Some Phone Credit Cards Hit as Unfair

Customers of Pacific Bell and the six other former Bell System telephone companies may get new credit cards soon as a result of a preliminary U.S. Justice Department finding that the calling cards provide AT&T; an unfair advantage in the long-distance business.

In initiating the action, the department said that the present charge card system has two flaws that amount to unfair competition in the increasingly deregulated long-distance telephone market:

- The cards are promoted “misleadingly” as good for calling “anywhere,” even though the local companies are limited to handling only calls within a single local service area (of which there are 10 in California).

- The cards “discriminate” in favor of American Telephone & Telegraph, which once was the corporate parent of the seven operating companies, by routing all long-distance calling card calls through AT&T;’s network.

Consequently, department officials argued, customers who subscribe to competing long-distance services may unwittingly use AT&T; service when they make calling card calls.

Carries AT&T; Number

Cards issued by the local phone companies carry customer identification numbers for both local and AT&T; service without identifying AT&T.; The new cards would not have the AT&T; number.

Justice Department officials gave the local companies until June 25 to comply with its demands or explain why they should not have to.

A spokesman for Pacific Bell in Los Angeles said the company has not decided how to respond. An estimated 2 million of the magnetically coded, plastic cards have so far been sent to its customers in California.

In a letter that went out Friday, signed by Charles F. Rule, acting assistant attorney general, the department asked the companies to “initiate corrective action immediately.” Rule acknowledged that the companies are developing technology to correct the problem but added that it is not expected to be ready before 1989.

Must Adjust Equipment

Under the consent decree that provided for the breakup of the old Bell phone system on Jan. 1, 1984, AT&T; is supposed to compete in the long-distance business on an equal footing with such competitors as MCI Communications and U.S. Sprint. To that end, the seven former Bell operating companies have had to adjust their equipment to provide local connections of equal quality and cost to all long-distance carriers.

A spokesman for MCI welcomed the department’s action, saying that calling card promotions have been “misleading” customers about what services the local companies provide.