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AT&T hikes basic long distance rates

The telecommunications giant raises its basic rates and imposes new fees in a possible move to push customers toward packaged services.

AT&T is raising rates for its basic long distance service, imposing a new minimum fee for people who make few long distance calls.

The company says it is acting to plug a $300 million hole in its account books created by the cost of servicing these low-use customers.

But the move also marks a new step in AT&T's effort to nudge its customers toward its larger packages of services, since customers who sign up for multiple products or the company's forthcoming cable phone service won't be charged the fee.

Beginning in July, AT&T basic rate phone customers will be charged a minimum of $3 for long distance service. Thus, a customer who makes only a dollar's worth of calls in a month will see a surcharge of $2 added to the bill.

The company says it is not trying to push people into using new services, or trying to drive low-frequency customers off its network.

An average of 15 percent of its users use less than 30 minutes of service a month, costing the company close to $300 million a year, a company spokesman said.

The costs of maintaining these individual users' accounts, even if no calls are made, is more than $3 per month, the spokesman added.

The company is using the drive--which has also been picked up by competing long distance companies--to help push users into packages of services.

By consolidating multiple lines and wireless services on a single bill, users will quickly reach the $3 minimum and be unaffected by the charge, the company points out.

Once AT&T begins operating its local phone service through its newly acquired cable TV network, local subscribers also will be unaffected by the charge.

MCI WorldCom, AT&T's chief competitor in U.S. long distance markets, instituted a similar $3 minimum charge last January.