Getting Hung up on Basic Phone Rate Increases

Remind me someday to tell you my experiences with AT&T.  But for now, here are some interesting and frightening statistics:
AT&T customers saw their monthly rate for basic residential phone service jump 22% this month to $16.45. The increase followed a 23% rate hike last year.

And you know what? That’s the good news.

The bad news is that, beginning in January 2011, AT&T and other phone companies will be permitted to jack up basic rates as much as they want — no regulatory limits will apply.

"If you want to know what will happen then, look at how much their rates went up for directory assistance and call waiting and other services that were deregulated in 2006," said Denise Mann, who oversees telecom matters for the California Public Utilities Commission’s consumer-watchdog division.

"It will make your head spin like Linda Blair," she said.

That’s putting it mildly. AT&T’s charge for an unlisted number has soared more than 345% since rates were deregulated four years ago, from 28 cents to $1.25, according to the PUC’s Division of Ratepayer Advocates.

The company’s charge for directory assistance has climbed 226%. The cost for call waiting is up 85%.

So far, however, rates for basic residential service charged by AT&T, Verizon and other phone companies have remained under state regulators’ control.

Regulators threw a bone — a small one — to consumer advocates during the deregulation process. Rate increases for basic phone service were temporarily limited to no more than $3.25 a year. Basic service includes local and 911 emergency calls.

"For the working poor, keeping residential service affordable can make all the difference," Mann said. "This was the one thing that we really worked hard to protect. We laid our bodies on the tracks for this."

Beginning next year, however, all bets are off. "The sky’s the limit," Mann said.

AT&T is already off to a flying start. It has raised the cost for basic phone service more than 50% over just two years.

Gordon Diamond, an AT&T spokesman, said this month’s rate hike "represents only the second time in 16 years AT&T has increased its rate for basic phone service."

That’s one way of looking at it. Another is that the state froze the rate for basic phone service for most of that time, so AT&T hit customers with double-digit increases in both years it was allowed to do so.

Diamond said the higher rates reflect changes in the cost of living over the 14 years that rates were frozen.

If so, AT&T has overcompensated just a tad. The consumer price index rose about 45% from 1994 to 2008, according to the federal government’s Bureau of Labor Statistics.

Diamond declined to say whether AT&T’s costs for providing basic phone service rose by a commensurate amount over the period. Nor would he speculate on what the company will do next year, when its regulatory leash is removed.

For its part, Verizon boosted its charge for basic residential service last year to $19.91 monthly from $17.66, or about 13%. The company says it has no plans for another rate hike this year.

"We feel this is the right rate," said Jon Davies, a Verizon spokesman.

He too declined to speculate on what might happen when the regulatory cap disappears next year. "That’s too far ahead," Davies said.

When the PUC voted in 2005 to deregulate most phone rates, it said the California telecom market was sufficiently competitive to justify leaving phone companies to their own devices.

The thinking was that market forces would safeguard consumers by pushing prices lower. That hasn’t happened.

"Market forces have not yet met the challenge of controlling price increases," the Division of Ratepayer Advocates concluded in a 2008 report. It called for prices to be regulated until officials get a better fix on whether people can afford basic service.

So far, it doesn’t seem like the industry-friendly PUC is in any hurry to helrolp consumers.


AT&T is truly out of control.  I don’t know about your rates but we used AT&T and our basic phone bill went from under $50 a month to almost $80!  So we cancelled our land line and tried MagicJack and it works Great!!  $39.95 a YEAR!!! Unlimited local and long distance.  $69.95 for 5 years.  Easy to hook up and use.  Has caller ID, voicemail, Google, redial.  All you need is a computer and a phone jack, even if your phone jack is disconnected from the phone company.  Rumor has it that AT&T will be discontinuing their land line service soon.

Anyhow, you can order one and try it free for 30 days.  No, I don’t work for them!  lol!!!  But I like the idea of paying only $39.95 a year for unlimited local and long distance phone service, and I wanted to share.  Take a hike AT&T!!

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5 Responses to Getting Hung up on Basic Phone Rate Increases

  1. Joe says:

    What you need now Bob is a plug for Verizon LOL! We don’t use AT&T here…sounds like it’s a good thing!

  2. Jade says:

    What the heck is that? I will have to look it up!

  3. Sue says:

    I about choked when I opened our phone bill last month and it had doubled! I immediately eliminated our FAX line just to bring it back down to where it was. I really need my land line for my business and around here we don’t have anything else except AT&T. I think their charges are outrageous! Wish I could rely on cell phones—many do around here—but we live in a DEAD area where NO phones work, so that’s out of the question. ARGH! What to do!????

  4. Tom says:

    Back in the day (before your day), real estate was at a competitive disadvantage if it was in GTE (now Verizon) territory as opposed to PacBell (now AT &T). I guess you are saying that times have changed along with prices. Bring back the basic black rotary phone. You got your money’s worth and they were indestructable. lol

  5. nodope says:

    Peeps still attach phones to their house and pay extra for that?Sheeeesh, whodthunkit

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