Lowered prices, raised fists, AT&T, MCI drop rates, but local companies still claim foul play

The first responses to the Federal Communications Commission's reductions in access charges have come from AT&T and MCI amid a flurry of accusations from long-distance providers and Bell regional holding companies.

The two long-distance providers last week reduced rates for domestic long-distance calls by 5% during daytime and evening hours and 15% during night and weekend hours. The cost reductions, which come in response to a May 7 order by the FCC that local telephone companies reduce the access fees they levy on long-distance providers for initiating and completing long-distance calls, are expected to be the first in a series of pricing adjustments as the industry prepares for the advent of competition for local calling.

"Typically, the [other carriers] will follow, although not in lock step," said Frank Governali, telecommunications analyst with financial advisory firm CS First Boston Corp.

Sprint has not yet determined how much of the reductions are attributable to Sprint and therefore has not formulated a rate reduction plan, according to carrier officials.

MCI said in a statement it was delivering on its promise to reduce long-distance phone rates by passing on interstate access charge savings. AT&T made a similar pledge in writing to the FCC that it would pass on all its access fee savings to its customers.

"The supposition is that all the savings will be flowed through to customers," said a spokesman for AT&T. "In a competitive environment like this, no one can really afford to hang onto a cost savings and not pass it on to customers." Most of the savings will be realized by basic-rate customers, he said. Members of other rate plans probably will see some benefit, he said, but "those details will be part of marketing promotions that we're not revealing for now.

While other long-distance carriers are expected to follow the lead of MCI and AT&T, complaints have already come from at least one local carrier that these reductions don't go far enough. After AT&T hinted that it might back away from a pledge to pass along all its savings to customers, Bell Atlantic filed a letter of opposition with the FCC.

"If they live up to that promise, they will be living up to what they promised to the FCC on May 7, but we're suspicious and we think AT&T customers should be suspicious, particularly basic rate payers," said a Bell Atlantic spokeswoman.

While AT&T declined to comment on the complaint, MCI and AT&T have claimed that RHCs have implemented only $1.5 billion of the $1.7 billion in access charge reductions so far.