AT&T to Hike Long-Distance Rates

<br>NEW YORK (AP) _ Starting Tuesday, AT&T Corp.'s long-distance customers will pay 16 percent more in fees related to their out-of-state toll calls. <br><br>The carrier said its plunging consumer

Wednesday, January 2nd 2002, 12:00 am

By: News On 6

NEW YORK (AP) _ Starting Tuesday, AT&T Corp.'s long-distance customers will pay 16 percent more in fees related to their out-of-state toll calls.

The carrier said its plunging consumer long-distance revenues left it with no choice but to raise the fees it collects from customers that are earmarked for the Federal Communications Commission's universal service fund.

The fund subsidizes Internet use in public libraries and schools, as well as phone service for low-income customers and rural health care providers.

Carriers are required to pay 6.8 percent of consumer long distance revenues to the fund. AT&T and Sprint currently impose a fee of 9.9 percent onto customers' long distance bills.

AT&T is raising that share to 11.5 percent, so that a customer who spends $50 on long distance will pay $5.75 in fees, up from $4.95.

``Because of our declining revenues, we need to recoup the money in order to pay the fund,'' said AT&T spokeswoman Claudia Jones. ``This isn't a revenue generator for AT&T.''

AT&T expects consumer long distance revenues to drop by 25 percent or more in 2002.

One analyst suggested the fee hike was a sign of the weakness of the long distance telephone sector, buffeted by customers switching to e-mail and wireless phones as well as price competition from local carriers.

``AT&T's consumer long distance business is hurting financially, and this is one way for it to improve its margins,'' said Lisa Pierce, a Giga Group telecom analyst. ``The question is, will the rest of the industry follow? AT&T may be suffering more than the average company, but the others aren't in good shape either.''

At Sprint, spokesman James Fisher said the carrier has no announced intention to raise the fee. WorldCom could not be reached for comment.

Pierce said the FCC should shift the fund's burden away from the ailing long distance sector. She said AT&T's move could push more telephone customers to replace wireline phones with a cellular phone, and avoid the growing number of fees, which make up, on average, 19 percent of a consumer long-distance bill.

``I don't think we should be mad at (AT&T),'' Pierce said.