AT&T Boosts Some Per-Minute Charges

Wednesday, June 7th 2000, 12:00 am
By: News On 6

WASHINGTON (AP) — AT&T is raising many per-minute rates for tens of millions of customers, but federal regulators say they will hold the company to a pledge to pass on billions of dollars in savings to consumers.

Just last week, the Federal Communications Commission announced that it would cut by $3.2 billion the ``access fees'' that local phone companies charge long-distance carriers to connect calls — costs that typically are paid by phone users.

In turn, AT&T and Sprint, the nation's No. 1 and No. 3 carriers, had formally pledged to pass along these reductions to consumers. Consumer advocates from the start voiced doubts that the promises made by the companies and the commission would materialize into real benefits for consumers.

Today, FCC Chairman William Kennard said the agency would hold AT&T to its word.

``AT&T promised to pass on savings to all consumers,'' Kennard said. ``Their new rate plan does not do that.''

According to its most recent rate changes, AT&T plans to increase its per-minute rate for basic schedule customers Monday through Saturday.

—Under the old basic rate, the company had charged 26 cents per minute during weekday peak times, 7 a.m. to 7 p.m., and 16 cents per minute during off-peak times, or 7 p.m. to 7 a.m. Now, customers on the basic schedule will pay 29 cents a minute all day Monday through Friday.

—Under the old basic rate, the company had charged 11.5 cents a minute on Saturday and Sunday. Now, customers will pay 29 cents a minute on Saturday. But on Sunday, the rate will drop to 7 cents a minute.

FCC officials said last week they were confident the access fee reduction would trigger a rate war to bring down consumer phone bills. But today they toughened their stance and said they would enforce the pledge of AT&T and others to pass through savings to consumers.

But consumer groups chastised AT&T, saying that the company is trying to recuperate its costs for dropping the $3 monthly minimum fee by raising per-minute rates.

The companies ``have learned over the years that if you change two numbers at one time, the FCC gets confused,'' said Mark Cooper, research director for Consumer Federation of America. He estimated that AT&T basic rate consumers making more than 12 minutes of calls a month would see their bills go up and those who make 44 minutes of calls would see an increase of $3.00.

Gene Kimmelman, co-director of the Washington office of Consumers Union said that with the increases in other rates, AT&T will actually end up keeping the lion's share of the savings netted from the access charge reductions.

It was clear that the plan's most immediate benefits would go to those who make few or no long-distance calls, because AT&T has pledged to do away with a minimum $3 monthly fee. But the impact on moderate or heavy users — who make more than $3 in calls a month — depended on how much the carriers reduced their per-minute rates.

AT&T said it would keep a current plan set at 19 cents a minute all the time, with no monthly usage charge and no monthly fee, for at least one year. It also plans to send a letter to all basic rate customers to inform them about the change and other options available.

Company officials defended the rate increases, noting they are comparable to what competitors charge already. And they emphasized that consumers should analyze their calling patterns to select the plan that works best for them.

For example, ``If a basic schedule customer does most of his or her calling on Sunday, and many customers do, that plan is an attractive option,'' said AT&T spokeswoman Rochelle Cohen. Others might choose the 19-cent-a-minute plan, she said.

``AT&T is committed to passing on to consumers all access charge reductions as we have always done,'' she said.