Unlike customers services, which must be priced to compete in the market, service industries have a long reputation of arbitrarily pricing customer penalties for non or late payment. But lately, in this economy, the policies and pricing of penalty has gotten completely out of control.

It’s kind of like a penalty has no limit of intrinsic value, and has instead become an underhanded way to generate alternative revenue streams, conveniently invisible at sale time.

I have written service billing systems before. Late payment is not an issue for any human resource. An automated system handles the entire cycle of late payment, customer notification, extension, and, eventually, service disconnection (the service I authored did not levy late fees) which the user could re-enable themselves online.

There are no human beings involved in the process at any point and whatever services are consumed by the user during the late period is of no concern (depending on service of course). Its just a cost of doing business – and a tiny one.

In fact, while late fees are higher today than ever, they were probably much more in line with reality years ago, when humans had to get involved more regularly with simple disruptions which now incur no real labor or expense whatsoever.

Which is why, for a wireless company especially, hairtrigger late penalties are 100% about revenue generation and have no relation whatsoever to real inconvenience to the wireless company.

It’s been many, many years since I have had a service shut off for late payment, but today we found my wife’s iPhone had lost service due to nonpayment to AT&T Wireless.

As it turns out, my wife’s cell phone bill was indeed late – but only 11 DAYS late. How could AT&T possibly shut off a longtime, reliable customer for being 11 days late? There must be some mistake. As we needed to call AT&T anyway to get her reconnected, we would find out.

As it turns out, there was nothing more to the story. The rep explained to me that it was AT&T policy to disconnect users at any time after the bill due date for late payment (!)

I explained to the service rep that I understood the need for a late payment policy, but that disconnection after 11 days was completely outside any sort of industry standards whatsoever.

I hadn’t even received a late notice in the mail yet, or my next bill!

Then I found out the reason WHY AT&T is so hairtrigger to disconnect for late payment. Not only is there is a $5 late payment fee, but also a $36 (!!) reconnect charge for re-enabling the service after it has been disconnected.

By disconnecting service before the bill is paid, AT&T gets to circumvent any state laws regarding late payment (which typically restrict such charges to $5 or 1.5% of the amount owed), by charging a seperate and much higher fee for reconnection of service!

11 days late, in AT&T world, is a $41 penalty PLUS service disruption!

And lets think about it – what the HELL is the labor involved in reconnection – or disconnection – of wireless service in 2010? A keystroke? Couldn’t have been much more than that, as the rep had it done in seconds.

It’s completely criminal. There is no relation between my being 11 days late with a bill, and $41 in recovery to AT&T – that’s just robbery.

I told the customer service rep that there was absolutely no way in hell I was paying a $36 reconnect fee, and she said she “would see if she could get it waived” – which she did, without speaking to anyone.

What actually probably happens on her end is that she attempts to see how many people she can get to NOT complain about this. I doubt AT&T gives anyone a hard time complaining about this fee, as it is just so obnoxious.

Like so many iPhone users, I am chomping at the bit to switch to Verizon. AT&T has completely relied on its exclusivity contract with the #1 smartphone while providing the worst customer service of the big three.

Despite being constantly hounded for poor call quality and terrible 3G coverage, rather than hang a lantern on their problems and address them, they pretty much just pretend they don’t exist.

When Verizon recently exposed AT&T’s relatively horrific 3G coverage, AT&T responded by saying they had the fastest 3G service ( again, 3G speed in an area with no coverage is 0 Mbps ), just ignoring the argument.

Later, they responded by saying they must be better as they have less customer churn, ignoring the fact that everyone knows that that is due to the popularity of the iPhone in spite of the hatred of AT&T by iPhone users.

Originally appeared on: StationStops - Metro-North Train Schedules and NYC Commuting Blog See the original post here: AT&T Wireless: 11-Day late Bill = $41 Disconnect ?!