American Telephone & Telegraph Co. asked the Federal Communications Commission yesterday to approve the largest long-distance rate increase in company history -- a move that could bring the company an additional $1.4 billion in revenues.
In light of the this week's Federal Communications Commission decision to sharply raise AT&T's rate of return, it is likely the request, which would increase long-distance rates by about 16 percent, will be approved by the regulatory agency.
The largest previous increase, filed with the FCC last year, raised long-distance revenues by $499 million, increasing the company's revenues in that market by 3 percent.This latest request would raise Bell System long-distance revenues by 7 percent.
Under the new Bell System rates, the cost of a three-minute direct call from Washington to New York placed during the day would rise from $1.16 to $1.34, while the rate for evening calls would rise from 75 cents to 87 cents. Rates for daytime calls between Washington and Los Angeles would increase from $1.37 for three minutes to $1.58, while the night rate for that call would rise from 89 cents to $1.02.
AT&T, however, points out that while the consumer price index has risen by 160 percent since 1967, interstate telephone rates have risen by 20 percent. Further, company spokesman also note that with the development of efficient methods of sending calls, rates had been decreasing between the 1940s and 1970s.
AT&T asked the FCC to put the rates into effect five days after the rate-of-return decision is issued officially. Although that decision was unanimously approved by the FCC it does not become effective until it is released in final form at least several weeks from now.
"We cannot afford any additional delay in implementing the new rates," said James Billingsley, AT&T vice president for federal regulatory matters. "We proved, and the FCC recognized, the importance of adequate earnings in the current economic environment."
The rate increase, he said, is necessary to "assure the Bell System's ability to continue to provide good telephone service in the face of galloping inflation and record-high interest rates."
The rates hikes go hand-in-hand with an earlier request by the company to raise wide area telecommunications service, or WATS, rates. In fact, yesterday's request will raise slightly the level of an earlier WATS rate increase for businesses, who provide more than half of AT&T's long-distance telephone revenues.
AT&T said that a New York City business customer now pays $1,761 a month for the first 240 hours of service and $4.89 for each additional hour for calls across the continental United States.
Under the higher rates, that same customer would pay $2,043 a month for the first 240 hours and $5.67 for additional hours of WATS service.