AT&T Stokes FCC's Anger with Consumer Rate Hike

FRAMINGHAM (06/26/2000) - At least one member of the U.S. Federal Communications Commission is calling on the FCC to suspend its recent approval of an AT&T Corp.-backed plan to reform access rates and bill surcharges, in the light of a new move by AT&T to raise its basic long-distance rates.

AT&T on Friday announced it was raising its basic daytime residential rate to 29.5 cents per minute for people who have not signed up for a discount plan.

The move provoked a bitter response from FCC Commissioner Gloria Tristani, who in a statement accused AT&T of "failing to deliver" on promises it made when the FCC voted to reduce the access charges on long-distance carriers last month.

Tristani then said the FCC should suspend July 1 implementation of the access-reform plan, originally proposed by a group of six carriers, including AT&T, labeling themselves the Coalition for Affordable Local and Long-Distance Service (CALLS).

The CALLS plan simplifies and slightly reduces the confusing series of universal-service surcharges that now appears on residential users' bills, reduces the per-minute fee charged long-distance carriers by Bell companies for completing their calls and sets up a new federal fund to meet universal-service goals.

Despite FCC claims that the CALLS plan also helps business customers, analysts have noted that it doesn't actually reduce any of the business-user universal-service surcharges (See FCC order won't reduce business telecom surcharges).But if the plan doesn't go into effect as scheduled, business users may have more difficulty in negotiating reductions in their individual per-minute discount plans, owing to uncertainty among carrier pricing executives and sales representatives.

AT&T said Friday's basic price increase was only part of the story. As part of a "radical redesign" of its residential calling rate structure, AT&T said it will undertake additional consumer education to inform people of their best price options - even if they don't rush to the phone to respond to ubiquitous rate teasers on television. AT&T also repeated an earlier promise to eliminate a US$3 monthly minimum charge on basic residential users.

AT&T had earlier tried to raise its basic residential rate after the CALLS plan was adopted but retreated after Tristani and FCC Chairman William Kennard protested. This time Kennard responded in a noncommital manner. "We are looking closely at today's filing to determine whether it complies with our requirements," Kennard said in a statement Friday afternoon.

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