Media that empowers working people – that's how we build a More Perfect Union.

Don't Miss a Video!

Access our exclusive reporting and rapid response actions directly in your inbox, so you don’t miss a beat in the fight for working people nationwide.

Be a part of a community backing up independent journalism with action.

Ideas

Have a story to tell or idea to share?
Email [email protected]
© 2021 More Perfect Union Action

Together we can build power for working people.

We’re asking questions that really matter, and telling the stories of people who really need to be seen and heard.

You can support our work by donating today.

Amount

Make It Monthly

Don't Miss a Video!

Access our exclusive reporting and rapid response actions directly in your inbox, so you don’t miss a beat in the fight for working people nationwide.

Be a part of a community backing up independent journalism with action.

AT&T and Verizon Raised Prices in Lockstep, Looking To Make Billions

The two wireless giants announced similar price increases just days apart.

In June, America’s two largest wireless providers raised monthly prices on some older plans by $6-$12, a move estimated to generate billions of dollars in additional revenue. Most analysts believe it was an attempt by AT&T and Verizon to push low-cost legacy subscribers who are happy with their existing service to more expensive unlimited services. Last week, management confirmed the strategy with investors. “In some cases, they’re choosing to pay the increase of their existing plan and not move,” AT&T CEO John Stankey said. “And we’re also seeing some use it as an opportunity to migrate into better plans and trade up.”

Despite being independent companies, management at both announced similar “adjustments” within days of each other last month. The price changes ensure that consumers pay more for their existing service, or upgrade to a more expensive “premium” offering to avoid the higher fee. This approach is ubiquitous across the industry. “We’ve been coaxing people up to higher and higher priced plans even as prices are rising,” a Bank of America Analyst told the AT&T COO in June.

Neither is concerned about customers leaving due to the announcements. “We will see a small bubble in churn here in the third quarter,” Verizon CFO Matt Ellis said. “But apart from that, we expect to see significant benefit from the actions we’ve taken.”

The American wireless industry is extremely concentrated and a poor value for consumers.

AT&T, T-Mobile and Verizon made a massive bet on 5G, but consumers have not been willing to pay for it.

  • Starting in 2020, the U.S. government started auctioning off the C-band airwaves, a portion of the wireless spectrum that enables ultra-fast 5G connections.
  • Industry analysts initially expected the bids from wireless carriers to reach between $38 and $52 billion. However, the first auction reached nearly $70 billion.
  • As of March 2022, wireless carriers have spent $118.4 billion on 5G auctions—almost double what the industry paid for 4G. Verizon alone has spent around $65 billion on licenses.
  • Market surveys suggest that 5G capability isn’t one of the top four reasons people switch carriers.
  • According to Bloomberg, as of March 2022, the investments have yielded “little to no revenue” for the providers.
  • Wireless providers planned to offer 5G services for a surcharge, only to revert to bundling it with more expensive premium plans after limited success convincing customers to pay more.

To boost lower than expected revenue, telecoms increased administrative fees.

  • Wireless operators are afraid to increase the advertised headline rate of their plans, which consumers pay attention to. Management believes that higher rates cause churn and impact growth. Instead, they are raising “administrative fees” associated with the plans. In June 2022, Verizon increased the fee by over 144%, matching previous increases by AT&T and T-Mobile.
  • An industry research group suggests that administrative fees account for $8-9 billion a year in revenue for the three major wireless providers. Verizon’s most recent increase is estimated to generate $1.5-1.6 billion in new revenue for the company.

The wireless industry expects to earn significant revenue through price increases.

  • Verizon anticipated that the price increase would generate an additional $1 billion in revenue in the back half of 2022.
  • According to AT&T management, “everything is tracking” with the price increase and that it may raise revenues in the future by looking “at pricing again.”
  • As a result of its merger with Sprint, the federal government banned T-Mobile from increasing prices until April 2023.

The industry has signaled that it will pass the price increases on to shareholders through dividends and stock repurchases.

  • In the last five years, AT&T and Verizon have spent a combined $120 billion on dividends and stock buybacks. Management for both firms have signaled payouts of $11 billion and $8 in the future.
  • T-Mobile has not paid dividends or purchased stock since it purchased Sprint for $26 billion in 2019. Management has told investors that it plans to resume stock buybacks in 2023-25 with over $60 billion of purchases.

After committing to invest hundreds of billions of dollars on 5G licenses and equipment, and having little to show for it, wireless providers have found a new way to boost revenue and migrate consumers to their more expensive service offerings: raising prices on existing legacy plans.

Related Stories

Cholula
The Largest U.S. Spice Company Is Raising Prices in America – But Not China
Read More
YouTube Thumbnail
The Dirty Secret Behind Dollar General’s Low Prices
Read More

The Latest

YouTube Thumbnail
What Scorpion Venom Has To Do With Amazon’s Monopoly
Read More
YouTube Thumbnail
Our Camera Footage Got Raided. You Won’t Believe Why.
Read More
YouTube Thumbnail
Michigan’s Bold New Solution to High Drug Prices
Read More
YouTube Thumbnail
Why U.S. Hospitals Are Closing At An Alarming Rate
Read More
YouTube Thumbnail
We Went to the Most Unequal Place in America
Read More
YouTube Thumbnail
Big Pharma’s 20-Year War On America
Read More
YouTube Thumbnail
Whistleblower Exposes Health Insurance Companies’ Most Evil Scheme
Read More
YouTube Thumbnail
What Disney Doesn’t Want You to Know About Visual Effects
Read More
YouTube Thumbnail
Inside the Exploitation at Vegas’s MGM and Caesar’s Palace
Read More
YouTube Thumbnail
How Four Companies Took Over Our Food Supply
Read More
YouTube Thumbnail
How Internet Companies like Verizon And Comcast Abandoned Rural America
Read More
YouTube Thumbnail
What Nestle and Abbott Don’t Want You to Know
Read More
YouTube Thumbnail
Trump Could Lose These Voters. Here’s Why.
Read More
YouTube Thumbnail
Chicago’s Radical Solution For Broken Tipping Culture
Read More
YouTube Thumbnail
The Hidden Reason Manufacturing Jobs Have Disappeared
Read More
YouTube Thumbnail
The Truth About Medicare Advantage
Read More
YouTube Thumbnail
Marvel workers won the first union in visual effects history
Read More
YouTube Thumbnail
We Uncovered a Shocking Right-Wing Plot to Eradicate Public Schools
Read More
YouTube Thumbnail
The Government’s Radical Solution to Lower Drug Prices
Read More
YouTube Thumbnail
This New Deal Jobs Program Is Coming Back
Read More