Posted on: Tuesday, January 1, 2002

AT&T raising long-distance fees by 16 percent

By Jim Krane
Associated Press

NEW YORK — Starting today, AT&T Corp.'s long-distance customers will pay 16 percent more in fees related to their out-of-state toll calls.

The carrier said its plunging consumer long-distance revenues left it with no choice but to raise the fees it collects from customers that are earmarked for the Federal Communications Commission's universal service fund.

The fund subsidizes Internet use in public libraries and schools, as well as phone service for low-income customers and rural health care providers.

Carriers are required to pay 6.8 percent of consumer long distance revenues to the fund. AT&T and Sprint impose a fee of 9.9 percent onto customers' long distance bills.

AT&T is raising that share to 11.5 percent, so that a customer who spends $50 on long distance will pay $5.75 in fees, up from $4.95.

"Because of our declining revenues, we need to recoup the money in order to pay the fund," said AT&T spokeswoman Claudia Jones. "This isn't a revenue generator for AT&T."

AT&T expects consumer long-distance revenues to drop by 25 percent or more in 2002.

One analyst suggested the fee hike was a sign of the weakness of the long distance telephone sector, buffeted by customers switching to e-mail and wireless phones as well as price competition from local carriers.

"AT&T's consumer long distance business is hurting financially, and this is one way for it to improve its margins," said Lisa Pierce, a Giga Group telecom analyst. "The question is, will the rest of the industry follow?"

At Sprint, spokesman James Fisher said the carrier has no announced intention to raise the fee. WorldCom could not be reached for comment.