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Saturday, Aug. 15, 1998
AT&T plans minimum monthly fee
Long-distance charge of $3 to be phased in
By DAVID E. KALISH
Associated PressNEW YORK - AT&T Corp. plans to start charging long-distance customers a minimum of $3 a month, even if they don't make any long-distance calls.
The minimum bill takes effect today for new AT&T customers who sign up for discount calling plans, and a week later for all new customers. Starting Jan. 1, all current AT&T customers who switch to a discount plan also will pay the minimum.
AT&T customers will pay the minimum charge only for those months when their long distance charges amount to less than $3. For example, someone spending $2.50 in a given month would pay 50 cents more to meet the minimum.
AT&T says it needs the money to cover the costs of serving infrequent callers. But consumer groups said the charge will hurt those customers least able to afford it.
Up to now, long-distance companies limited their minimum charges; AT&T, MCI and Sprint now charge some consumers minimum fees for plans that give discounts for calls during off-peak hours.
``The new ethos is, if you're not making a lot of calls, go away,'' said Gene Kimmelman, co-director of Consumers Union, a Washington, D.C.-based consumer group.
AT&T, the nation's largest phone company, contended the charge was needed to cover the $300 million a year it loses on customers who spend less than $3 a month. That applies to 15 to 20 percent of AT&T's 70 million customers.
AT&T took pains to avoid describing the plan as an attempt to push away unprofitable customers. It said it would exempt people from the minimum fee who show they are low-income consumers; to qualify, customers must be enrolled in a state telephone assistance program, call a toll-free AT&T number and provide proof of eligibility.
``Being fair to all customers is important to us,'' said George Burnett, vice president in AT&T's consumer markets division.
But some said the various steps could prove difficult for some low-income people to figure out. ``This is part of an on-going trend of loading costs on low-volume consumers,'' Kimmelman said.
Moreover, AT&T's announcement Friday seemed to strike a raw nerve. Phone service, like gas and electric utilities, has been accepted as a way of life open to all people, no matter how many calls they make.
The AT&T charge is ``an unconscionable abandonment of residential telephone customers,'' said Samuel Simon, chairman of the Telecommunications Research and Action Center, a Washington, D.C.-based consumer group.
The minimum fee stems from a broader cost-cutting drive by AT&T chairman C. Michael Armstrong, hired last year to try to revive lackluster revenues in the company's consumer and business telecommunications services. Moreover, AT&T needs to invest billions of dollars to upgrade the cable-TV lines it's acquiring in a merger with Tele-Communications Inc.
``AT&T doesn't want to be the service provider for little old ladies with tennis shoes,'' said Brian Adamik, an industry analyst with the Yankee Group, a Boston-based research firm.
``They want to be the company that provides a wide range of services to profitable customers,'' he said.
AT&T is saddled with a disproportionate share of low-paying customers, analysts say, a holdover from its Ma Bell heydey as originator of nearly all U.S. phone calls. The company estimates 15 percent of new customers spend less than $3 a month. The costs stem from such expenses as bill processing and customer service.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web