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AT&T Raises Basic Rates for Long-Distance

Telecom: Average residential bill will go up 40 cents a month.

February 17, 1996|From Associated Press

WASHINGTON — AT&T Corp. is raising basic long-distance rates for most of its 80 million residential customers by an average of 40 cents a month starting today.

The nation's largest long-distance company said Friday that the 4.3% increase--the first for residential customers in more than a year--is needed to bring prices closer to the cost of providing service.

AT&T spokesman Dan Lawler said he did not know exactly how many customers will be affected, but he said most customers will see an increase.

Brian Adamik, an analyst with the Yankee Group in Boston, said the increase, which he called mild, will not drive away customers. He predicted that other long-distance companies will follow suit.

Rivals MCI Communications Corp. and Sprint Corp. had no immediate comment.

Lawler would not say how much revenue the increase will generate.

The basic rate is what customers pay if they are not part of a discounted calling program.

Discounts offered through various AT&T calling plans would not be affected by the increase, Lawler said.

AT&T also said it is increasing the service charge on long-distance calls billed to credit cards other than AT&T's by 20 cents per call, to reflect the higher costs of such transactions. Company representatives said they do not know how much revenue will be generated.

In addition, AT&T decided to renew through at least June 30 two discounted calling plans--AT&T True USA Savings and AT&T True Savings--for existing customers. Those had been set to expire in March.

It also said some business services, including 800 service, will be subject to small rate increases, but it did not say how much.

A new telecommunications law President Clinton signed Feb. 8 will allow new competition to AT&T and other existing long-distance companies.

To date, local phone providers Bell Atlantic, Nynex, Ameritech and SBC Communications have filed for or announced plans to provide long-distance service to customers other than their own. Those plans are subject to state regulatory approval.

Adamik said he believes that AT&T's rate increases are designed to safeguard margins, in anticipation of future competition. "You're seeing price ups going on now in preparation for price downs in the future," he said.

AT&T reported revenue of $79.6 billion for 1995, up 6% from 1994. 1995 earnings plunged to $139 million after a charge for restructuring.

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