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Phone company rate change for '800' numbers called 'out of order'

Just placing a "toll-free" telephone call for an airline reservation could boost ticket prices before Christmas. Those "800" numbers are scheduled to cost more for the heaviest users by Dec. 14, if the Federal Communications Commission (FCC) grants approval.

Airlines, hotel-motel chains, car rental agencies, direct marketing firms, banks, and other industries would see increases as high as 80 percent in their telephone bills. Bus and trucking companies, publishing houses, and insurance firms would also be hard hit.

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If the new rates are approved, spokesmen for many companies say, their firms are likely to pass the costs along to their customers or cut back services. Some small companies, whose products or services are sold primarily by telephone , say they will be forced to merge or go out of business, according to the New York-based Committee for Corporate Telephone Users (CCTU), an umbrella organization representing hundreds of companies nationwide.

Under the new rates, about 10 percent of the 100,000 American Telephone & Telegraph (AT&T) customers who use the interstate Wide Area Telecommunications Service (WATS) would be subject to increases. but about 90 percent of the WATS users, such as some small mail-order houses which make minimal use of the WATS lines, would actually see their rates lowered by about 10 percent.

The new rates, proposed in a 17,000-page document filed Sept. 15 with the FCC , are in response to several FCC regulatory and court actions over the past six years, according to AT&T officials.

The FCC does not approve at AT&T's current practice of charging its WATS customers a flat rate, with all subscribers paying the same amount, whether they use a WATS line 11 hours or 240 hours a month.

So AT&T has decided to charge its WATS customers by the hour.

Minimal users of WATS would no longer be subsidizing the maximum users under the new proposal, one FCC staffer points out. "The large corporations screaming about the possible huge cost increases may very well have been the beneficiaries of huge subsidies for the last 20 years."

But Avis, Citicorp, Ramada Inn, Greyhound, and about 20 other large WATS users who belong to the CCTU have filed a joint complaint with the FCC. Several other companies have also filed independently.

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Complaints also have been submitted by AT&T competitors -- the MCI Communications Corporation, Southern Pacific Company, US Transmission Systems Inc., and Western Union Company -- who reject "the costing methodology that AT&T used to justify the new rates," says James Tobin, an attorney with Southern Pacific.

The government's General Service Administration, the largest user of the WATS service, says AT&T will make "excessive returns" under the new rates and wants the FCC to reject or suspend the proposal until after an investigation.

CCTU chairman Kenneth Phillips, director of the office of telecommunications policy at Citicorp, says, "The new rates will put the direct telephone marketing industry right out of business. It will also take its toll on the airline and car-rental companies, raising the rates charged for hotel rooms and rented cars substantially. Small companies that rely heavily on WATS may go out of business altogether."

Many users also say that the transition to higher charges will occur too rapidly. But William R. Stump, assistant vice-president of AT&T federal regulatory matters, says, "This came as no surprise to them. They have known since 1974 that our current rate schedule would not go on forever."

Mr. Stump says, "We don't make a dime more under the new tariff. We'll come out even."

Dr. Alan Pearce, a telecommunications economist who has worked at the FCC and in the White House as a telecommunications policy adviser, says AT&T's present rates should be frozen while the FCC conducts an extensive investigation.

"The proposal is a very serious and momentous landmark tariff filing because it occurs as the telecommunications industry is emerging into a new competitive era. It should have a thorough investigation."

He says, however, that current indications from within the FCC show that the new AT&T rate proposal will be approved or implemented on Dec. 14. An investigation may follow, he says, but he doubts it.

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