AT&T; Expected to Get Increased Rate Flexibility : Telecom: FCC considers ending virtually all long-distance pricing regulation.
WASHINGTON — In a move that could eventually ignite another long-distance price war, federal regulators next month are expected to give AT&T; Corp. more flexibility to quickly change its residential toll call rates.
The regulatory about-face came after AT&T;, which has been seeking such a change for two years, promised to offer special low-cost dialing plans for low-volume callers and the poor, said Reed Hundt, chairman of the Federal Communications Commission.
“We would stop virtually all price regulation. We would let market competition determine the prices . . . except for low-volume and low-income customers,†Hundt said in an interview Thursday.
Under current FCC restrictions that classify the company as a so-called dominant carrier, AT&T; must wait from two weeks to 45 days to implement rate changes because it holds a 60% share of the $70-billion long-distance market. The delay means the company can’t quickly respond to rate changes implemented by rivals such as MCI Communications Corp. and Sprint Corp.
Nonetheless, consumer advocates aren’t cheered by the prospect of AT&T;’s soon having more pricing flexibility.
“It’s probably bad news for consumers at this point,†said Bradley Stillman, telecommunications policy director for the Consumer Federation of America, a Washington group.
“Our concern is that you face a situation where AT&T; [remains] a real dominant power in the long-distance market,†he said . “Frankly, anybody who doubts that AT&T; doesn’t wield a massive amount of power just has to look at the pricing patterns.â€
Analysts agree that after nearly a decade of bruising competition that drove the price of toll calls down about 40%, AT&T; and its rivals are unlikely to enter into another price war. But if Congress, as expected, completes its overhaul of the nation’s telecommunications laws this fall and allows the regional Bell companies to enter the long-distance market, AT&T; could use its new pricing flexibility to more quickly lower residential rates.
“There’s no market impact yet because AT&T; is normally the price leader,†said William N. Deatherage, a telecommunications analyst for Bear, Stearns & Co. But he said the present situation will change with the entry of the Baby Bells, whose deep pockets and established relationships with potential customers are expected to win them 30% of the long-distance market.
AT&T; initially requested that the FCC abolish the dominant-carrier rules in 1993. But it wasn’t until last week, when AT&T; Vice President R. Gerard Salamme wrote the agency, that it agreed to consider the request.
Salamme urged the FCC to quickly rule on new economic data, facts and comments the company submitted in April to back up its position that it “lacks market power†to dominate long-distance. Hundt said the FCC will take up the matter at its October meeting.
“We think we have made a good case,†AT&T; spokesman Jim McGann said. “It’s time for AT&T; to be put on equal footing with its competitors.â€
There are about 500 long-distance carriers nationwide.
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