AT&T raises some rates for services
2nd increase since state deregulated the practice

Ryan Kim, Chronicle Staff Writer, Tuesday, July 10, 2007

AT&T's plan to raise prices next week by $1.01 a month for individual services such as Caller ID, call waiting and three-way calling has consumer groups riled up, decrying what they call a lack of protections for customers.

The Utility Reform Network and Utility Consumers Action Network said Monday that the planned price increase, which takes effect on Sunday, illustrates how state deregulation of the industry has led to higher prices and fewer choices for consumers and small businesses.

The California Public Utilities Commission voted in August to allow phone operators to set rates on services without seeking approval from the commission, as they had in past years. Carriers like AT&T and Verizon only need to give 30 days notice to customers before implementing a change.

The board said at the time that competition, especially from cellular operators and Internet phone companies, would keep traditional phone prices in check. But consumer advocates said the decision has led to higher prices and more pressure to buy bundles of services.

"It didn't take long for the phone giants to take advantage of the (commission's) laxity," said TURN Executive Director Bob Finkelstein. "Now the question is how long will it take for the (commission) to stop these reconstituted monopolies from taking advantage of customers, just as they have in the past?"

The rate changes affect services such as Caller ID, call waiting, call waiting ID, call screening, call return, call forwarding, speed calling, distinctive ring, three-way calling, priority ring, busy call forwarding and anonymous call rejection. This is the second rate change for custom calling features since the rules went into effect. Stand-alone Caller ID has gone from $6.17 per month last year to $7.99 in January. Next week, the service will go to $9 per month.

Service packages are increasing by 6 to 10 percent a month, while the one-time activation fee is increasing 58 percent, from $4.75 to $7.50. Rates for business service went up in December, and custom calling features for businesses went up in March.

Gordon Diamond, a spokesman for AT&T, said the changes concern only stand-alone services and do not affect the vast majority of AT&T users who take a bundle of custom calling features. He said many of the individual rates hadn't changed in 20 years and needed to be reassessed.

Diamond said marketplace competition keeps AT&T from increasing rates significantly and has prompted the company to develop packages and services that appeal to its customers. The company began offering an unlimited local calling package with 13 custom calling features for $24 a month in December. Today, it will outline plans for a free advertising-sponsored directory assistance service called 1-800 Yellow Pages.

E-mail Ryan Kim at rkim@sfchronicle.com.

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This article appeared on page F - 1 of the San Francisco Chronicle

Click here to read UCAN and TURN's Press Release, and the LETTER to
President Michael Peevey of CPUC, the California Public Utilities Commission.