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$750-Million Cut in Long-Distance Access Charges Ordered by FCC

December 25, 1987|BRUCE KEPPEL | Times Staff Writer

Calls to out-of-state friends and relatives will go down beginning New Year's Day, but the savings will fall slightly short of the 3.6% reduction proposed by American Telephone & Telegraph.

The Federal Communications Commission on Thursday ordered local phone companies to cut their access rates--the charges that AT&T and other long-distance carriers pay them to have interstate phone calls completed--by $750 million next year.

AT&T had proposed an $800-million industrywide reduction that it said would have translated into a 3.6% cut in interstate phone rates for its customers. Although the FCC sets interstate rates only for AT&T, the company sets the standard for long-distance charges. Its principal competitors--MCI Communications and US Sprint--previously have offered matching reductions in order to retain a price advantage over AT&T's.

Volume 'Underestimated'

An AT&T spokesman in Washington, Herb Linnen, told the Associated Press that the company would have to study the FCC order to determine how much of the $750-million reduction would apply to AT&T, but an FCC official estimated AT&T's savings, based on its share of the long-distance market, at about 75% of the sum. AT&T had said a $800-million reduction would have cut its weekday rates about 6.3%, evening rates 2.2% and late-night and weekend rates--already two-thirds lower than weekday charges--by 0.8%.

Linnen said AT&T should be able to reduce its interstate long-distance rates by at least half a billion dollars effective Jan. 1.

The local phone companies, which include San Francisco-based Pacific Bell, had proposed to reduce their access charges for between-state calls by $151 million, less than 1%. But the FCC said that proposal "seriously underestimated" the long-distance calling volumes anticipated next year, a factor that affects the level of access charges.

The companies estimated that volume would rise 3.6% in 1988, but the FCC maintained that interstate calling will continue to grow by 14% a year. The agency also found that some of the phone companies' anticipated operating costs were excessive.

The access charge reductions, which the local phone companies initially proposed in October, stem from various FCC rule changes as well as the increasing and more efficient use of their telephone networks.

In any case, today is expected to set a record for holiday calling. AT&T anticipates handling 44.6 million calls, a holiday record. Last Christmas, its customers placed 39.3 million calls. MCI said it expects to handle about 10 million calls today, and Sprint 15 million.

The reductions ordered Thursday by the FCC are part of a continuing series of cost adjustments since the Bell System was broken up by the 1984 divestiture of AT&T's local phone units. The commission also is considering changing its traditional way of regulating AT&T's long-distance operations. It has proposed scrapping its practice of limiting profit margins in favor of setting maximum long-distance rates, giving AT&T more flexibility in pricing.

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