MCI, AT&T Raise Rates Again
Thursday January 2, 8:35 pm ET
By Barbara Powell, Associated Press Writer
Associated Press
Nation's Two Largest Long-Distance Providers, MCI Group and AT&T Corp., Raising Rates Again
JACKSON, Miss. (AP) -- The nation's two largest long-distance providers, MCI Group and AT&T Corp., are raising rates again even as their turf is being increasingly invaded by local phone companies.
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Industry analysts, who expect that No. 3 provider Sprint Corp. will also hike prices, say the big players have little choice but to raise rates and fees to stem revenue declines.
"The price wars in the long distance business have weakened the industry," said Jeff Kagan, an Atlanta, Ga.-based telecommunications industry analyst. "This is a way of backtracking and trying to make these companies stronger."
MCI, beginning Feb. 1, is raising per-minute rates on its Anytime Calling and Anytime Advantage plans to 9 cents a minute from 7 cents. In December, MCI -- whose parent WorldCom Inc. is struggling to emerge from the nation's biggest corporate bankruptcy -- raised rates to 9 cents from 5 cents on other plans.
MCI spokeswoman Claire Hassett said the latest rate increase is in response to changing market conditions, including greater demand for its local and long-distance bundled plan with a base rate beginning at $49.99 a month.
Industry analysts have predicted price hikes will continue, particularly for basic services. They also predict more price incentives on bundled services plans as companies try to steer consumers to plans with a higher profit margin.
"They're trying to reward the behavior they want to see more of," Kagan said.
Separately, AT&T Corp., the nation's No. 1 long-distance company, disclosed Wednesday that as of March 1, the basic rate for international calls will rise by an average of 8 percent. Callers with special international calling plans won't be affected.
Earlier this week, AT&T raised the monthly charge on its 7-cents-a-minute plan to $4.95 from $3.95. |
