PUC Allows PacBell to Raise Fees on 411 Calls

After an 18-month fight, Pacific Bell on Thursday won the right to nearly double its directory assistance fee to 46 cents per call as well as eliminate free 411 calls for businesses and reduce free requests from residential customers.

The state Public Utilities Commission rejected a smaller increase and approved the changes despite strong opposition from consumer groups and a statewide outpouring of customer complaints.

The price hike--the first directory assistance increase by PacBell since 1984--is likely to infuriate customers who believe they are being forced to use 411 more because of changing area codes and phone books with limited coverage or outdated listings. The change, which could bring PacBell an additional $100 million annually, is expected to take effect in two to four weeks.

An increase in fees, critics argued, will hurt consumers--especially pay-phone users, the elderly or customers on fixed incomes and those with limited English-language skills.

PacBell residential callers now get five free local directory assistance calls a month and pay 25 cents for each additional request. After the change goes into effect, residential customers will be limited to three free 411 calls a month and will pay the higher rate for additional calls.

PacBell, the state’s largest phone company, had originally sought permission to raise the fee for local directory assistance to a maximum of $1.10, with an immediate increase to 50 cents.

GTE, the state’s second-largest local phone company with nearly 3.5 million customers, gives residential customers five free local 411 calls a month, and business customers get two free queries a month. The cost for each extra call is 35 cents. The company has not asked regulators for a price increase, but a GTE spokeswoman said the fees are under review.

PacBell argues that the changes will have a limited impact on callers because 75% of its customers make three or fewer directory assistance calls in a given month. But others question that figure, noting that there are no independent tallies of directory assistance usage.

The company would not provide additional details on how many Californians would be affected by the changes.

But even if only 25% of PacBell’s 10 million residential customers make a fourth call to directory assistance in one month, the changes will have affected 2.5 million Californians and yielded PacBell an extra $1.15 million for the month. In filings with the PUC, PacBell said it expected to gain an additional $125 million in annual revenue if the fee was raised to 50 cents.

PacBell’s original request for a rate increase triggered a torrent of complaints from Californians. At last count, nearly 42,000 customers had written to the PUC to object to the price hike, and many more attended a series of public hearings held over the last year.

An alternative proposal before the PUC would have allowed a smaller rate increase--to 35 cents--and would have retained the existing allotment of free information calls for residential customers.

Calling the 46-cent price “reasonable” and the 35-cent alternative “bad policy and bad regulation,” PUC Commissioner Henry Duque and colleagues Josiah Neeper and President Richard Bilas voted in favor of the 88% price increase.

PacBell noted that the new price remains below the fees charged in 25 other states.

“At 46 cents, PacBell customers who punch in 411 will still get the best bargain for local directory assistance,” said PacBell spokesman Steve Getzug.

Still, two of the five PUC commissioners vehemently opposed the price hike, arguing that the fees would hurt consumers--especially customers on fixed incomes and those who have sight problems or limited English-language skills.

“I believe [the increase] is wrong, extremely unfair to the people of California, and extremely uncalled for,” Commissioner Joel Hyatt said.

PacBell has said its current price does not cover the costs of providing the service. In addition, the company has said it faces strong competition from Internet-based directory services, as well as from long-distance carriers, such as AT&T; and MCI WorldCom.

An informal survey by The Times on Thursday revealed that in 10 directory assistance calls an operator spent only 10 seconds on the line answering a phone number request.

Indeed, others in the phone industry challenge the notion that PacBell has competitors in directory assistance.

“Who competes in 411? Well, nobody does, because every time you call 411, you get PacBell,” said Stuart Whitaker, a consultant and publisher of the Operator, a Falls Church, Va.-based industry newsletter.

What’s more, the directory services offered by the long-distance carriers are not considered part of local phone service and cost far more--between 95 cents and $1.40 per use, whether it’s for a local number or an out-of-region listing.

“The reality is this is not, in any practical sense, a competitive service, and millions of Californians rely on it,” Hyatt said.

PUC Commissioner Carl Wood, who had proposed the increase to 35 cents, questioned the need to raise fees as high as 46 cents, expressing frustration that no independent data exist that show whether the proliferation of new area codes increases the use of directory assistance.

Consumer groups acknowledge there is no consensus about how much it costs PacBell to provide local 411 service.

In papers filed by PacBell, the company said it cost 33 cents, while PUC Commissioner Duque cited a price of 39 cents a call. Critics have suggested that the cost may be much lower, given operator layoffs, call center consolidation and increased automation in PacBell’s directory assistance division.

In addition, some of those costs are offset by the fact that PacBell’s 411 operators now also handle requests for nationwide (or long-distance) directory assistance. The nationwide information service is not regulated, and PacBell charges 95 cents for each of those calls.

For customers who want to buy telephone books outside their local calling areas, the cost ranges from $12 to $44 each, depending on the size and whether they have Yellow Pages listings, PacBell said.

Under PUC rules, customers must be given unlimited free use of local directory assistance if they are unable to use a phone book because of visual or other limitations.

PacBell customer Kathleen Hughes of Pasadena said the 46-cent cost could add up fast for many people. “I deplore the rate increase because it will be a hardship for seniors like me,” she said.

The Utility Reform Network, a San Francisco-based consumer group, immediately vowed to push for a new hearing on the matter.

“I think it’s indefensible . . . the commission went out of its way to help the monopoly make more money today,” said Paul Stein, an attorney at TURN. “We think there are strong grounds for overturning this decision.”