Your Phone Bill Just Got More Expensive. Here's Exactly Why.

📆This Week’s Topic

This week we will be talking about AT&T and their cellular plans. Recently, they announced that they will be investing $250 billion into their cellular network in order to scale it and improve it as we move into the AI age. AT&T has always been considered the cell phone company that is at the base for the whole industry while being a bit behind as tech rapidly advances. But, this investment may change those perceptions.

💳 The $250 Billion Investment

You might be asking, why after all these years is AT&T investing a quarter of a trillion dollars in their network? The main reason is that they are experiencing issues with their existing network is struggling to handle the AI that we are using now and that is putting a lot of strain on the network. In order to keep growing as a company they need to invest an enormous amount of money to upgrade their network to handle the new AI usage, especially with over 100 million U.S. wireless subscribers the rapid expansion of AI usage needs a new and improved network to support it.

📊How Does This Affect My Wallet?

Well even though AT&T is investing $250 billion in their network recovering will fall on the customers. The consumers have already had to deal with price hikes of $10 to $20 per month depending on the size of their plan. This has caused a lot of AT&T customers to consider switching to competitors, who are offering better deals and discounts along with more competitive prices that AT&T simply cannot match.

🔚 Outcome Of Investment & Price Hikes

The outcome for these price hikes and the investment is not a complete straight line. But after the most recent price hike AT&T saw a notable increase in churn up from 0.80% to 0.89%. Even though 0.08% of the customer base doesn’t sound like much, it still amounts to roughly 90,000 customers switching. Even though AT&T is making the biggest investment in cellular in 150 years, unless they provide significantly better service and show their customer base that the new quality of the product is worth these steep price hikes they may begin to see those switches increase even more after the five year period AT&T is planning to invest the $250 billion. It is likely that they may have to cut down the price after the five year period as it could hurt AT&T’s customer base.

⏳ Final Summary

In summary, AT&T is investing $250 billion in their cellular networks to try to expand as their current network is very crowded right now. Although, most people assumed this to be a net positive users have already reported a $10-$20 price hike depending on their plan. This means that for future AT&T users it is going to be more expensive than alternatives but may have increased speed and quality due to the increased network. The question is whether that increased network is going to be worth the price but we probably won’t know that for a while since the investment is spread over the next 5 years.

🙏Thank You & Important Information

Anyway, thank you so much for reading this edition of Friday Finance. If you have any topic you would like to read you can hit reply on any of our emails, and give us a suggestion and we will do our best to cover it.

Jacob Gans & Grayson Stein

Friday Finance