11% Cut Ordered in AT&T; Long-Distance Call Rates

The Federal Communications Commission on Tuesday ordered the American Telephone & Telegraph Co. to reduce its long-distance rates by $1.85 billion beginning Jan. 1, saving consumers an average of 11% on long-distance calls.

The rate cut, the fourth in less than three years, is “truly good news for American consumers,” FCC Chairman Mark S. Fowler said. “We project that the average price of long-distance calls will drop by 11%, with no change in local telephone rates.”

A survey released Tuesday by the Consumer Federation of America concluded that reductions in long-distance rates have not compensated for the increases in local phone company rates since the breakup of AT&T; three years ago. But Fowler said the survey ignored recent trends, including reductions in out-of-state long-distance rates.

Looking ahead to the New Year’s Day football games, Fowler said a five-minute daytime call from Pasadena, Calif., the site of the Rose Bowl, to Ann Arbor, Mich., will cost $1.68 on Jan. 1, 1987, compared to $2.53 in January, 1984.

After noting that other long-distance companies not regulated by the FCC, such as MCI and Sprint, are expected to offer similar rate reductions, the commission projected that the potential overall savings to businesses and consumers will exceed $2 billion.

Because of this latest reduction, Fowler said, “the average consumer will be paying long-distance rates that are about 30% lower than what they paid three years ago.”

The FCC said the AT&T; rate reductions that take effect Thursday are 50% greater than the cut of $1.2 billion that the phone company had proposed in November.

The higher AT&T; rate reductions are primarily the result of decreases ordered last Wednesday by the commission in the charges that AT&T; and other long-distance companies pay to local phone companies for local connections.

“Our prices are being reduced because we are passing along the cost savings that we received when the FCC told the local companies to charge us less for connections,” AT&T; spokesman Edith Herman said. “Consumers will see the effects of this action in their bills in January,” she said.

Costs Overestimated

In addition, the FCC said the new rate reductions reflect its findings that AT&T; had overestimated the costs of operating its long-distance network by $225 million, including projected costs for billing and collecting long-distance charges.

With the new reductions, AT&T; estimated that the cost of long-distance calls made between 11 p.m. and 8 a.m. and on weekends will drop by 5.9%, calls from 5 p.m. to 11 p.m. will cost 9.3% less, and calls from 8 a.m. to 5 p.m. will be 14.5% cheaper. Rates for WATS lines, which are used by businesses for toll-free incoming calls, will drop 5%.

Efficient Communications

Albert Halprin, chief of the commission’s common carrier bureau, called the reductions “the direct result of FCC programs to encourage more efficient use of one of this nation’s greatest resources--our telecommunications network.”

The FCC said growth in long-distance calls resulting from lower rates has allowed rate reductions to take place without any increase in local rates. Fowler predicted that local telephone rates, which are set by states, would remain flat or even be reduced in some areas in 1987.