Cagey Consumer

AT&T Makes Promised Access Fee Reductions "Disappear"

On August 13, 1998, AT&T issued a press release announcing that it had passed through the savings received from reduced access fees and then some. On August 14, 1998, AT&T effectively said "just kidding".

The Details

Ever since the AT&T divestitute in 1984, AT&T claimed that the access fees paid to local phone companies were excessive, and petitioned the FCC for reductions in these charges. Reductions in these fees have occurred several times, but the latest reduction was accompanied by a monthly "PIC-C" fee, technically charged to the long distance carrier, but almost always passed on to customers.

One concern about the reduction in access fees was whether customers were benefiting from them, but with the pass-thru of the PIC-C fee, many customers found that they were not only getting no benefit from the access fee reduction, but were actually paying more in phone charges.

The August 13 press release claimed that AT&T had passed along $460 million more in the form of lower rates than its own access fees had been reduced. But residential customers on AT&T calling plans saw no reduction in their rates, only the pass-thru of the PIC-C fee. How could AT&T have passed through the access fee reductions, while customers were actually paying AT&T a new monthly fee and receiving no reduction in their per-minute charges?

Basic Rate Customers Benefit

The answer had to be that the lower rates were going to customers paying AT&T's basic rates. Since most AT&T customers pay the basic rates, this would explain the claimed overall reduction in charges to customers, even though basic rate customers tend to have low average call volumes.

Basic Rate Customers Lose

One day later, on August 14, 1998, AT&T announced that it was imposing a new monthly minimum fee that would, for the most part, affect customers who were paying AT&T's basic rates. In large measure, these customers will effectively be crammed by a new charge that they have never consented to. For most low-volume basic rate customers who stay with AT&T, the access rate reductions they had previously benefited from will be more than offset by the new monthly minimum fee. Those who make the effort to shop for alternative long distance services may be able to both avoid a monthly minimum fee and receive lower per-minute rates at the same time, but in any case, they will no longer be receiving the "reduction" in access fees that AT&T had promised the FCC.
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