A new and controversial way of computing local monthly telephone charges for residential and business customers has been proposed for the District of Columbia by the C&P Telephone Co. as part of a massive repricing effort under way throughout the Bell System.
C&P, in a petition pending before the D.C. Public Service Commission, is seeking permission to offer local measured rate service, which would charge for each local call according to the distance, duration and time of day -- the same criteria now used on long distance telephone calls. The measured rate option would be in addition to the current service offerings.
For some telephone customers, particularly those who use their phone infrequently, the proposal could mean lower telephone bills. But for others, who use the telephone often, it could lead to higher bills.
Only D.C. telephone customers would be immediately affected by the C&P proposal, but similar measured rate service also appears to be coming in Northern Virginia and suburban Maryland.
At present C&P is testing measured rate service in five Virginia communities: Belle Haven and Cape Charles on the Eastern Shore and Norton, Coeburn and Wise in the western corner of the state. Maryland state law now forbids measured rate service, but efforts are under way to eliminate that ban.
C&P's proposal for D.C. "provides customers with another choice whereby a person can better control telephone cost by selecting time of day, distance and duration," said Web Chamberlin, a company representative. He emphasized that it is being proposed as an additional option rather than as a replacement for existing service.
But consumer advocates expressed alarm that the C&P action could add to consumer telephone expenses more often than it reduces them. They also voiced concern that flat rate service, which permits unlimited local calling, may ultimately be replaced by measured rate service, as it has been in New York City, or become so expensive that it will be become a luxury for the average phone user.
"This proposal will virtually put a pay telephone into every home," said Lee Richardson, president of the Maryland Citizens Consumer Council and a former president of the Consumer Federation of America. He said the proposal is an unnecessary addition to existing rate choices and will add to telephone company costs that eventually will be passed on to customers.
D.C. People's Counsel Brian Lederer is studying the proposal to determine what action his office should take. "Looking at it now, I see problems with the concept," he said, principally that it would greatly complicate telephone use.
At the heart of the proposal is a division of the metropolitan area into sections known as bands, with a rate for each band. The telephone bands would work like taxi cab zones: each time a call crossed into another more distant band, the cost would go up.
For example, a five-minute daytime call from a D.C. residential telephone to someone else in the D.C. band would cost 12 cents. But it would cost 15 cents to talk five minutes to someone in the second band, 18 cents to someone in the third band and 21 cents to someone in the fourth band.
Discounts would apply in the evening (generally between 5 p.m. and 11 p.m.), when there would be a 35 percent reduction in rates, and at night (generally 11 p.m. to 8 a.m.), when there would be a 60 percent reduction -- the same discounts now used for long distance rates. Finally there would be a charge for each additional minute that the customer stayed on the telephone.
Basic monthly rates for the proposed measured rate service for one residential line and one standard C&P telephone would start at $4.98, including a call allowance of $3.60. If use exceeded $3.60, due to number of calls, duration, distance or time of day, C&P would bill the customer accordingly. For an average D.C. customer, who monthly makes 168 calls lasting five minutes each, the measured rate charge could range from $9.44 to $36.66, depending on the bands crossed and time of day.
The effort to extend measured local service to customers here and elsewhere in the nation was triggered largely by the competition that the giant Bell System now faces. In the past, company policy was to keep local service charges low by subsidizing them with long distance rates -- a policy that the American Telephone & Telegraph Co. in its latest annual report says "made sense in the regulated monopoly world in which we used to operate." But, the report notes, "That world no longer exists."
Because of deregulation, Bell has begun adjusting long distance charges to to compete with other companies like MCI and Western Union for long distance customers. That has led to the Bell campaign to reprice other services, which in the Washington area includes:
Higher installation charges for telephone customers. Under a new rate schedule that took effect June 26, a D.C. residential user pays $32.40 to have one standard phone installed by a telephone worker, compared to $25.90 before. A D.C. business now pays $48, compared to $38.70 before. Similar increases have been implemented in Washington suburbs. The Northern Virginia resident now pays $46.40, compared to $30 before rates changed Dec. 20. The suburban Maryland resident pays $42.35, compared to $28.28 before rates there changed Jan. 30.
Unbundling of prices for phone instruments from phone lines. In the past, the telephone company typically billed for monthly service that included use of both the telephone instrument and the telephone line. But now, under the June 26 rate changes approved for D.C. customers, C&P charges $8.18 a month for one residential telephone line with unlimited calling. If the customer wants a standard C&P telephone, there is an additional 80-cent charge, for a total of $8.98. If the customer has his own telephone, he pays only the $8.18.
Telephone service for Virginia and Maryland customers also has been unbundled. Under rates approved Dec. 20, the Northern Virginia customer pays $10.65 a month for one residential line and 95 cents for a standard telephone. Maryland rates for basic telephone service were first unbundled in late 1979. Now, under a rate schedule approved Jan. 30, the suburban Maryland residential customer pays $11.05 for a basic line and $1 for a standard telephone.
But the biggest potential change by far for the average residential customer here is the introduction of the measured rate service concept.
The C&P proposal in effect would put local telephone use on the same basis as other utilities. Customer phone time, for those who choose measured service, would be metered much the way electricity, water and natural gas now are.
C&P can do this with the sophisticated electronic switching equipment that already is in use in much of the phone system, C&P's Chamberlin said. To track each local call made by a customer, the telephone company would program the computers to do one more task, he said.
Consumer leaders, however, say that the C&P proposal raises serious questions for telephone customers.
"We think there is no cost-based way to do this fairly, no way to decide the correct cost for a call," said David Greenberg of the Consumer Federation of America.
Richardson, who has opposed the telephone company on other issues in the past, said that the burden of the proposed changes will fall heaviest on those least able to afford it: senior citizens, for example, who rely more on home telephones to keep in touch with the rest of the world and the handicapped who are on the telephone longer because of special equipment they use to communicate.
"The company has a real burden to show why this proposal is necessary," Richardson said.
He also said that the proposal will increase telephone company revenue requirements because of the cost of installing the measured rate system, handling the additional consumer inquiries that it may bring and doing the more detailed billing that will be required.
Telephone company officials downplayed the cost of offering measured rate service and said it could be made available for D.C. customers at an initial expense to the company of about $27,000.
At present D.C. customers can select from four types of local service: flat rate with unlimited calling privileges in the metropolitan area, which 41 percent of home users have and which starts at $8.98 a month; flat rate with unlimited calling privileges in D.C., which 47 percent have and which starts at $4.98 a month; message rate with 60 free metropolitan area calls, which 10 percent have and which starts at $4.98 a month, and economy rate which 2 percent have and which starts at $2.98 a month. The economy service has a 6-cent charge for each call made by the customer. With message rate, that same charge kicks in after 60 calls.
Although both the message rate and the economy rate consider the number of calls made by the telephone customer each month, neither takes into account the duration of the calls, the time of day they are placed or the distance.