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What Are These Fees On My Phone Bill And Why Do They Keep Going Up?

Taxes And Fees Phone Bill

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Although still struggling with gas pricing, food costs skyrocketing, rents going up and everything else tied into our current inflation issues as well as the pundits talking about a possible recession, most people thought they had figured out their monthly telecom costs.

With unlimited talk, text, and data, phone bills stayed fairly consistent unless you were hitting “411” on a regular basis or making a lot of international calls that weren’t included in your plan.  But the Big Three are at it again.  In a time when many people are struggling to make ends meet, Verizon, per reporting in Fierce Wireless, just added an Economic Adjustment Charge — adding $1.35 per line (Verizon claps back at T-Mobile on pricing strategy | Fierce Wireless). “adding $100 million more per month for Verizon, which is $1.2 billion in just one year.”

AT&T announced that it is “raising prices on some older wireless plans by up to $6 a month for single-line customers and up to $12 per month for families,” as reported in the same article.  

Verizon’s “Slap Back” was to publish a list of actions that the Un-Carrier has done that “is not a price increase” but adds costs and fees for things like increasing the cost to call support for care or upgrades to $35.  T-Mobile answered that with an up to $1,000 credit to switch to their service and I had a great tweet from Mike Sievert with an ad in my inbox today. 

So, Is This Good for Consumers?

Who knows where the bottom is? Is it a price increase if my plan stays at $39.99 but fees go up?  What about if I don’t call customer care?  No added cost there. That’s why at last count, millions of users in the United States that are known to be on prepaid are fairly happy because their plans include taxes, don’t have all of these fees and you know exactly what you are getting for a fixed price every month.

I’ve written previously about the closing of the gap between postpaid and prepaid.  Same network, same handsets, financing available on high-end models, device protection, and all of the rumors dispelled that you get a superior experience if you have postpaid service vs. prepaid.  The only real downside is roaming outside of your home network which is, for the most part, fairly a non-event for most users.  What is good for consumers, if these fee increases continue, is to finally have the courage to go to a prepaid service plan.  I know it’s a tough decision, like canceling your gym membership to a facility that you haven’t visited in six months.  But tough times dictate tough decisions and saving money on your wireless bill shouldn’t be a tough decision.

Our MVNOs are primarily in the prepaid business.  Verizon’s purchase of Tracfone’s brands did more than just “legitimize” prepaid wireless; it showed that the largest United States carrier is serious about serving this segment of the market.  While Wall Street is still fixated on postpaid net adds and revenue growth, prepaid is still the fastest-growing segment of our business.  T-Mobile rebranded MetroPCS as Metro by T-Mobile to tell consumers that their prepaid brand was powered by the mothership.  Why did it take five years after acquiring MetroPCS for this to happen?   

"It drives me crazy that literally millions of hard-working people are struggling to get by yet feel stuck with AT&T and Verizon because they think prepaid wireless is subpar," John Legere, (then) CEO of T-Mobile, said in a statement. T-Mobile is rebranding MetroPCS, offering new unlimited plans - CNET

Mr. Legere said that 4 years ago in the fall of 2018.  A lot has changed but a lot has also stayed the same.  

I also spoke with Stephen Stokols at Boost Mobile.  I asked what the value proposition is for a prepaid customer, 

“We have no fees on prepaid. While the big carriers tack on hidden fees to drive up ARPU.  Boost is doing the opposite. We're lowering prices and offering new lower cost plans including our carrier crusher plans with $30/month unlimited." -Stephen Stokols, CEO of Boost Mobile

The Best Value in Wireless, based on the continuing increasing fees and taxes, might just be prepaid.

Okay, What’s the Plan?

MetroPCS launched in 2002 with an ad campaign that stated “$50 means $50,” no taxes, period.  Why are today’s MVNOs NOT stating this every day in their marketing?  Talk about a clear advantage?  Yes, AT&T, T-Mobile, and Verizon want postpaid customers but their investments in Cricket, Metro, and now Tracfone respectively tell us that they believe that the prepaid market is alive and well and a great value, especially during these difficult economic times.

I reached out to my colleague Jeff Moore from Wave 7 Research (www.wave7research.com) for his thoughts.  Jeff stated;

"Prepaid carriers and MVNOs use the same networks as postpaid carriers.  Customer care is weaker from prepaid carriers and data prioritization is often lower, but the bigger the gap grows between postpaid costs and prepaid costs, the more tempting it will be to choose a prepaid carrier.  Some prepaid carriers include taxes and fees with their plans, a fact that could get increased attention." - Jeff Moore, Principal of Wave7 Research

Prepaid vs. Postpaid, the discussion will probably never end.   But if you’re not playing to your strengths, you’re losing business.  For those millions of prepaid subscribers that are not paying monthly fees and taxes, or seeing their bills go up, they are very happy with the same services that you are selling today.  Get in front of taxes and fees, give your customers what they want, and in today’s times, what they need; a fixed price with great value on the same networks that the postpaid folks are selling. Remember, you’re the entrepreneurs, the trailblazers.  You built your business on being different and innovative.  

Need more assistance?  We at Atrium Unlimited Consulting (https://atriumunlimited.com/) are happy to help.  Let us know how we can help you get the message across.

Good Luck and as always, Good Selling!

Jon



Jon Horovitz has been in the wireless industry as a senior executive for 31+ years. He headed up sales and operations in leadership roles for McCaw Communications, AT&T Wireless, Nextel, Boost Mobile, and Sprint. He has owned an MVNO as well as assisted in the start-up of three others. His consulting company, Atrium Unlimited, LLC advises carriers, MVNOs, investment bankers, and venture capitalists interested in joining the wireless space. Jon would love to hear from you about any consultative needs you may have. Please visit https://AtriumUnlimited.com



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