Now who's getting short-changed?, AT&T raises business rates to offset increased pay phone costs

AT&T's recent move to raise business long-distance rates is the first indication that carriers are feeling the heat of the Federal Communications Commission's pay phone rate adjustments.

Until last fall, major carriers such as AT&T, MCI and Sprint split a $6-a-month per-phone fee to pay phone operators for coinless calls. That rate jumped to $45 a month last fall, but it only applied to Independent pay phone operators - not to pay phones operated by local exchange carriers such as the Bell regional companies and resellers like GTE.

In April, the $45 rate was expanded to all pay phones. In response, AT&T announced that it would raise rates on long-distance services for businesses to pay the increased rates. AT&T estimates that its new share amounts to $26.81 a month per pay phone.

The interexchange carrier is challenging the new FCC rates and says it will roll back any business rate increases if it succeeds in lowering pay phone compensation rates.

"While pay phone owners should be fairly compensated for the cost of providing coinless calls, we believe the compensation levels set by the FCC are unreasonably high," said Ken Sichau, AT&T vice president for business network services.

For its part, the FCC said the new rates are designed to reimburse pay phone operators for a wider range of coinless calls. The old $6 rate was intended to compensate them only for access code calls - those in which a consumer uses an AT&T or other company calling card and dials an access code to get to the carrier. The new rate is supposed to be compensation for a wider range of calls, including the booming market for 800 numbers.

The FCC is also looking at changing the nature of compensation from the current per-line charge, which is based on industry averages, to per-call charges based on the actual calls made from a phone.

"The big winners here are the pay phone operators," said Robert Rosenberg, president of Insight Research Corp., a Livingston, N.J.-based telecommunications consulting firm. "The carriers will simply readjust the allocation of their settlements behind the scenes."

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