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AT&T quietly raises some phone rates

The long distance giant is quietly raising rates on some of its individual telephone services, hoping to push users toward more profitable bundles of telecom products.

AT&T is quietly raising rates on about a dozen of its individual telephone services, hoping to push users toward more profitable bundles of telecom products.

The company released the news in a series of newspaper advertisements last Friday. Consumers that missed these ads will likely see the price hikes for the first time when their bill comes next month.

The price hikes are the latest in a string of subtle nudges AT&T is giving consumers to guide them toward bundled products such as the company's Personal Network plan, which includes long distance, Internet, and wireless service.

Late last year, the company pulled back from advertising its individual services on television, and is now investing significant resources in advertising its package deals.

Persuading people to add more services is one way the company hopes to reduce the number of customers who sign up, but then leave the company's service. This kind of consumer churn has boosted the company's marketing budget, and sharply eroded the company's residential calling market share.

But the bundling is also a preview of what will happen once AT&T is able to integrate the cable TV-based systems, such as cable service and high-speed Internet, from its acquisition of Tele-Communications Incorporated.

The bundling trend has raised protests from consumer groups, who say AT&T and other long distance companies are engaging in a kind of price discrimination against low-volume users.

"They have identified the high-end customers, and bundling is how you capture those customers," said Mark Cooper, research director for the Consumer Federation of America. "They have been whacking the bottom and bundling the top."

AT&T executives noted, however, that basic-rate long distance subscribers and the company's One Rate long distance customers were largely exempt from this round of price increases.

"A lot of consumers will be unaffected by these price changes unless they use these other services," said Mark Siegel, a company spokesman. Most of the rate hikes were due to increased company costs, Siegel added.

Some of the new price increases will be substantial.

The price of the company's volume discount plan, for callers that spend more than about $25 per month on service, will go up by about 2 cents per minute. The service fee for using a calling card on this plan will go up from 95 cents to 99 cents. The company is no longer marketing this service, Siegel said.

Service charges for calling card calls using operator assistance will go up from $2.25 to $2.95, or from $2.45 to $3.45 if the customer doesn't use the company's 1-800-CALL-ATT, or from $2.45 to $3.45 if the customer doesn't use the toll-free number.

Asking an operator to check a busy number and break in will go up from $6.75 to $9.95. Other operator services, such as collect calls or ordinary long distance services, also will go up.