Report on Telephone Rate Hikes Called Misleading

A Consumer Federation of America report concluding that residential telephone subscribers have been shortchanged since the Bell System breakup was branded inaccurate and misleading by the phone industry and its regulators.

The regional Bell phone companies and the Federal Communications Commission rejected the report’s findings that phone rates have ballooned since the AT&T; divestiture while the spinoff companies earn excessive profits.

“Service has never been better. The percentage of homes with a phone has never been higher,” said BellSouth, one of seven regional Bell companies spun off from American Telephone & Telegraph Co. in the breakup five years ago.

The federation’s annual report on phone service, released Wednesday, said telephone service is no longer the consumer bargain it once was.

Overall phone rates, which rose at less than one-third the rate of general inflation in the 50 years before divestiture, have been rising as fast as inflation since then.