America’s second largest carrier, AT&T, is set to increase its upgrade and activation fee from $20 to $25 starting this Friday, 20 January, 2017. The move follows a recent, similar $5 increase in fees by Verizon Wireless, America’s largest carrier, where according to industry analysts because of the change the company will be able to maintain profit margins in 2017. AT&T’s decision to increase the activation fee will only make a $5 increase to customer bills at the time of activation or upgrade, but it is an increase in costs nevertheless. AT&T report that they are “making a minor adjustment to [their] activation and upgrade fees.” The two year activation fee for other connected tablets and wearable devices is staying at $45 for the time being. AT&T’s last activation charge increase was in April 2016, when the company raised the fee from $15 to $20. This means in the course of a year, AT&T’s activation fee has increased from $15 to $25.
AT&T’s decision could be the company simply increasing its fees as Verizon Wireless has, but keeping their prices cheaper than Verizon’s $30. The action by America’s two largest carriers will only make a relatively small difference to customer bills over the course of a two year plan, but presumably is to cover increased costs for the company to processing the new contract arrangements when adding a new line or upgrading a device. In recent industry reports, AT&T is set to be more profitable in 2017 despite the projection that it will lose customers, because the company is in the process of shutting down its legacy 2G networks. AT&T will use the spectrum freed up by switching off the old 2G masts in order to increase its 3G and 4G LTE network coverage, a more efficient networking technology for the company.
America’s two smaller national carriers, Sprint and T-Mobile US, charge a $30 activation fee and a $20 SIM fee respectively. It remains to be seen if either of these two companies follows their larger competitors and increases activation costs, although this is seen as less likely by the industry because Sprint and T-Mobile are working hard to capture market share from the larger carriers. At the Consumer Electronics Show in early January, T-Mobile US announced an end to bundling additional taxes and fees with their monthly plans by their “all in” Uncarrier scheme.