Facing Massive Subscriber Defections AT&T Chooses: Rate Hikes & New, Bogus Fees

from the synergies dept

AT&T's had a bit of a tough stretch lately. Saddled by massive debt from its $200 billion Time Warner and DirecTV mergers in recent years, the company keeps deciding to recoup that debt from its subscribers in the form of relentless price hikes. That, in turn, has resulted in millions of subscribers heading for the exits. In fact, AT&T has lost roughly eight million pay TV subscribers since 2017 -- not exactly the sector domination AT&T executives dreamed of when they first began their massive acquisition spree back in 2015.

Normally, a company hoping to make inroads in a sector like TV (traditional or streaming) would try and focus more on not pissing its subscribers off. But as a government pampered telecom monopoly unfamiliar with things like competition, this is all alien territory for many AT&T executives. So, relatively unsurprisingly, the company is imposing all manner of new rate hikes across its AT&T broadband, TV, and DirecTV service options.

That includes a $5 to $9 rate hike for many of DirecTV and AT&T's already pricey cable bundles, but it also includes entirely new bogus fees the company has introduced design to sound like a government-mandated surcharge, specifically designed so you'll get mad at government, not AT&T:

"DirecTV is also adding a "Federal Cost Recovery Fee of $0.19 per month," similar to a fee that used to be charged once per year. Despite the name, the fee is not mandated by the government. AT&T said the fee covers "expenses that DirecTV pays to the Federal Communications Commission."

While this fee is starting small, AT&T has a history of sneakily raising overall prices by adding new fees and then steadily raising them through the years. The Federal Cost Recovery Fee will be charged in addition to a number of other fees that AT&T excludes from listed prices so that it can advertise lower prices than it actually charges."

In a functional society with functional regulators, companies wouldn't be allowed to make up a completely bogus fee, then blame the government -- all so it can falsely advertise a lower rate. This not being a serious country with functioning regulators, these bullshit fees have become incredibly commonplace across both the cable TV and broadband ecosystem. In fact the cable industry is estimated to make $28 billion annually in bullshit fees. Occasionally these companies will face a class action or regulatory action, but the penalties are almost always a pittance compared to the money made from the bullshit fees in the first place.

Granted a serious country with functioning regulators wouldn't have approved AT&T's DirecTV merger (because it reduced TV sector competition) or the Time Warner merger (because economists repeatedly warned the leverage from vertical integration and overall consolidation hurts both consumers and competitors alike), but hey, here we are.

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Filed Under: broadband, competition, fees, rate hikes
Companies: at&t


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  • icon
    madasahatter (profile), 8 Dec 2020 @ 9:34am

    When Comcast...

    When you make Comcast look good you are truly horrible.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 8 Dec 2020 @ 10:29am

    dropped years ago

    I dropped DirecTV years ago just after AT&T acquired it... haven't regretted it one bit.

    In fact, my family and I realized quickly there was almost nothing i missed from cable/satellite tv service.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 8 Dec 2020 @ 12:24pm

    With the internet at hand.

    Gross margin and profit.
    They Could easily drop the Profit into the Payments, and finish this in 2-3 years, and NOT BOTHER THE USERS of the service.
    $93 billion is a very good sum.
    And all you would have to do is NOT give dividends to anyone or Top wages.

    reply to this | link to this | view in chronology ]

  • icon
    Dan Neely (profile), 9 Dec 2020 @ 6:54am

    The price hikes will continue until customer retention improves.

    I see many more price hikes in the future.

    reply to this | link to this | view in chronology ]


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