THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, October 13, 1995 TAG: 9510130547
SECTION: BUSINESS PAGE: D6 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium: 58 lines
Federal regulators decided today to free AT&T Corp. from regulations that govern the rates for residential long-distance customers, dismissing the objections of rival companies.
The Federal Communications Commission voted 5-0 to a lift price regulation that applies to 80 million AT&T residential customers. The plan takes effect 30 days after the FCC releases a text of today's action.
The commission, however, also agreed to adopt provisions designed to protect the rates of low-income customers and people who make less than $10 a month in long-distance calls.
Nonetheless, the Consumer Federation of America - along with rivals MCI and Sprint - have opposed the FCC plan, with the consumer group saying it could lead to higher phone rates.
The FCC and AT&T disagree. They say the action would let AT&T act more competitively, which eventually should lower residential rates and speed new services to the public.
The FCC's action lets AT&T, like its rivals, charge whatever it wants for residential service and would no longer be subject to rate caps. AT&T has been subject to price regulations since before its breakup in 1984 because of its size and market power. The price regulation does not apply to MCI and Sprint.
However, to protect the most vulnerable customers - those who generally are not enrolled in a discounted calling plan, where there is robust competition among the long-distance companies for customers - AT&T has offered and would be required to:
Provide a 15 percent discount to low-income residential customers for three years.
Provide a guaranteed rate for low-volume residential customers starting at $3 a month for the first 20 minutes of service in the first year offered.
Provide regulators with five days' notice of proposed residential rate increases above certain levels.
AT&T, like MCI and Sprint, would still have to submit proposed rate and service changes to the FCC, but it would get much more flexibility to change them.
AT&T would be permitted to implement a rate or service change one day after filing a plan with the FCC - the same rule for MCI and Sprint. AT&T now has to wait 45 days when proposing changes to residential rates or service and 14 days for changes affecting business customers. The company says that aids its competitors. The nation's largest long-distance company, AT&T, controls 56.6 percent of the long-distance market. It has been pressing the FCC for price freedoms for nearly a decade. MCI and Sprint, with 17.7 percent and 8.7 percent respectively of the long-distance market, fear AT&T could use the new freedom to hamper competition.
KEYWORDS: FCC RULING by CNB