AT&T and T-Mobile are both announcing quarterly subscriber gains to their networks, while Verizon announced a revenue increase with subscriber losses. While Verizon was once known as the premium network, AT&T and T-Mobile have tilted the balance with their network build-outs in the last few years.
So how does Verizon report a revenue increase, even though they are losing subscribers? One method to help adjust the bottom line has been adding or adjusting extra fees to their cellular plans. Each cellular carrier will advertise that you can have their premium service as low as $40 per cell phone, but each carrier is different about how they come to that price point.
Below is a quick comparison of the consumer and business prices currently offered on each carrier’s premium plans
- T-Mobile Advertises as low as $40 per line on both their consumer (with 5 lines) and business (with 6 lines) accounts
- AT&T Advertises as low as $45 per line (with 5 lines) on their consumer accounts and $40 per line (with 6 lines) on their business accounts
- Verizon Advertises as low as $50 per line (with 5 lines) on their consumer accounts and $45 per line (with 5 lines) on their business accounts
What is not clear is how much taxes and fees are in addition to these plans. T-Mobile’s consumer plan clearly states that all taxes and fees are included, while all other plans indicate ‘pricing plus taxes & fees’.
Taxes certainly do vary across the country and would be hard to concisely advertise, but taxes would also be the same across each provider selling services at the same price point and location; so they are not relevant in the comparison.
T-Mobile, AT&T, and Verizon each charge an administration charge and telco recovery fee of $3.30-3.49 per voice line.
But on-top of Verizon’s higher plan prices, they also charge a fee that no other carrier does: an ‘Economic Adjustment Charge’. The current consumer and business economic adjustment charge is $2.20 per voice line; but a couple weeks ago Verizon sent out an email to business customers informing them that their fee will be raised to $2.98 on business accounts.
This email is below:
Dear Verizon Business Customer,
Notice of Change to the Economic Adjustment Charge
Effective January 11, 2023, the monthly Economic Adjustment Charge for smartphones and data devices will increase from $2.20 to $2.98 per month/line. The charge for basic phone and tablet devices will remain $0.98.
Our number one priority is to provide exceptional service to your business and consistently deliver the quality and reliability that you expect from Verizon Business.
Fully invested in your success, we work every day to maintain competitive prices — often by absorbing increases that we incur. The current economic conditions impacting businesses worldwide continue to mount and despite our best efforts to mitigate further impact, we intend to offset a portion of these costs by implementing an Economic Adjustment Charge.
Thank you for trusting in us and choosing Verizon Business as your partner. We remain committed to delivering outstanding network performance, service excellence and value for your business.
Your Verizon Team
Last time around, Verizon received a lot of unpopular press about their innovative terminology for raising prices, but this time around there has been hardly a peep. This time, Verizon more cunningly applied the charge to business customers first. A cynical bystander might think that this simply lays the groundwork to allow Verizon to later increase the charge on consumer accounts with an obligatory statement that it ‘simply matches‘ the fee already being charged on business accounts. A similar tactic was used by Verizon when they increased their administrative fee by $1.35 in June, 2022 for voice lines only, to then later increase the fee by $1.34 on additional data plans in December, 2022.
Verizon is estimated to have 142.8 million subscribers, if each subscriber were charged the $2.20 economic charge it would account for a $942 million increase of revenue over a single business quarter (or $3.7 billion in a year). That yearly amount increases to $5.1 billion a year, if each subscriber was charged the higher economic adjustment charge of $2.98.
Verizon’s most competitive business ‘premium’ plan is already 12.5% higher than AT&T’s and T-Mobile’s pricing, but that price is actually 19.9% higher when the economic adjustment charge is factored in. As of today, consumer accounts are only paying a 16% premium for Verizon’s plans, but Verizon might be itching for a way to increase their economic adjustment charge next.
The FCC stepped in to require more clear price advertising on broadband services. With Verizon’s new methods of raising prices (without having to change their prominently displayed price), one might hope that clearer price advertising would come to cellular plans next.
Leave a Reply