State Orders Cuts in AT&T; Phone Rates

The state Public Utilities Commission has ordered a 27% cut in American Telephone & Telegraph Co. rates for long-distance calls within California for the last six months of this year.

The reduction, which may be continued next year, totals $194 million from July through December and passes on to customers AT&T;’s savings in fees to local phone companies for connecting to their networks, the PUC said.

The commission Friday ordered a continuing rate reduction of 10%, or $168 million a year. On top of that, AT&T; was told to give customers a one-time refund of $110 million during the six-month period, or 17%, to make up for rates it collected during the first half of 1988 that have proved to be excessive.

Reduction to Continue

The 10% reduction will continue in 1989, and another one-time refund, which could approach 17%, will be added, said Carl Danner, an aide to PUC member G. Mitchell Wilk.

In a separate action, the commission authorized AT&T; to start its own billing for many residential and business customers as early as this fall. The company now sends its billing statements as a part of the bills collected by local phone companies.

The separate bills would be allowed for residential customers with $5 a month or more in in-state toll charges and for businesses with $10 a month or more.

The PUC said the decision would cost directly billed customers $2 to $6 a year, cost Pacific Bell and General Telephone more than $45 million a year in lost billing fees from AT&T; and save AT&T; $49.3 million in billing fees and other costs.

The rate reductions stem from a 1985 PUC decision to phase out, over seven years, the payments AT&T; and other long-distance companies had been making to local companies like Pacific Bell for the right to tie into their networks.

The commission split 4 to 1 on how to reduce customers’ bills, with dissenter Frederick Duda voting to give back all the money in a lump-sum refund, rather than devoting some of it to a continuing rate reduction.

The majority said that a rate reduction “will stimulate greater volumes of calling; these additional calls create benefits to customers that they would not otherwise receive if rates were to remain near current levels. We believe that most customers will prefer to make more future calls at cheaper rates instead of receiving a one-time refund based on recent use.”