Millions of Californians will start paying several dollars a month more for land-line phone service after AT&T's second price increase for custom-calling features since the state lifted rate caps last year.
The nation's biggest phone carrier this week boosted the cost of caller ID, call waiting and a host of other features for a la carte phone service.
The move could push many people to sign up for bundles of services, such as phone and Internet together, that could save them money overall but cause them to spend more with AT&T. Two-thirds of AT&T's customers have bundled services, which aren't subject to the rate hikes.
AT&T and other carriers want more people to sign up for bundles because those customers have proved less expensive to maintain and less likely to leave for rival companies. The price hikes could leave the phone companies vulnerable to customer defections because cable TV companies are aggressively wooing phone customers.
Verizon Communications Inc., the second-largest carrier in the state, also has been increasing rates this year for stand-alone residential, business and wholesale services. AT&T controls about 65% of the state's telephone access lines, compared with Verizon's 18%.
Phone companies say the rate increases reflect their increasing costs, which they had not been able to pass on to consumers under decades of regulated pricing.
But consumer groups complained that competition was failing to keep prices down, as promised, after the state Public Utilities Commission's decision in August to end rate regulation.
"It's open season on telephone rates, so the companies are jacking prices up," said Regina Costa, an analyst with the Utility Reform Network in San Francisco.
Since January, the phone companies' rates for certain features have soared as much as 350% for those who don't buy bundled services.
Many customers used to paying $6.17 for caller ID in December, who had already seen one price increase to $7.99 a month, will now pay $9. Call waiting, speed dialing and other features that cost $3.23 in December now run $5 after two price hikes. An unlisted number now costs $1.25 a month, a 346% increase over the previous charge of 28 cents a month.
AT&T customer Carol Harvey of Walnut Creek, Calif., is upset that she has to pay more to keep her number out of phone directories.
