AT&T has some expensive legal bills to pay facing down the Justice Department’s objections to its recent expensive acquisition of Time Warner, Inc. But no worries, AT&T’s wireless customers will be helping to pick up the tab after another major hike in an “Administrative Fee” that will raise at least $800 million a year for the phone company.

BTIG Research analyst Walt Piecyk caught AT&T hiking its Administrative Fee twice during the last quarter, now reaching $1.99 a month, billed to every post-paid wireless customer.

AT&T introduced the fee in 2013, claiming it would cover some of AT&T’s costs connecting phone calls and managing its wireless network. It started at $0.61 a month, then increased at some point to $0.76.

Although AT&T received negative press after introducing the fee, for most customers it is just one of several barely noticed charges applied in a separate section of monthly bills usually reserved for mandatory government fees and taxes. Many customers assume the fees are mandated by local, state, or federal governments, but in fact many are actually conjured up by AT&T and pocketed by the company. Most analysts believe companies create these fees to raise revenue without the perception of raising rates.

“The Administrative Fee helps defray certain expenses AT&T incurs, including but not limited to: (a) charges AT&T or its agents pay to interconnect with other carriers to deliver calls from AT&T customers to their customers; and (b) charges associated with cell site rents and maintenance.” – AT&T

Customers are now noticing the $1.99 Administrative Fee and complaining about it, after the company nearly tripled it over the last three months.

Fees and surcharges paid by a typical AT&T wireless customer in Illinois.

“In April of 2018, the Administrative fee increased to $1.26 and in June it rose again to $1.99,” Piecyk writes. “We believe the increase applies to all post-paid phone lines other than perhaps some large enterprise contract customers. We have confirmed that it does not apply to pre-paid lines after some customer service reps incorrectly told us otherwise last night. We believe this fee is included in AT&T’s reported service revenue and ARPU despite AT&T’s accounting change last quarter, which stripped regulatory fees and taxes out of both revenue and cost of service.”

Piecyk calculates that if 85% of AT&T’s 64.5 million postpaid wireless customers are now charged the fee, it will result in $800 million of incremental service revenue annually.

Piecyk is skeptical AT&T needed the money to cover cost increases.

“It’s hard to believe that interconnection costs have increased in the past six months enough to justify this fee increase,” Piecyk writes. “In fact, wireless operators have been crediting LOWER interconnection costs when explaining why their cost of service was in decline. Not surprisingly, we don’t recall any reductions in Administrative Fees by AT&T or its peers associated with reductions in interconnection expenses.”

Tower fees, also mentioned by AT&T, may have increased slightly, but as compensation for building out FirstNet, a public safety/first responder-prioritized wireless network, taxpayers are reimbursing AT&T $6.5 billion of FirstNet’s construction costs, despite the fact FirstNet will also benefit AT&T’s ordinary paying customers who will share the benefits of AT&T’s network expansion.

AT&T’s Administrative Fee hike will play right into the hands of T-Mobile, which has an advertising campaign blasting other wireless companies for sneaky fees. (0:45)

The Trump Administration is seeking billions in new “user fees” charged to broadcasters, cable and satellite providers that would likely be passed along to consumers as a new surcharge on their cable, wireless, and broadband bills.

The White House, at the request of the Federal Communications Commission, backs increasing user fees to help fund the $4.8 trillion 2019 federal budget. The new fees would be in addition to FCC-imposed “regulatory fees” that are already passed on to customers by most providers.

The fee, vaguely called a “spectrum management tool,” in the FCC’s 2019 budget request, includes few details. Broadcasters have seen similar proposals before, and have attacked them as a way to get TV stations to give up valuable channel holdings. Various administrations have proposed user fees designed to encourage license-holders to abandon less valuable spectrum so it can be repurposed for other uses. But the powerful broadcaster lobby — the National Association of Broadcasters, has successfully appealed to strike similar proposals in the past.

Other mandatory fees, including franchise and regulatory fees, special tax levies, and mandatory surcharges have traditionally been passed along to individual subscribers, often at a markup by the provider. It seems unlikely this fee would not be passed along as well.

Credit challenged AT&T customers may be out hundreds of dollars if they fail to understand the difference between AT&T’s service deposit and a “credit management fee” for new customers. 

For years, postpaid customers with damaged/no credit have been asked by AT&T employees to post a significant deposit to establish service. For many U-verse and cell phone customers that amount can reach $449 or more. Customers complain AT&T sales employees rarely explain whether they are being asked to put down a refundable deposit or being billed AT&T’s novel “credit management fee,” especially after they are reassured the “deposit” will eventually be returned to customers.

In Ohio, one customer is upset that AT&T has misrepresented its $449 one time “credit management fee” as a refundable deposit and claims AT&T now wants to keep that money for itself, despite his perfect payment record.

Michael Tedesco told FOX 28 in Columbus when he signed up for cable provider AT&T, he was required to spend $449 towards a deposit to get U-verse service activated.

“I was 19 and didn’t have any established credit, so they told me I had to put down a deposit,” said Tedesco. He claims AT&T promised to return $5 of that money each month as a credit on his bill, which means Tedesco would receive his full deposit back only after approximately 7 1/2 years of staying with AT&T. Tedesco also claimed AT&T promised to immediately return the balance of any remaining deposit if he canceled service.

But that isn’t what happened.

“I’d been with them for two years, so that’s $120,” said Tedesco. “So $329 should be returned to me. But now they’re saying they changed their story. That it’s a non-refundable fee.”

AT&T’s non-refundable “Credit Management Fee” is often called a deposit by AT&T’s salespeople. But it isn’t.

A Google search about the non-refundable nature of AT&T’s “deposit” has revealed considerable controversy over AT&T’s “credit management fee” and how it is represented by AT&T employees trying to make a sale. When customers return to complain, they are told to read AT&T’s voluminous terms and conditions, which claim the fee might or might not be refundable.

Telecom companies have traditionally used refundable deposits as a way to insure themselves against a customer considered more likely to default on their bill. For decades, phone companies usually returned deposits back to customers, with interest, after 12-24 months of a satisfactory payment history.

AT&T has instead turned that insurance protection into another way to earn revenue for itself, and critics contend AT&T employees are misrepresenting the costly fee and how customers can get it back.

An AT&T spokesperson admitted shareholders come before customers.

“The credit management fee is in place to cover the upfront cost of service while protecting our shareholders against loss in the event a customer isn’t able to pay their bill,” wrote the spokesperson in a written statement. AT&T also claimed it tells customers up front it is not a deposit. “We communicate to these customers before they sign-up that this is a one-time non-refundable fee.”

If AT&T returns a portion of its “Credit Management Fee” at its discretion, it comes in $5 increments, which means it will take over seven years to get your money back.

The Ohio Attorney General has little power over AT&T’s contracts, language, or sales practices, and offered that consumers need to protect themselves from companies like AT&T.

“It’s helpful to ask things like ‘is there a schedule of when money will be credited to my account? What happens if I leave? How long do I have to stay with the company?'” Melissa Smith, from the AG’s Consumer Division, told the Columbus FOX affiliate. “But what’s most important, no matter what that operator says, is to make sure it lines up with what’s in the contract.”

In dozens of pages of terms and conditions for AT&T’s products and services, the relevant language is found under the Billing section (emphasis ours in the language below), and it is highly confusing because it conflates a traditional deposit program with AT&T’s newer, non-refundable “credit management fee,” making it next to impossible for consumers to understand which applies  until after their first bill arrives:

Advance Payments, Deposits, Fees and Limits.

We may require you to make deposits or advance payments for Services, which we may use to satisfy your initial bill for Services, to offset against any unpaid balance on your account, or as otherwise set forth in these TOS or permitted by law. Interest will not be paid on advance payments or deposits unless required by law. We may require additional advance payments or deposits if we determine that the initial payment was inadequate. Upon determination solely by AT&T of satisfactory payment history or as required by law, AT&T may begin refunding of the deposit or advance payment through bill credits, cash payments, or as otherwise determined solely by AT&T. Based on your creditworthiness, a non-refundable fee may be required to establish service and we may require you to enroll, and remain enrolled, in an automatic payment or electronic funds transfer plan. We may establish additional limits and restrict service or features as we deem appropriate. If your account balance goes beyond the limit we set for you, we may immediately interrupt or suspend service until your balance is brought below the limit. Any charges you incur in excess of your limit become immediately due.

Many customers learn about the fee only after receiving their first bill, which usually arrives after the contract grace period deadline offered to customers who change their mind and exit the contract penalty-free.

“I recently ordered new service and I was told ‘Congratulations you don’t require a deposit,'” wrote ‘Susanja.’ “That’s great, right? Not! I just opened my first bill and there’s a $500 credit management fee for a total of $600+ for my first month’s bill.”

By the time the first bill arrived, she was already locked into a contract with a substantial cancellation penalty.

WTTE-TV in Columbus investigates AT&T’s “Credit Management Fee.” (3:29)

Suddenlink customers around the country are finding accessing the internet has suddenly gotten more expensive. For many service areas, the cable operator raised its rates in December for television and broadband service, with some of the biggest hikes coming from sneaky surcharges.

In many states, the most popular basic bundle already costs $90 a month. The biggest increases have come from “surcharges” which are never a part of Suddenlink’s advertised promotions, surprising many customers on their first bill.

In Arizona, the Broadcast TV surcharge has gone up another $1.61 a month, making customers pay $8.39 a month for a handful of local channels. A separate sports programming surcharge of $5.15 also applies. Suddenlink is also part of the club of cable operators charging customers $10 a month to rent a cable modem. For good measure, the cable operator also wants another dollar a month for its DVR and $3.50 more for broadband. Assorted other fees and surcharges tack on another $4.50 a month.

Suddenlink has already notified some regulators more price hikes are coming in the next several months.

But a Suddenlink spokesperson said there is more good news than bad.

“We provide Suddenlink customers with superior products and services at a great value, continually introducing faster internet speeds and with plans to roll out an enhanced video experience in the coming months,” Janet Meahan, spokeswoman for Suddenlink, told the Daily Miner in Kingman, Ariz. “Our pricing remains extremely competitive in the face of rapidly rising programming costs.”

Mehan also told the newspaper that Suddenlink introduced 1 gigabit internet service in Kingman in October, and provided “complimentary” speed upgrades for residential customers at no extra charge.

“They also had their artificial internet rate hike when they implemented data ‘allowances’ (caps),” retorted Ryan, a Suddenlink customer. “Their upgrades are anything but complimentary.”

Readers report they’ve had success calling Suddenlink and threatening to cancel service over the rate increases. Some report they’ve successfully negotiated their rates down to a level just a dollar or two higher than what they paid two years ago. Customers can also buy their way out of Suddenlink’s data caps by upgrading their service.

New subscribers and existing customers who elect to get an upgrade will automatically be enrolled in an unlimited plan at no extra charge the first year, pay an added $5 a month after 12 months, and an added $10 a month after 24 months. Customers currently subscribing to Suddenlink’s fastest local services may choose to retain their existing usage-based plans or upgrade to an unlimited plan.

French competition regulators have fined Altice for a second time this year for abusing European regulatory policies designed to protect competition in the marketplace.

The French Competition Authority imposed an $88.5 million fine for pursuing mergers and acquisitions without first getting permission from the regulator.

In 2014, Altice rushed into an effort to buy SFR, one of France’s major cellular and broadband providers. Although ultimately successful, the French regulator produced a lengthy dossier with evidence Altice executives allegedly engaged in illegal back door negotiations to complete a takeover of both SFR and Virgin Mobile with or without clearance from the agency that ensures French consumers benefit from competitive markets.

“The Group chose not to refute these practices and to accept the French Competition Authority’s settlement offer,” Altice said in a statement. “The Group chose to settle the matter in order to limit its financial exposure, given the level of penalties imposed for the type of procedural violation under the French Commercial Code.”

SFR customers apparently wished Altice never acquired the telecom provider, because the mass exodus from customer cancellations continued for yet another quarter, despite extremely low-priced customer retention promotions.

SFR’s cable and fiber broadband division lost 75,000 customers in the last three months, 193,000 over the year. Among DSL customers, 120,000 said goodbye to SFR during the last quarter, 432,000 for the year. SFR’s mobile service did even worse, down 88,000 customers in the last three months, 593,000 for the year.

To offset losses on that scale, Altice is relying on American cable customers to make up the difference. At least 41% of Altice’s global operating free cash flow now emanates from Cablevision and Suddenlink customers in the United States. Thanks to rate increases and other revenue enhancers, Cablevision customers kicked in 2.2% more revenue while Suddenlink customers provided 6.2% more to Altice’s revenue numbers. Suddenlink customers are already paying unprecedented cable bills, with a reported 46.4% profit margin, which ranks among the highest in the U.S. cable industry.

Seeing the enormous sums of money to be made running cable companies in the much-less competitive United States, Altice has been drawing up plans for a potential initial public offering to build a war chest to expand the Altice USA empire starting in 2017.

Among the most likely targets to be consolidated under the Altice umbrella: Cox Communications, Cable One, Mediacom and Midco. Some of those companies are privately held, so Altice founder Patrick Drahi would likely have to pay a substantial premium to snap up some of these mid-sized companies.

If the incoming Trump Administration opens the floodgates for a merger and acquisition free-for-all, Drahi might aim higher, looking at Charter Communications. An acquisition attempt of Comcast would be his most audacious move yet.

Those customers consolidated into the Altice family can look forward to higher bills and significant cutbacks in some customer support functions.

Altice plans to continue centralizing call center operations and demanding better performance from workers employed there. By minimizing customer contacts with call centers, costs are reduced. Making sure customer problems are addressed quickly is supposed to reduce customer losses from churn.

Rate increases and additional fine print also guarantee more revenue for Altice operations. In France, SFR has not shied away from imposing multiple rate increases throughout the year, even when customers are “locked in” with a promotional rate. SFR has been playing with how it charges France’s value-added tax (VAT), reducing it for some while adding new passed-thru charges for others. Many customers saw their bills increase by around 10% over the summer and are waiting to pay even more this fall.

Cablevision and Suddenlink customers are getting similar treatment as they discover new and unusual service charges and fees, including general rate hikes of about 3.4% that take effect in December.

The most significant change is that Cablevision no longer provides credits for disconnecting customers. Regardless of when you drop Cablevision service, Altice will not give you any service credits for disconnecting before the end of your billing cycle.

Manasquan, N.J. resident Bonnie McGee discovered Cablevision’s quietly imposed change that took effect in October.

“No matter what now, I am paying for 25 days when I am not getting any service from them,” McGee told New Jersey’s Press on Your Side. Her final bill was $183.

Under the previous owners, billing stopped the day a customer disconnected service and turned in their equipment. Under Altice, customers will continue to be billed for service, even if they cannot access it because they turned in their set-top boxes and cable modem, under the end of the billing cycle.

Cablevision officials call this change a benefit to their customers.

“Optimum services remain available to you for the full billing period and there are no partial credits or refunds of monthly charges already billed,” according to the fine print on Optimum bills.

“Like many entertainment and telecommunications providers, our services are available on a monthly basis, and customers have access to all of our high-quality products and services until the end of their monthly service period,” a spokesperson told the newspaper.

While that may sound good to the bean counters at Altice, it has infuriated customers, and the change may be permanently harming Cablevision’s name, leaving many departing customers even more unhappy with the service they canceled.

“Why would I even think about going back to Optimum for anything?” one asked. “I will never go back,” said another.