AT&T passes inspection fee onto customers

AT&T passes inspection fee onto customers

April 4th, 2013 by Shelly Bradbury in Business Around the Region

An AT&T logo is displayed on an AT&T Wireless retail store front in Philadelphia.

Photo by Associated Press /Times Free Press.

POLL: Do you have a landline phone in your home?

Landline versus cell phone use in Tennessee, 2003-2012

*2012 -- 2.23 million regulated wire lines in service in TN -- cell phone data unavailable

*2011 -- 2.73 million - cell phone data unavailable

*2010 -- 2.96 million - cell phone data unavailable

*2008 -- 2.96 million - 84 percent had cell phones

*2007 -- 3.05 million - 83 percent had cell phones

*2006 -- 3.25 million - 72 percent had cell phones

*2005 -- 3.2 million - 69 percent had cell phones

*2004 -- 3.3 million - 58 percent had cell phones

*2003 -- 3.7 million - 54% had cell phones

Source: The Tennessee Regulatory Authority

Despite the allure of automatic bill pay and electronic statements, Charles "Buck" Meyer always gets a paper copy of his AT&T phone bill, and he always gives it a once-over.

So when AT&T added a new $1.99 fee to his bill last month, the Cleveland, Tenn., resident caught it right away. And he wasn't happy.

"My regular service is only 22 bucks," he said. "If they add $2 to it, that's almost a 10 percent increase. I've been on the fence about switching off my landline for some months, and this could be the thing that pushes me over the edge."

AT&T added the $1.99 fee in March to the bills of all landline phone customers in Tennessee, AT&T spokesman Bob Corney said. It's listed as the "Tennessee regulatory inspection fee," and is designed to recoup the money AT&T is required to pay the Tennessee Regulatory Authority.

The TRA monitors private utility providers throughout the state and sets the rates and service standards. About 79 percent of the TRA's annual budget -- $6.4 million of $8.1 million -- is collected in the form of inspection fees from utilities.

Companies are legally required to pay the fee, but a 2009 statute gave utility companies the option to pass the charge on to consumers. And that's what AT&T is opting to do.

"In March 2013, AT&T began recovery of some of these inspection fees for 2011 by adding a one-time charge of $1.99 as a line item on customer bills," Corney said via email. "A monthly 'inspection fee' charge will begin later this year to recover inspection fees for other years."

The recurring monthly fees will be less than the $1.99 fee charged in March, he said, although the company hasn't figured out the exact recurring amount yet.

AT&T's move stands out because most companies recover the inspection charge in their rates, TRA spokesman Greg Mitchell said.

But tacking the fee on to customers' bills is well within the company's rights. Not only does state law give utilities express permission to add the inspection fee to customers' bills, it also allows AT&T to reover those costs by upping it rates without TRA approval.

"AT&T operates under market regulation which, according to the state law, does not require them to seek TRA approval for any rates or fees," Mitchell said.

Still, Meyer said he doesn't like the way AT&T is going about adding the charge, which he considers a de facto rate increase.

"Slip a little line item on there that's just a couple bucks and is a one-time deal," he said. "Then pretty soon it's on there every month."

The regulatory laws vary from state to state. In Georgia, the only fee utility companies are allowed to pass on to the consumer as a line item is the Universal Access Fund charge, said Leon Bowles, director of telecommunications at the Georgia Public Service Commission. All utilities pay a regulatory assessment fee in Georgia, he added.

"My guess is they're collecting it somewhere but it's not listed on the bill," he said.

AT&T's inspection fee only applies to landline customers because the TRA doesn't monitor wireless providers. And it could push people like Meyer -- who have been toying with the idea of ditching their landlines -- to make the complete switch to cellphones.

The number of landlines in Tennessee has been steadily dropping over the past decade from 3.7 million in 2003 to just 2.2 million at the end of 2012, according to the TRA. At the same time, the number of people using cell phones has nearly doubled.

Corney declined to say how much money AT&T is collecting through the new inspection fees and would not say how many landlines AT&T serves in the state. But he has noticed a statewide trend away from landlines and toward unregulated options like cell phones or broadband phones.

He said that AT&T will reduce the fee for customers if state legislators vote to down the rate the company is required to pay the TRA.

"In the previous administration, telecommunications inspection fees increased despite a dramatic decrease in telecommunications services regulated by the commission," he said. "We are hopeful that legislation will pass this session to reduce the regulatory burden on landline telephone customers in Tennessee."

Until that happens, AT&T landline customers can expect to pay a little more.

Contact staff writer Shelly Bradbury at or 423-757-6525.