AT&T; Seeks Rate Boost of $123 Million, More Control

Citing “a worsening financial situation,” AT&T; Communications asked the state Public Utilities Commission on Monday to raise its rates $123.6 million and give it greater flexibility in setting prices.

The long-distance arm of AT&T; lost $14 million on its California operations last year and reported losing $19 million in the first half of this year.

The company, which formerly enjoyed a long-distance monopoly, remains the predominant intrastate carrier among about 100 competitors providing service between the state’s local calling areas. Of these, only AT&T; must obtain state approval for changes in rates and service, AT&T; said, while competitors simply notify the commission of their intent.

AT&T; will not have a decision before summer, commission spokesman Walt Thompson said.

S.F. Down, Bakersfield Up

Under the proposal, AT&T; rates for calls covering less than 150 miles would rise slightly and rates for longer calls would drop. For example, a direct-dial, five-minute call between San Francisco and Los Angeles made during normal business hours costs $1.93, but would decline to $1.88. On the other hand, a similar call between Los Angeles and Bakersfield, which costs $1.55, would cost $1.66. (A five-minute call between Los Angeles and San Diego would remain unchanged at $1.66.)

“The rigid rules and regulations developed for the monopoly era--and still used today in California to regulate AT&T--are; no longer necessary or appropriate,” John Dennis, company vice president for regulatory affairs, said. The commission’s regulation of AT&T; hurts California consumers, limits the number of new service options available to them that are available in other states, and adds significantly to costs, he said.

More than 20 states, including Oregon and Nevada, have adopted some form of streamlined regulation or pricing flexibility for long-distance rates, Dennis said. The company proposed that the commission let the firm modify its rates within limits.

AT&T;’s filing marked the first time that commission analysts will get to look at the financial record of AT&T; Communications, offspring of the breakup of the old Bell System, as a free-standing entity.

Costs Not Considered

The firm’s intrastate rates and surcharges added to its customers’ bills result from hearings that failed to consider AT&T; Communication’s business costs, Dennis said. It pays 81 cents of every $1 of revenue to local telephone companies, such as Pacific Bell and General Telephone, for billing services and as “access charges” for completing its calls. The intrastate access charges, set by the commission, are among the nation’s highest, he said.

AT&T;’s proposal also seeks to reduce discounts for off-peak calling and to nearly double the charge for intrastate directory assistance to 60 cents from 35.

AT&T; also asked to reinstate its suspended “Reach Out, California” program. The program offered a bulk rate for calling during off-peak periods. When the commission suspended the program, after complaints of unfair pricing lodged by AT&T; competitors, the cost of the first hour of such calls was $10, with an $8 charge for each additional hour; AT&T; asked that those rates be raised to $12.50 and $11.