Telephone users have both suffered and benefited in the past year as local rates have risen and long-distance rates have dropped.
The trend toward higher local rates and lower long-distance rates is a result of the breakup of the Bell System January 1, 1984, with the subsequent elimination of subsidies long-distance users paid to keep local rates low, the telephone industry argues.
Over the last year, the Federal Communications Commission has helped long-distance rates fall by requiring most businesses to pay several dollars a month per line to local companies for access to long-distance service.
Residential customers will be required to pay $1 a month beginning June 1, going up to $2 a month in 1986.
Until now, long-distance companies have been paying the burden of the costs -- and passing them on to long-distance users.
"Limited introduction of competition is starting to create more efficient and less costly long-distance service," said Bert Halprin, chief of the FCC's common carrier bureau.
"And a more rational, cost-based local service pricing helps everybody by maximizing the efficient use of that wonderful natural resource -- the telephone network," he added.
Over the last year, long-distance rates have fallen by an average of 5.1 percent, according to the FCC. When multi-line business began paying access charges last May, American Telephone & Telegraph Co. dropped its rates by 6.1 percent, and its competitors followed suit.
In June, with the imposition of residential access charges, AT&T rates are expected to drop another 5.6 percent.
Over the last year, installation charges have increased about 27 percent between the end of 1983 and the end of 1984, according to the Consumer Federation of America. Residential installation rates vary widely from $23 to $65, according to the Commerce Department's National Telecommunications Information Administration (NTIA).
Between February 1984 and February 1985, local phone rates have gone up an average of 8.7 percent, said the FCC. The Chesapeake & Potomac Telephone Cos. have asked for $54.5 million in additional revenue in D.C. and for $118.7 million in additional revenue in Maryland.
If the rate increases are granted, residential rates in D.C. and Maryland will have doubled since 1983.
As a whole, telephone companies asked for $2 billion in additional rate increases in 1984 and got $1.3 billion, according to the National Telecommunications Information Administration, a Commerce Department arm. The Consumer Federation of America puts the figure requested by phone companies since the Bell System breakup at $10.9 billion, with $5.1 billion granted.
The federation's figures are disputed by the United States Telephone Association.
Rate increases are pending in 15 states so far this year, according to the Consumer Federation. "If this reflects the trend for the rest of the country for the remainder of the year, we anticipate that residential local rates will go up another $1.5 billion in 1985," said Gene Kimmelman, legislative director of the federation.
Kimmelman added that lower long-distance rates make no difference to most consumers who make less than $10 worth a month in long-distance calls, while rising local rates may drive 5.5 million people off the telephone network by the end of the year.
"What good is cheaper chrome when you can't afford the Cadillac," he said.
The United States Telephone Association disputes that consumers will be forced off the telephone network, saying that new local calling options were designed to keep consumers on the network.
"It would be ridiculous for the phone industry to just sit back and watch 5.5 million people be pushed off the telephone network," a spokesman for the association said.
Phone companies across the country have begun introducing "local measured service," a rate plan whereby customers pay for calls based on time, length of call and distance. Many phone companies offer modified versions of the usage-based plan in the form of rate packages charging a basic fee for dial tone and additional amounts per call.
"Consumers should be happy because they have a wider range of options available for phone service than ever before," said the FCC's Halprin.
The "equal access" process that eliminates the lengthy codes consumers had to dial previously to reach Sprint, MCI, SBS Skyline or other long-distance services also is making life easier for consumers, according to the FCC.
But the process, mandated by the breakup of the Bell System, has been confusing to consumers over the last year because it is being phased in unevenly across the country. This allows some telephone numbers in a given city to have the service before other exchanges in the same city do.
While long-distance companies still can offer substantial savings over AT&T, consumers will see a shrinking of the savings AT&T's competitors offer over AT&T because of rising costs for connection to the phone network.
At the same time, the quality of service will improve as equal access gives long-distance companies the same quality lines AT&T enjoys, the FCC said.