American Telephone & Telegraph Co. announced today it will ask the Federal Communications Commission for a $1.75 billion annual reduction in long-distance rates, the largest rate cut ever proposed.
At the same time, industry sources said that in addition to the rate cuts, AT&T is expected to propose a 75-cent charge for each long-distance information call, a service that is now provided free of charge.
In announcing its intention to file for a rate reduction, the company did not disclose specific tariffs that would result. But sources said that rates for short-haul calls of under about 100 miles would drop by 1 percent to 4 percent, rates for calls in the 800-to-900 mile range would be cut about 15 percent, and rates for calls of up to 3,000 miles would drop by about 10 percent.
The rate reductions would bring AT&T charges for long-distance calls closer to those of its competitors such as MCI after the Bell System is broken up on Jan. 1.
AT&T officials have repeatedly said that they expect to announce sharp reductions in long-distance rates as soon as the federal government ends years of controversy over so-called "access charges," the fees paid to cover the costs of connecting local telephones into long-distance networks. Those costs have been subsidized by the Bell System's long-distance revenues.
The announcement of the rate reduction is clearly timed to attempt to stem a growing tide of congressional dissatisfaction with a recent FCC decision that passes much of those costs on to residential telephone customers. AT&T officials warn that any congressional effort to alter the FCC's formula on the eve of the company's breakup will only raise more uncertainties about the divestiture action and its timing.
Just yesterday, a Senate committee tentatively voted to delay by a year an FCC order that would require residential telephone customers to pay $2 a month for the cost of connecting to long-distance service, a fee that could rise to as much as $6 a month over the next several years.
"Our ability to make our planned reductions in interstate long-distance rates is dependent upon no changes or delays in implementing the FCC's access charge order," said Morris Tannenbaum, chairman of AT&T Communications, the Bell System's long-distance arm.
"The scheduled reductions will save our customers substantial sums of money and represents the largest single rate cut in telecommunications history," Tannenbaum said.
AT&T officials said the $1.75 billion figure was calculated based on what the rate cuts would mean when applied to the company's projections for 1984 calling volume.
Company spokesmen said those specific projections were "proprietary." But Edward M. Greenberg, an analyst with Sanford C. Bernstein & Co., said that the AT&T rate cuts represent about 5 percent of his estimate of total interstate revenues.
An AT&T spokesman said that consumers with a long-distance bill of $20 a month "can look forward to that bill being 10 percent to 15 percent less" if the FCC approves the rate cuts. Greenberg, however, pointed out that the average residential customer "will actually be paying more for telephone service when you factor in the $2 a month access charge."
The company reported total long-distance revenues for 1982 of $21.4 billion, a figure that includes a variety of business services not generally related to today's long-distance announcements.
If approved by the FCC, the rates would go into effect on Jan. 1, 1984, the scheduled date for the AT&T breakup. The company also announced that the local Bell operating companies would file tariffs by Sept. 30 detailing these new customer access charges.