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Telecoms ring up plan
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August 2, 1999: 5:26 p.m. ET
Six top companies offer plan to simplify bills, but CU hangs up
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NEW YORK (CNNfn) - Six major phone companies unveiled a plan Monday that could lower long distance telephone bills and slightly raise local bills, in a proposal denounced by a leading advocacy group.
Consumers Union said it will strongly oppose the plan to restructure local and long distance rates.
Six top phone companies -- AT&T Corp. (T), Bell Atlantic Corp. (BEL), Sprint Corp. (FON), BellSouth Corp. (BLS), SBC Communications Inc. (SBC) and GTE Corp. (GTE) -- said they had asked federal regulators to revise the complex web of subsidies that keeps phone service affordable throughout the country.
The plan, to be phased in over five years, ultimately would reduce by $5.6 billion annually the amount long distance companies pay to local carriers, mostly in per minute access charges added to each customer's calls.
The plan also eliminates a fixed fee of about $1.50 per month that long distance companies pay to local carriers for access to each customer.
The Federal Communications Commission must approve the plan, but opposition from consumer groups could doom the proposal.
In addition to consumer opposition, several major companies decided not to back the proposal, including No. 2 long distance firm MCI WorldCom Inc. (WCOM) and regional Bells Ameritech Corp. (AIT) and US West (USW).
The industry proposal essentially would reduce long distance rates while increasing local phone rates.
"We will adamantly oppose this," Gene Kimmelman, co-director of the Washington office of Consumers Union, said in a telephone interview. "This plan is like an industry cabal and demonstrates the lack of competition for the consumer business."
Kimmelman estimated the plan would raise local phone bills by several dollars a month, or a total of $2 billion a year on all consumers nationwide.
"It's totally unfair for modest users of telephone service," he said. "They get no assurances and there is no public oversight."
For example, long distance companies could choose to pass on the $5.6 billion annually they would save only to business and high volume residential customers. Lower long distance rates for those customers would dramatically exceed the amount of increases in local bills.
But customers who made only a few long distance calls per month would likely pay more in new local charges than they saved in lower long distance rates.
AT&T spokesman Jim McGann said Consumers Union's objection to the plan "was expected" and defended the proposal, describing it as "historic."
"It's a good plan," he said.
-- from staff and wire reports
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