Skip to content
Ralph Nader > In the Public Interest > Skyrocketing Telephone Rates

Unless millions of residential telephone users organize, their monthly basic telephone bill will skyrocket like a Roman candle, except that it will keep going skyward. From Los Angeles to Boston, these hikes will quadruple or quintuple by 1986-7 from what you are now paying.

A few days ago, readers of the Washington Post learned about the first stage upsurge. The Chesapeake and Potomac Telephone Co. (CU) filed a new rate increase proposal with the Public Service Commission that would more than triple what residents pay for unlimited local telephone service. The charge for connecting service at a new home or apartment address would go from $9 to $72! And get this; the cost of installing new equipment goes to $21 for the first 15 minutes of work and $11 for each additional quarter hour from the current maxi­mum price for house calls of $9.

Starting next January, local telephone companies can charge you a $4 per month access fee just for the right to connect to long distance telephone service. Also on the way, if consumers do not mobilize, is the drive for local measured service throughout the United States. That means each time you pick up the phone to make a local call, the phone company will charge you for its duration, the distance to the called number (10 blocks or 70 blocks, for example) and the time of the day the call is placed. Brian Lederer, the People’s Counsel for the District of Columbia, calls this formula “the local long-distance proposal.”

What provided the impetus for this explosion of telephone charges was Ronald Reagan’s settlement of the government antitrust case with AT&T. The agreement with the giant company provided for the divestiture of the local bell companies which in a year or two will be on their own. The 13 cents per long distance call minute will no longer be transferred to them. Instead, the access fee will help make up the difference.

The local bell companies are jumping on this loss of long distance revenues to demand state and federal approvals of gigantic increases in rates and charges. They wan these increases even before they cease receiving that share of long distance revenues. And the projected increases are far out of proportion to their loss of long distance monies.

Where are the state regulatory agencies and the Federal Communi­cations Commission (FCC) which are supposed to protect the consumers? They are in a mixed state of chaos and understaffing for the task of analyzing these price hike demands. Last month, the national associa­tion of state regulatory utility commissioners asked the FCC to study (1) the probable rate increases for basic telephone service within the next two years as a result of the AT F T divestiture and recent FCC decisions; (2) the percentage of customers likely to discontinue basic telephone service because of these rate increases; and (3) ways to preserve universal telephone service for Americans.

Imagine, the state agencies are conceding their passivity, apart from a few outspoken state officials, and asking the FCC to do something that it should have started many months ago on its own. The FCC showed how much it cares when it observed last year that the loss of 800,000 residential telephone consumers would be “acceptable.” Unaffordable telephone service means that families cannot summon police, fire or medical assistance by dialing a number.

Pretty soon, some member of Congress will introduce legislation to establish a telephone assistance fund to help the indigent afford phones. But who will penetrate to the root of the problem and compel full disclosure of the telephone companies’ pricing strategies, their real costs and the extent to which large commercial telephone users, who could set up their own systems, will be underbilled in order to keep them on the phone company’s rolls.

Electric utilities have long given large electricity users lower prices per kilowatt hour and made up the difference by higher charges to smaller users than any economies of scale could justify. In this way, large users would not have the incentive to develop their own generating facilities. The same approach is about to be adopted by telephone companies.

A new phrase is creeping into the telephone company’s dictionary. You, the residential telephone customer are called “cost-causers.” You are being semantically prepared for the century’s most traumatic telephone price shock.

If you desire more information about what you can do to help organize a movement for fair telephone rates, send a business-size, self-addressed return envelope to Sam Simon, Telecommunications Research and Action Center, P. 0. Box 12038, Washington, DC 20005.