost of this service in line with the market — which starts at a $40 price point”.

In other words, if they raise their price to match the competition, no one can really do anything about it. That’s the kind of pricing strategy that monopolists use in a duopoly or similarly restricted market. They can’t extract the maximum rent from customers because there is some choice, but if everyone keeps ratcheting up their rates, they’ll still be clocking up profits above and beyond what they can get in a truly competitive market.

The DirecTv Now price hike is 180 degrees away from what AT&T told a federal judge would happen if it was allowed to buy Time Warner. The company trolled lower prices past the judge, who obliged with a green light and no conditions. Which means AT&T is free to do what it wants with its much bigger video business.

And pretty much everything else it offers, including broadband service, which it operates in a cosy duopoly with cable companies. Except where it doesn’t and it’s a monopoly.

Keep a close eye on your bill.