AT&T gets unlimited pricing freedom

The state’s largest phone company will have more latitude to set prices in the state, under a landmark decision issued today by the N.C. Utilities Commission.

But AT&T lost its year-long fight to win unlimited pricing freedom on basic residential service. State regulators will continue regulating AT&T’s price for the basic residential service — now about $19 a month — because telecommunications competition in North Carolina does not adequately protect consumers by providing them with options to AT&T service.

Price regulation requires a public hearing, and usually a state audit, before a phone company can significantly change rates.

But the Utilities Commission said that there is enough market choice to justify letting AT&T unlimited pricing freedom on several key services. Those services include basic business phone service as well as residential calling features, such as call forwarding, call waiting, speed dialing, call tracing and call block. AT&T had been allowed to increase prices on basic business service and on calling features by as much as 20 percent a year, but now the state will lift those annual limits.

AT&T, formerly known as BellSouth, sought more pricing freedom in its larger metropolitan areas, where customers have competitive options, such as wireless access, Internet phones and phone service from cable company Time Warner. AT&T officials said the company was losing significant market share to competitors, such as Time Warner and Vonage, that do not require state approval to set prices.

AT&T officials have said that basic residential phone service is artificially underpriced because of state regulation. Company officials had said they don’t necessarily plan to increase costs; instead, they told state regulators they need the flexibility to quickly respond to discount promotions marketed by competitors throughout AT&T’s service area.