A proposed refund of at least $100 million to customers of American Telephone & Telegraph Co., supported by White House consumer adviser Esther Peterson and other federal government spokesmen, has been rejected by the Federal Communications Commission.
Morover, a majority of the regulatory agency indicated at a meeting on Thursday that the FCC will approve a higher rate of profit for the giant communications firm from its interstate telephone business. AT&T contends higher earnings are required because current ceilings are based on 1976 costs.
There would be no long-distance telephone rate increase because of the FCC decision, however. AT&T recently has been earning a higher return on interstate service than allowed by the FCC in previous rate decisions. Simply by allowing higher earnings to become authorized, rates could be left unchanged.
The fact that AT&T was exceeding its allowed rate of return - the profits permitted on total investments for interstate service - was uncovered in recent months by the FCC staff, which subsequently recommended that $100 million of alleged overcharges be returned to consumers.
Carter administration consumer adviser Peterson said the excess profits amounted to some $200 million. To allow AT&T to hold on to such an amount would "set an ill-advised and undesirable precedent," she told the FCC.
Under the regulatory agency's last AT&T interstate rate decision in 1976, the Bell System was permitted a return of between 9.5 percent and 10 percent a year. In 1978, however, AT&T admits that it earned 10.02 percent, "for all practical purposes right at the upper part of the range."
The FCC's own staff figured the 1978 return at a higher level, 10.22 percent, and Chairman Charles Ferris and Commissioner Tyrone Brown both called for some form of refund. Otherwise, the process of setting profit limits would become meaningless, they argued.
An apparent majority of the FCC indicated, however, support for an AT&T proposal to raise the ceiling on profits, filed on March 8. The Bell System asked for a new ceiling of 10.38 percent, to be followed by a rate of return between 11 percent and 12 percent at a future date. At the meeting last week, the FCC made no decision on what level of interim earnings it would permit and suggested public hearings on the broader question of a permanent rate of return.
AT&T Vice Chairman James Olson said the FCC simply "recognized the dramatic changes in the economy since 1967." A higher rate of return "merely adjusts for the higher interest rates," he added.
The Bell System is on record as pledging that there will be no long-distance rate hikes in 1979, as part of its compliance with the administration's wage and price controls. The last interstate rate boost for telephone service was in February 1976.