AT&T Jacks Up ‘Measured’ Phone Service Rate Because It Can

AT&T extorts more money from captive customers

With bills for pretty much everything steadily rising, some people try to keep a lid on monthly costs by opting for “measured” phone service.

What that means is they’re charged a fixed rate for a limited number of local calls, plus a per-minute rate for any additional calls. If you don’t use your phone a lot, it can be a really good deal.

Too good, apparently. Or so the bean counters at AT&T seem to have concluded.

Beginning March 1, the company’s base rate for measured phone service will jump $3 a month to $15.37 from $12.37 — a nearly 25% increase. The charge for additional local calls will be 3 cents per minute.

Separately, AT&T’s flat-rate charge for unlimited local calls will increase $1.05, to $21 a month.

These are simple plans for people with simple calling needs. Their cost to AT&T is negligible.

“It’s extortion, pure and simple,” said Regina Costa, telecom research director for the Utility Reform Network, or TURN, a San Francisco advocacy group. “There’s no proof that these price increases are justified.”

And thanks to our hands-off state regulators, no such proof is required. As of last year, the California Public Utilities Commission has allowed phone companies to jack up basic rates as much as they please.

The idea is that a competitive marketplace will keep costs down. Yet even though Verizon says it has no plans to raise its own fees for measured and flat-rate phone service, that hasn’t stopped AT&T from taking the plunge.

Lane Kasselman, an AT&T spokesman, said about 10% of the company’s phone customers have measured-rate plans. The rest have flat-rate plans.

Kasselman said fees for measured and flat-rate calling plans are going up because, well, because.

“Goods and services go up,” he told me. “That’s how our economy works.”

Glib as that may be, Kasselman does have a point. It obviously costs AT&T something to maintain and improve its network capabilities. Modest rate hikes more or less in line with the rate of inflation are understandable.

As of November, the annual inflation rate was about 3.4%.

A 25% increase, therefore, might strike some as blatant price gouging, especially for a service that’s intended mainly for penny pinchers and those on a fixed budget.

Kasselman responded that measured and flat-rate phone service are considered “a la carte” by AT&T — that is, they’re stand-alone services and aren’t priced the same way the company prices those big bundles of phone, television and Internet service.

“Customers can save a lot of money by going for packaged services,” he said.

That’s true, if you look at the cost of specific services. For example, you can get phone service plus Internet access for $39.95 a month. You can get phone, Internet and TV service for $89 a month. These prices are cheaper than if you ordered each service separately.

But those are introductory rates. After a year, your bills will climb.