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AT&T Assures FCC It Plans to Pass Along Lower Costs

May 04, 1997|From Associated Press

WASHINGTON — Clearing the way for a cut in many consumers' long-distance phone rates, AT&T promised Saturday to pass on to customers any savings that result from a federal overhaul of telephone access charges.

The long-distance carrier's letter to the Federal Communications Commission was applauded by consumer groups, which were concerned about how cutting costs would trickle down to callers.

"This is the biggest cut for the average consumer in long-distance for many, many years," said Gene Kimmelman, co-director of Consumer Union.

The FCC is revamping the labyrinthine subsidies that make local phone service affordable to the poor and to those living in high-cost rural areas. Changes would affect businesses and residences. A final plan is due Tuesday, and FCC officials indicated Saturday that the AT&T action would enable them to go forward with their plan.

More than $1 billion in savings could come from cutting access fees paid to local phone companies, which route long-distance calls on their networks, and from changes in the regulatory formulas the FCC uses to calculate fees.

But the FCC and consumer advocates have been concerned about guarantees that savings would be passed along to customers. AT&T, which handles 50% of long-distance calls, responded to those concerns.

In the letter, AT&T assumed that the savings resulting from the FCC's regulatory changes would amount to at least $1.7 billion, about $900 million of which would directly affect AT&T.

"We've confirmed that if the FCC makes access reductions, we're going to give the money back to customers," said Steve Davis, AT&T's vice president for law and government affairs.

The company promised to reduce its basic schedule prices 5% during the day and evening and 15% at night and on weekends. That would mean $600 million in savings to residents and $300 million to businesses.

Kimmelman believes the FCC can cut more from the money local phone companies get, but he said Saturday's announcement was a good sign for callers.

"I'm viewing it as a first step for cutting the fat, but it's a big win for consumers because it's a long-distance rate reduction and it's the first sign that the FCC is willing to cut the fat out of telephone pricing as we move to a more competitive market," he said.

The savings were targeted at basic rate customers, and it was unclear Saturday whether callers who belong to any of AT&T's promotional calling plans would benefit.

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