Overcharging for Long-Distance Alleged

WASHINGTON —  The federal government’s chief telephone regulator on Thursday accused the nation’s long-distance giants of overcharging customers just months after the government ordered a massive reduction in phone rates.

In separate letters to the chief executives of AT&T; Corp., MCI Communications Inc. and Sprint Corp., Federal Communications Commission Chairman Bill Kennard accused the carriers of failing to keep their promise to pass along $1.7 billion in rate reductions ordered by the FCC last May.

“There is a growing body of evidence that suggests that the nation’s largest long-distance companies are raising rates when their costs of providing service are decreasing,” Kennard wrote in the two-page letter.

Kennard demanded that the executives “provide detailed information” explaining whether the companies had passed reductions in phone charges along to consumers and, if so, how the reductions were structured.

AT&T;, MCI and Sprint disputed Kennard’s assertion that they are overcharging customers.

The terse letter was triggered by a complaint from the United States Telephone Assn. and several consumer groups that contended that long-distance carriers were overbilling for new federal fees that took effect Jan. 1.

The rate overhaul was part of a complex federal government effort to revamp so-called access charges collected by long-distance companies and passed along to local carriers for handling their portion of long-distance calls.

The FCC changed the formula for the access charges and had anticipated there would be accompanying reductions in the rate per minute charged for long-distance calls. The new access charges were part of a congressionally mandated program to subsidize phone service for the poor and residents of rural areas.

Kennard contended in his letter that the restructuring of telephone access charges didn’t open the door for long-distance carriers to increase the overall amount for long-distance calls.

Rather, the restructuring only altered the manner in which access charges are assessed. Long-distance carriers now have to collect a flat monthly fee for each telephone line, instead of collecting a per-minute charge as they have in the past.

As a consequence, MCI and Sprint now separately bill their customers $1.08 and 80 cents respectively each month for the per-line access fee on top of their regular toll rates. But in many cases those toll rates have remained unchanged.

AT&T; officials could not be reached. But the company, which now charges homes with multiple lines $1.50 a month, will reportedly be changing the way it assesses the fees in April.

AT&T; will charge all residential customers on discounted calling plans a flat monthly fee of 95 cents regardless of the number of lines they have, according to reports by the Associated Press.

The attack on long-distance carriers comes as the long-distance industry is facing intense competition. Qwest Communications Inc., for example, this month began marketing long-distance service for 7.5 cents a minute--a price nearly 25% lower than the cheapest overall long-distance discount plans.

Officials of the three major long-distance carriers said they have passed along rate reductions. But industry officials conceded that some consumers may be hit with higher bills if they are not enrolled in discount calling plans.

“Every MCI customer who has made a long-distance call on Sundays in the last six months knows that rates have gone down,” said MCI spokeswoman Jamie Depeau, referring to MCI’s five-cents-a-minute Sunday rate. But consumer advocates voiced support for the FCC.

“We are pleased to see the FCC finally demand accountability from the long-distance companies,” said Gene Kimmelman, co-director of the Washington office of the Consumers Union. “It is clear that the FCC’s own pricing programs are not working as they intended. Last year they promised consumers there would be no increase on their bill if they only had one phone line. Now we are finding out that is not the case.”