American Telephone & Telegraph Co. yesterday said it was raising the rates it charges businesses for private-line services by an average 8.6 percent.
The new rates apply to the private lines used by large business customers and the government for transmitting voice, data, video, documents, photographs, radio and television programs.
In a filing with the Federal Communications Commission -- which must approve the increase -- AT&T said it would have to pass along to business customers the higher rates the nation's local telephone companies charge AT&T for local telephone circuits.
AT&T said that in an attempt to hold down customer costs it was reducing prices it charges for its dedicated long-distance facilities by an average 21 percent, but the overall effect of the new rates would still be a price increase of 8.6 percent because of the increase in local telephone charges.
The proposed rates, which will go into effect March 4, will produce nearly $264 million in additional revenue needed to cover AT&T's cost of providing end-to-end private lines, including charges paid to local telephone companies, AT&T said.
The rates are designed to raise AT&T's earnings on private-line services to its authorized level of 12.75 percent. The company said it had been earning less than half the authorized level on these services. Under federal regulation, AT&T is permitted the 12.75 percent rate of return on its operations.
AT&T plans to introduce three new private-line rates to take effect shortly after local companies begin charging their new rates to the long-distance companies.
AT&T said the new rates will give customers more options for configuring private-line connections between distant locations.
"Today's filing gives customers the option of retaining or obtaining AT&T as a single point of contact for the establishment and maintenance of dedicated communciations paths between customers' premises," said James R. Billingsley, senior vice president of AT&T. "Customers will be able to obtain their service entirely from AT&T or obtain access from others and connect to AT&T interoffice channels."
But the exact effect of rates on individual groups of customers "will vary depending upon the particular mix of services they use," said Billingsley. "Those customers who have benefitted most from a rate averaged structure may expect to receive higher increases," he said.
Rates for AT&T long-distance, international long-distance, WATS, and WATS 800 service are not affected by the rates proposed yesterday.