Business phone costs fell 6.5% in the first quarter.

The drop continued a trend that has lopped one-quarter off phone costs since the AT&T; breakup three years ago, a report said. Leading the decline was AT&T;’s Jan. 1 cut in long-distance rates and subsequent cuts by its two main rivals, MCI and US Sprint, according to CCMI-McGraw Hill. However, the cuts in long-distance rates have been offset by increased charges for local service. The Consumer Federation of America said earlier this year that only customers who make $40 or more in monthly long-distance calls have benefited from the transfer of costs from long-distance to local service.