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American Morning

You May Soon See a Change in Your Telephone Bill

Aired January 03, 2002 - 07:37   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: The good times may be over. You may soon see a change in your telephone bill, as long distance carriers begin to raise their prices. And companies are looking for revenues anywhere they can find them, and they're using hidden fees and other charges to get that revenue.

Steve Young is crunching the numbers for us.

(BEGIN VIDEOTAPE)

STEVE YOUNG, CNN FINANCIAL NEWS (voice-over): Forget telephone price wars of the last decade. With the consumer long distance business on the ropes, the big three, AT&T, MCI and Sprint, are all raising prices to get the biggest bang from each customer they keep and shed customers who spend the least.

SAMUEL SIMON, TELECOM RESEARCH & ACTION CENTER: They need to get $5 to $10 a month for every customer they have, and they're doing it by rate increases, the universal service charge, hidden fees and the like to get that minimum monthly amount.

YOUNG: Much of the price creep is hidden in confusing surcharges, including that government mandated universal service charge. It's supposed to ensure residents of rural America have adequate phone service at a non-exorbitant rate.

Regulators set a 6.8 percent universal service fee, but AT&T has just raised what it charges customers to 11.5 percent, up from 9.9, saying it's entitled to the difference for a variety of reasons. MCI is still at 9.9; so is Sprint.

SCOTT CLELAND, CEO, THE PRECURSOR GROUP: What I would take away from AT&T doing this is it tells you that the long distance industry is under a lot of distress, because the shenanigans of increasing the universal service fee tells you that they are not as concerned about upsetting the regulators. That they're more concerned about collecting the revenue.

YOUNG: Customers who haven't chosen a price plan but are using a so-called basic long distance rate will be hardest hit. AT&T and MCI are hiking their basic rates about 17 percent. Sprint is doubling its Saturday rates to 20 cents a minute for some customers.

(on camera): Because of history, analysts say phone companies don't expect a major consumer revolt. After all, half the nation's long distance phone customers haven't bothered to switch companies in 20 years.

Steve Young, CNN Financial News, New York.

(END VIDEOTAPE)

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