AT&T; Plans Long-Distance Minimum Bill

AT&T; Corp. said Friday it will begin charging new residential customers a minimum of $3 a month for long-distance phone service, a move that will affect millions of consumers as the company tries to wring more revenue from callers with tiny bills.

The move is the first significant push toward making long-distance more like such services as cable and banking, which collect monthly minimum fees regardless of customer usage.

“There has never been the notion of paying for access to long-distance, and that is what this introduces,” said Samuel A. Simon, chairman and founder of the Telecommunications Research and Action Center in Washington, a nonprofit group that monitors phone rates. “No matter how you look at it, a lot of people will be paying a lot of money for not doing anything.”

The new policy takes effect today for new residential customers signing up for a calling plan and Friday for new basic-service customers. Once in place, callers who make no long-distance calls or rack up less than $3 in charges in a given month will be assessed the difference.

For now, the minimum charge does not apply to the company’s 70 million existing customers or low-income customers who qualify for discounted service. The company also will exempt existing customers enrolled in a calling plan that has a monthly fee.

However, existing customers who change calling plans on or after Jan. 1, 1999, will be subject to the monthly charge.

Many long-distance companies already charge monthly fees or impose minimum usage requirements on customers in special calling plans, in return for lower per-minute prices on calls. But AT&T;’s new plan, which will spread to its current users over time, is a big step toward instituting minimum charges on all long-distance bills, regardless of the per-minute rate offered.

AT&T;, the nation’s largest long-distance carrier, downplayed the effect of the change, noting that just 15% of its new customers--more than 10 million people--spend less than $3 in any given month. But AT&T; said it loses $300 million a year sending bills and providing customer service to those occasional long-distance callers.

“We do care about all our customers, but we are losing money on this particular segment of the market,” said Nilda Weglarz, an AT&T; spokeswoman. “People pay monthly fees on so many things, but I think it’s just a shock for customers of AT&T.;”

MCI Communications and Sprint, the No. 2 and No. 3 U.S. carriers, said they have no plans to adopt a similar policy, although both companies already have a high percentage of customers on plans with monthly fees or minimum usage requirements.

Consumer groups immediately assailed AT&T;’s action as further proof that unregulated phone companies are moving to hit low-end users with fees while rewarding big spenders with discounts.

An estimated 40 million of U.S. long-distance customers are not enrolled in a calling plan, and about 35 million of them are AT&T; customers, according to Gene Kimmelman, co-director of Consumers Union’s Washington, D.C., office.

Those callers generally pay higher per-minute fees, ranging from 13 cents to 28 cents a minute at AT&T;, compared to the 10- to 15-cent rates available through the company’s calling plans.

“This is part of a trend toward dumping huge costs on low-volume customers and offering discounts to the high-end customers,” said Kimmelman, whose group has joined others in asking the Federal Communications Commission to consider re-regulating the long-distance companies.

Because of its roots as the nation’s long-distance monopoly, AT&T; continues to command a solid lead in customer numbers. But as heavy users have learned to shop around among the carriers, AT&T; has slowly lost some of its best customers, while keeping an estimated 20 million customers who do not make any long-distance calls in a given month, according to Brian Adamik, a senior vice president at the Yankee Group, a Boston-based research firm.

For that reason, Adamik and others are applauding AT&T;’s new strategy.

“They’re simply saying, if you want AT&T; service, you have to spend at least $3 a month,” Adamik said. “Why should 20 million people have AT&T; at their doorstep for free?

“The fact of the matter is, no one wants these people. There’s not a long line of companies waiting for these customer,” he said.