Wireless carriers have always been a fan of add-on fees and charges – it’s a tried-and-true revenue stream outside of their normal customer rates. But over the past several months, we are seeing the list and scope of these fees growing for enterprise customers. One example is Verizon’s “Economic Adjustment Charge.”
Beginning in June 2022, Verizon began imposing a new “Economic Adjustment Charge” on enterprise customers. Without exemption, business customers’ mobile phone data plans effectively increased by $2.20 a month and basic service plans (tablets and non-smartphones)
increased by $0.98. To add insult to injury, Verizon further increased the $2.20 per month charge by another $0.78 for smartphones in January 2023.
What’s Behind Verizon’s Economic Adjustment Charge Increase?
Verizon’s public reasoning behind the new charge is not surprising. An inflationary economic climate has driven up operating expenses and the company is now passing those higher costs on to its customers. The new Economic Adjustment Charge is intended to defray the carrier’s “administrative and telco expenses and costs of complying with regulatory requirements.” especially in the broader IT landscape.
It’s worth noting that Verizon is not the only wireless carrier to do this. AT&T has also raised rates. While direct price increases primarily affect consumer and family plans, indirect increases – such as raising the cost of mobile devices (by as much as $25 in some cases)– will have a discernible impact on business customer spending.
The Impact of Verizon’s Economic Adjustment Charge on Customer Costs
The cost implications of this change on enterprise customer spend is material. All Verizon Business customers are impacted. NPI’s initial analysis indicates the charge will raise customer costs by at least 5% (if not more). And as Verizon has demonstrated, the increases may continue as the company wrestles with inflation.
NPI advises Verizon Business customers take the following steps to mitigate the effects of these new charges on annual spend:
- Start by optimizing and renegotiating your Verizon contract for corresponding savings. The optimization of pricing/rates, discounts, credits, and business terms is an exercise that should be performed every 18 months. However, most customers are well overdue – which makes Verizon’s Economic Adjustment Charge just one more reason to get moving. Contract optimization and renegotiation typically reveals savings of 15 to 30%. That means this exercise will not only neutralize the impact of Verizon’s newest surcharges, but it will also likely offset the impact of any more coming down the line soon.
- Load-balance business volume between multiple carriers. This established best practice finds new relevance in the current economic climate. Verizon’s surcharge is aggressive, particularly for business customers. Balancing volume between competitive carriers will apply competitive pressure to drive down costs.
Remember – now is the time to inspect your wireless carrier agreements and spend strategy for savings!