AT&T suspends long-distance rate hike after outcry

Decision will affect tens of millions consumers

June 7, 2000
Web posted at: 9:14 p.m. EDT (0114 GMT)

NEW YORK (CNN) -- AT&T suspended its week-old long-distance rate hike after consumers complained that their rates nearly tripled and accused the nation's largest long-distance carrier of deceptive practices.

"There has been some questioning about the rates, about the timing," AT&T spokesman Mark Siegel told CNN. "In light of that we thought we would take another look at alternatives."

AT&T declined to comment on whether federal pressure influenced their decision.

In tersely worded statements Wednesday, the Federal Communications Commission sharply criticized AT&T for its decision to raise its rates last week -- a hike that increased basic rates from 11 cents to 29 cents, except on Sundays.

"I was totally misled by AT&T," said FCC Commissioner Gloria Tristani.

FCC Chairman William Kennard added, "AT&T promised to pass on savings to all consumers. Their new rate plan does not do that. It is in our order and I am going to enforce it."

"AT&T promised to tell their consumers which plan would be most cost effective for them. This was not done," Kennard added. "I will also hold AT&T to this commitment."

AT&T filed papers with the FCC notifying it of the intended rate hike on May 31, the same day the FCC announced consumers would be getting a break on their phone bills because long-distance carriers would soon pay lower access charges to local phone companies.

In turn, consumers would save $3 a month in fees for their basic service.

When AT&T announced its rate hike, customers complained bitterly, accusing the company of negating the FCC savings plan intended to benefit consumers.

Consumer advocate Gene Kimmelman said AT&T withheld information.

"They didn't tell (customers) that for 80 percent of the calling on the basic schedule, prices were going up anywhere from 10 (percent) to 160 percent," he said.

"It's not straight dealing," Kimmelman added. "It's not honest. It's not fair to the American consumer."

Kimmelman said AT&T and the FCC are responding to public pressure. "But what happens next week, next month when no one is paying attention?" he said.

Under the now suspended rate hike, AT&T raised long-distance rates on its basic service plan from 11 cents to 29 cents a minute, Monday through Saturday.

Rates for Sunday were 7 cents a minute.

"We've decided today we will suspend (the plan) until we review other alternatives," Siegel said. "What we've decided ... is to go back to our old basic rates, but consumers will still get the benefits of the elimination of the monthly fee on their bills as we announced last week."

Correspondent Deborah Feyerick contributed to this report.

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