Activists Seek AT&T; Rate Rollback
A consumer group Wednesday demanded that federal regulators require AT&T; Corp. to cut its weekday calling rates, saying the long-distance giant broke a promise to lower prices for many of its 80 million customers.
Consumers Union also accused the Federal Communications Commission of going too far in deregulating telephone rates in the $80-billion long-distance market.
“It is too bad this Thanksgiving marks the second in a row consumers have experienced a rate hike because AT&T; was effectively deregulated,” said Gene Kimmelman, co-director of the Washington office of Consumers Union.
“The telephone is a vital link to family and friends during the holiday season, and we think the deregulation that yielded this rate hike is a real turkey,” he added, noting that most long-distance companies have followed AT&T;’s rate hikes in the last three years.
The group said AT&T; this month raised average basic rates for nearly half its weekday calling periods, breaking an agreement reached last summer with the FCC to cut rates 5% to 15% for basic calling plan customers. The changes do not affect those on special calling plans.
“Consumers who make calls between 7 a.m. and 8 a.m. are paying as much as 100% more, because rates rose from an average of 13 cents a minute to 28 cents a minute,” Kimmelman said in a letter to FCC Chairman William Kennard.
“Between 5 p.m. and 7 p.m., rates rose from an average of about 17 cents a minute to 28 cents a minute, a 65% increase.”
Consumers Union accused the FCC of ignoring the move.
“AT&T; tells us that under their rate change some customers will have higher bills and some customers will have lower bills,” said an FCC spokeswoman.
“We encourage consumers to look at their phone bills. There are other long-distance companies, and consumers should be exploring their options.”
AT&T; spokesman Wayne Jackson denied that the long-distance carrier had raised its rates.
“This is not a rate increase. It’s a rate restructuring and it’s a rate simplification,” he said. “We did that because that’s what consumers told us they wanted: simpler rates that are easier to understand.”
AT&T; announced this month that it would extend its “peak” rates period by three hours.
Those rates would apply from 7 a.m. to 7 p.m. local time, Monday through Friday. The previous peak period was 8 a.m. to 5 p.m. The lowest weekend rate, meanwhile, was extended to include all of Saturday and Sunday, instead of ending at 5 p.m. Sunday.
Consumers Union asked the FCC to require AT&T; to restore its basic weekday calling rates to levels announced June 30.
Also Wednesday, AT&T; said it is looking to sell its paging unit as part of a strategy of quitting businesses that aren’t essential to its main phone operations.
The division is expected to fetch about $490 million, analysts said. The move, first reported by the New York Times, follows AT&T;’s decision last month to put its Universal Card business and the customer-care division of its Solutions unit on the block.
The planned sale comes as prices and profit in the U.S. paging industry have fallen because of competition from digital wireless phones. New AT&T; Chief Executive C. Michael Armstrong is aiming to quickly trim costs and shore up areas such as long-distance and cellular, where AT&T; already dominates.
AT&T; is 10th in the U.S. paging industry, where average revenue per customer has dropped about 20% in the last two years.
AT&T; shares added 38 cents to close at $55.88 on the New York Stock Exchange.
