C&P Telephone Co. filed a request yesterday for the biggest telephone rate increase in District of Columbia history -- a $67.7 million rise that would increase the cost of the most commonly used local residential service by 72 percent.
If the D.C. Public Service Commission approves the request, basic monthly service with unlimited calls throughout the Washington metropolitan area will jump from $8.18 to $14.11, the cost of a pay phone call will jump from 15 cents to 25 cents, calling information will cost 24 cents instead of 10 cents, and minimum phone installation charges will increase to $41.15 from $15.40.
Virtually all business and residential phone costs would be increased and total C&P revenues from the District of Columbia would climb 30 percent, C&P representative Web Chamberlin said.
The request is part of a massive nationwide strategy by American Telephone & Telegraph Co., C&P's parent company, to raise local telephone rates.
C&P already has asked for a 28 percent rate increase in West Virginia and a 26 percent boost in Maryland. A 10 percent surcharge on Virginia phone bills went into effect this week as the first step toward a major rate rise there, Chamberlin said.
AT&T says that up to now long distance services have been subsidizing local service to maintain low residential rates, but that local customers will now have to pay their own way. Long distance competitors of AT&T, such as MCI Communications Corp., challenge that claim, suggesting that there is no such subsidy.
AT&T also claims the company needs the rate increases to keep up with inflation and high interest rates.
Already this year, AT&T's 23 local operating companies have been granted $2.6 billion in annual rate raises, up sharply from $1.4 billion last year. Still pending are rate increases in 25 jurisdictions totaling another $3.5 billion.
"What this case is about is shifting the cost of telephone service on to the local customers," said Brian Lederer, D.C. People's Counsel, who represents customers in utility-rate cases. "If local regulators approve the way AT&T is going, local telephone bills are going to double or triple."
The consumer advocate said it is virtually impossible to determine how much of the cost of a home telephone goes to pay for local calls and how much is for long distance. What the phone company is doing, Lederer said, is arbitrarily assigning all the costs to local service where it has a monopoly so it can charge less for long distance and business services in which it faces stiff competition.
The D.C. Public Service Commission today is expected to rule on a separate C&P request to change the way the cost of local phone calls is calculated.
The phone company wants to base charges on the duration of the call, the distance between phones and the time of day. The proposal calls for splitting the metropolitan Washington area into service areas similar to D.C. taxi fare zones. Each zone barrier crossed would add to the cost.
The "local measured service" plan is not meant to increase phone-company revenues, but rather to make local phone charges reflect the cost of providing the service.
C&P said the measured service would be offered as an option, and customers could still choose to buy service that allows them to make unlimited free local calls. Lederer charged that increasing other charges would push more customers to choose the metered calling plan.
More than 40 percent of C&P's D.C. customers now choose a plan that gives them unlimited calls in D.C., and another 40 percent of the customers buy unlimited calls for the entire Washington suburban territory. The rest of the customers select a service with a cheaper base rate, but pay a message-unit fee if they make more than 60 local calls a month.
Under the C&P rate increase application, the metrowide service cost would jump 72 percent, from $8.18 a month to $14.11, and the D.C. service would go from $4.18 a month to $7.22. The message-unit charge on metered local calls would go from 6 cents to 8 cents.
Small businesses face even stiffer increases. The basic business fee would rise from $8.89 a month to $13.10, and the present allowance of 110 free message units would be eliminated. Chamberlin said such firms typically average 60 to 80 calls a month, which would add another $4.80 to $6.40 a month to their bills.
The phone company says the rate rise would require residential customers in the District of Columbia to pay $19.1 million a year in higher bills and would add $47.2 million to bills of businesses and government, a total of $67 million.
Lederer says the cost to customers would actually be $109 million, because the company is understating the impact of some changes.
Chamberlin said the latest rate increase request in D.C. would also mean that customers are paying the full cost of basic local phone service, although some specialized services still are being subsidized by other customers.
He said the sharp increases in phone installation fees are the result of a Federal Communications Commission ruling that installation costs must be paid by the customer and not spread over phone bills.
Under the C&P request, the basic fee for hooking up a new residential phone would be $41.15, regardless of whether the phone company has to visit the house or simply throw a switch in its office. Currently, installation without a visit costs $9 and a basic hook-up is $15.40.
If the phone company has to install wires or jacks inside the house, there will be additional charges, raising the total to $76.30, Chamberlin said. For the first time, the new rate plan allows customers to wire their own telephones and avoid the additional charges.
The phone company's application to the D.C. Public Service Commission is an inch-thick compilation of changes in fees for services ranging from princess phones to private branch exchanges.
A princess phone that costs $72 now would rise to $124 under the C&P plan. Touch-tone service that costs $3.50 a month would go to $5.05.
Asking an operator to help make a call instead of dialing direct is now free, but would cost an extra 50 cents; the conference call hook-up fee would jump from 25 cents to 40 cents; the surcharge on credit card calls would go up from 15 cents to 20 cents.