Long-Distance Rates for AT&T; Fall 3.5% Today : Consumer Group Says Cuts Favor Businesses
American Telephone & Telegraph’s interstate long-distance rates will fall an average of 3.5% today, with business customers likely to reap the greatest savings, and federal regulators say they are looking into whether the company’s rates should be cut further.
AT&T; said Thursday that residential customers, who on the average pay about $9 monthly in long-distance calls, will save just 21 cents, a 2.4% reduction, as a result of the cuts taking effect today. But the company’s highest rates--those in effect from 8 a.m. to 5 p.m. on weekdays, when most business calls are placed--will drop by 6.4%.
Evening rates, which run from 5 p.m. to 11 p.m. weekdays, will fall by 1.9%, and the already deeply discounted late-night, weekend and holiday rates will be trimmed by just 0.6%.
MCI Communications and US Sprint, AT&T;’s principal competitors, said they still were studying the rate cuts but promised to keep their rates lower than AT&T;’s.
AT&T; said it made the deepest reductions in business-hours rates for competitive reasons. The move drew an angry response from consumer advocates, who said that the company is more interested in wooing businesses than serving residential customers.
Competition Heats Up
“This is the handwriting on the wall for what to expect in the future under deregulation,” said Ken McEldowney, executive director of San Francisco-based Consumer Action. “AT&T; is responding in the expected way to competition for its business customers.”
The rate reduction was foreshadowed on Christmas Eve, when the Federal Communications Commission ordered local phone companies to cut their access rates--the charges that AT&T; and other long-distance carriers pay them for completing long-distance calls--by $772 million, effective today. Until Thursday, AT&T; had not indicated precisely how much of a cut that would mean in its rates.
The access-charge reductions stem from various FCC rule changes as well as the increasing and more efficient use of the local telephone systems. Since the breakup of AT&T; four years ago today, the FCC has required the company to cut its long-distance rates by nearly 36% as access charges were shifted to local phone bills. Residential customers now pay an FCC-imposed $2.60 monthly access surcharge to their local phone companies.
“What this means,” said consumer advocate McEldowney, “is that residential customers who do not make a large number of long-distance calls are finding their monthly phone bills increasing.”
The FCC’s insistence that AT&T; pass along its savings in the form of lower rates has put a price squeeze on MCI and Sprint, which have struggled to attract customers by offering low rates. Both have supported an FCC proposal to give AT&T; more flexibility in determining its rates, apparently hoping to ease the price competition. The FCC is expected to make a decision on the proposal before the Reagan Administration leaves office.
The FCC also has asked AT&T; to provide further financial data for 1988 concerning the effects of tax law revisions, changes in pension accounting procedures and investment in new equipment.
“We don’t have the information at the moment to say whether the sum of those and other potential changes is positive or negative,” Gerald Brock, an FCC official, told the Washington Post.
