Off topic - AT&T does the wrong thing (again).
(By this I mean -- having EVER come up with an idea to sharply increase per minute charges on long distance).
June 8, 2000
AT&T Postpones Plan to Increase
Call Rates After Public Clamor
By LESLIE CAULEY
Staff Reporter of THE WALL STREET JOURNAL
Bowing to enormous public pressure, AT&T Corp. Wednesday did an
about-face on a controversial plan that would have raised some consumer
long-distance rates by as much as 80%.
In a terse, late afternoon announcement, AT&T said it was "deferring the
restructuring of its basic rate schedule." AT&T Chairman C. Michael
Armstrong, who had personally approved the rate change that had created the
public furor, wasn't available for comment.
Jim Cicconi, AT&T's general counsel, said in an interview that AT&T might
yet decide to implement the controversial rates once it completes a thorough
review of the plan. "Absolutely. We are reserving that right," Mr. Cicconi said.
He added that consumers would be fully informed ahead of time about any
changes AT&T decides to adopt.
AT&T seemed taken aback by the furor created
by its rate changes, which grabbed headlines
across the country Wednesday. The changes
were actually filed on May 31, and implemented
on June 1.
Mr. Cicconi noted that AT&T had made it clear
some time ago that it intended to restructure its
rates. And in any major rate overhaul, he noted,
some prices go up and some prices go down.
"Our intention was to provide some options for low-volume callers." He noted
that "we still feel that this structure would do that."
In AT&T's case, calling rates for Sunday, its most popular calling day, got
slashed by almost 40%, while rates for other calling periods were increased by
more than 80%.
The rate increases were made as AT&T comes under increasing pressure for
improved earnings performance. The company's core long-distance business
has been hurt by aggressive price cutting from its rivals, and its plans to enter
the local phone business via cable-TV lines has proved more difficult than
AT&T originally anticipated.
In the meantime, consumers on the AT&T basic rate plan will now be put back
on the same rate schedule that applied prior to June 1, when the controversial
rate change went into effect.
AT&T's retreat stemmed from an industry proposal it said was aimed at
lowering consumers' phone bills. The move was met with skepticism by
consumer groups, which have long been suspicious of industry-led efforts to
lower bills.
AT&T's rate increases were filed on May 31 -- the same day the Federal
Communications Commission announced a broad plan aimed at significantly
reducing phone bills for most Americans. AT&T had promised the FCC that it
would drop a controversial monthly minimum charge of $3 that it charged
customers for just being AT&T long-distance customers. But AT&T officials
didn't rule out the possibility of make adjustments elsewhere.
AT&T did drop the $3 minimum, as promised. But it
quietly filed for adjustments to a host of other rates,
leaving the impression with some consumer groups
that it was more than making up for the give-back.
The telecommunications company basically ended
discounts for Saturday and off-peak calling, pushing
the per-minute charge to a flat 29 cents, up 12% from
the rate of 26 cents a minute for calls between 7 a.m.
and 7 p.m., Monday to Saturday. For off-peak calls
made between 7 p.m. and 7 a.m., the rate shot up
more than 80% from 16 cents a minute.
For calls made on Sunday, when AT&T claims
customers do most of their calling, AT&T moved to
lower rates 40% to seven cents a minute from 11.5 cents a minute.
By the time news of the changes hit the news on Wednesday, public
statements denouncing the AT&T's rate changes were flying. FCC Chairman
William Kennard issued an unusually terse statement: "AT&T promised to pass
on savings to all consumers. Their new rate plan does not do that. It is in our
order and I am going to enforce it."
The FCC chairman also accused AT&T of not hewing to its promise of telling
consumers which plan would be most cost effective for them. "This was not
done," Mr. Kennard's statement said. "I will also hold AT&T to this
commitment."
One person in the FCC's office said Mr. Kennard personally spoke with
AT&T's chairman, Mr. Armstrong, about the matter several times on
Wednesday. This person characterized the discussions as "direct, to-the-point
conversations." AT&T declined comment.
After AT&T's reversal, Mr. Kennard promptly issued another statement saying
he was "glad to see that AT&T has deferred its plan to restructure its basic
rates." He added that the FCC, in the face of last week's landmark overhaul of
phone charges, "must ensure that consumer actually realized tangible benefits."
To make sure there isn't any doubt, the FCC chairman has asked AT&T to
outline, in writing, its plans for passing along savings and notifying consumers
about any changes AT&T plans to make.
AT&T's Mr. Cicconi said letters explaining the changes that has been poised to
be mailed out would be withheld pending AT&T's review.
Write to Leslie Cauley at leslie.cauley@wsj.com
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