Just like Verizon Wireless, the second biggest wireless carrier in America has decided to increase its activation and upgrade fees. According to a report published by Droid Life, AT&T has hiked the charge for activating or upgrading a device on its network from the previous $20 to $25. A spokesperson for the mobile operator has stated that the move only counts as a minor adjustment, but for mobile users currently on AT&T’s network or for those looking to sign up, it makes a difference.
Earlier this year, industry leader Verizon Wireless had announced a similar development, adjusting its activation and upgrade fees to $30 (it was previously at $20). The Big Red had made that revelation along with the intention of discontinuing to offer traditional two year agreements to current and new subscribers, at the same time, opting to eliminate subsidies on mobile devices and instead going for equipment installment plans (EIPs).
With AT&T’s latest move, two of the biggest mobile operators in the United States have now issued significant price hikes just barely a month into the new year. But it is not clear yet if this will help the industry leaders prevent other major US wireless carriers like T-Mobile and Sprint from continuing to gain ground. During the third quarter of last year, Verizon Wireless had registered losses of 36,000 postpaid net phone subscribers, while posting a postpaid phone customer turnover rate that has increased two basis points compared to the previous year. Meanwhile, AT&T also lost 268,000 postpaid phone customers in the same quarter, the eighth consecutive time it has posted a quarterly decrease.
Still, it is interesting to note that instead of making an effort to protect its market share, AT&T appears to be focusing on retaining its high end customer base (in both postpaid and prepaid markets), and then monetizing them the best way it can. This approach seems to be working -- the wireless carrier recorded earnings of $40 billion during the third quarter of 2016, which is up 4.6 percent, and registering a net income increase of 11.2 percent, from cash revenues of $11 billion.
As for the $5 raise in activation and upgrade fees, AT&T may be looking to use this strategy as a means of optimizing its profits, and considering that its rival Verizon Wireless’ increase is bigger, AT&T may enjoy some leeway in trying to minimize customer migration, either to the Big Red, or to T-Mobile or Sprint.
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