American Telephone & Telegraph Co. yesterday asked the government to approve the largest long-distance telephone rate increase in history, a total of 10.5 percent in a two-step process by the end of the year that would give the company an estimated $1.2 billion in additional revenue.
Under the plan, AT&T would put 5.6 percent of the rate increase into effect in June, thus apparently enabling the company to comply with the Carter administration's price guidelines, which are based on an Oct. 1-Sept. 30 fiscal year. The remaining 4.9 percent of the proposed rate increase would go into effect in October.
An official with the Council on Wage and Price Stability said AT&T "filed for a much smaller increase than they otherwise would have because of the council's price standards."
But if AT&T had asked for the 10.5 percent increase at one time, rather than in two steps, the administration "most likely" would not have found the request in compliance with administration price guidelines, the official said.
The request, which must be approved by the Federal Communications Commission, comes while the FCC is considering how to deal with the fact that the Bell System exceeded its regulated rate of return by about $100 million. Consumer activists have asked that either the money be returned to telephone users or be used to set up a fund to represent the public in phone rate proceedings.
In addition, AT&T has asked the commission to raise its rate of return above the 10 percent figure set by the FCC.
James R. Billingsley, AT&T's vice president for regulatory matters, said the company would show a return on interstate investment of about 9.3 percent without a rate increase. "Overall, our rate of return must be at least 13 percent," he said.
The company needs to raise more than $6 billion this year to finance a $16.7 billion construction program designed "not only to assure good service, but also to keep the benefits of new technology flowing to our customers," Billingsley said.
AT&T estimated that the increase, if approved by the FCC, would raise the average customer's monthly telephone bill by about 17 cents in June and 13 cents more in October.
A business customer's bill would go up by about $1.35 a month in June and an additional $1.05 in October.
Only long-distance calls -- including interstate, overseas, WATS and private line services -- would be covered by the proposed rate increase.
Samuel Simon, executive director of the National Citizens Committee for Broadcasting, a group that has been involved in telephone rate proceedings before the FCC, was critical of the rate increase request.
"It is an abuse of economic power by AT&T that they would come in and ask for $1.2 billion in order to meet their allowed rate of return in 1980 when in 1978 they've opposed refunding excess revenues," Simon said.
"They've got three ongoing major rate processes at the same time and there is no way that consumer representatives can participate in these proceedings. You need to be an AT&T in order to be able to afford that."
Henry Geller, head of the National Telecommunications and Information Administration and the administration's top telephone policymaker, refused to comment on the AT&T proposal. A spokesman said agency economists would study the matter.
AT&T last asked the FCC for an interstate service rate increase (2 percent) in 1976.
Company officials point out that even with the increases, interstate rates on station-to-station calls are similar to the rates 30 years ago, and that with inflation factored in, long-distance phone rates are less than half of what they were 12 years ago.
The company also noted that between 1967 and 1978 the costs of new construction rose 47 percent, office equipment 61 percent and trucks 90 percent.