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Press Release June 18, 1998 |
Contact: 202/462-6262 |
WASHINGTON – Consumers Union fears the new long distance charges announced by AT&T Thursday, which will start showing up on consumers’ bills next month, are a "total rip-off."
"The 35 to 40 million households which have basic schedule, low-volume long distance telephone use are getting short-changed by AT&T," said Gene Kimmelman, co-director of the Washington Office of Consumers Union, publisher of Consumer Reports magazine. "It is astounding that the agency charged with policing these companies has done nothing to ensure fair pass through of the enormous savings long distance companies are reaping or protect low-volume consumers from excessive rate hikes. This looks like a total rip-off."
At issue: a 93 cent per month so-called "universal service" charge that will be tagged onto each AT&T residential long distance bill beginning in July. All other long distance companies are expected to make similar announcements in the near future. The 35 to 40 million households which use AT&T’s "basic" service will get an 85 cent per month charge on top of these new fees. AT&T’s new fees will amount to $1.78 per month for these families.
Consumers Union estimates that this universal service charge will add almost $700 million per year to consumers’ bills, given AT&T’s share of the residential long distance market. For the "basic" phone customer, the new charges will add about $750 million per year, CU said. If similar universal service fees follow from all the long distance companies, total residential long distance fee increases will balloon past $1 billion per year.
"The Federal Communications Commission must put an end to these new charges unless they are properly offset with a long distance rate reduction," said Kimmelman, who wants the agency to develop a more fair way to charge consumers for telephone services in the wake of the e-rate Internet initiative. "With costs on the decline for long distance companies, it is astounding to find these new charges for universal service show up on millions of phone bills. Where is the agency charged with protecting consumers from these kinds of rip-offs?"
Public data from January 1998 to January 1999 reviewed by CU shows long distance companies will receive up to $1 billion more in cost savings through access charge reductions than the price increase they face to pay for universal telephone service, including the e-rate initiative.
