Local phone rates rise

Hikes don't require approval

Local phone companies have been quietly raising phone rates for basic residential service, a strategy encouraged by a 2005 state rule allowing greater latitude to increase prices.

The most recent round of changes didn't require state regulatory approval but affected customers of the state's two biggest phone companies.

Last month AT&T raised rates for basic residential service in the Triangle, Charlotte and other metro areas by 6.4 percent, to $19.95 a month. Embarq raised basic residential rates in September to $18 a month, an increase of 6.8 percent in Clayton and Garner, and 8 percent in Fuquay-Varina and Wake Forest.

In recent years, the N.C. Utilities Commission has loosened pricing restrictions and agreed to give phone companies more autonomy in making rate changes to traditional, no-frills phone service.

Smaller rate changes -- typically under 12 percent -- don't require regulatory approval, but the phone company is required to notify the utilities commission and customers.

The phone companies say the rate increases are needed because for decades the basic dial tone service for the home was artificially underpriced by regulation.

It's never easy to make that case to customers. Bob Horton, a retired computer engineer in Garner, can't find the silver lining to his rate increase.

"I don't have any options at the cost level I'm at," Horton said. "They basically have a person who doesn't want to spend a lot for telephone service between a rock and a hard place."

Local phone rates have been creeping up for years. The basic residential rate offered by AT&T, and its predecessor BellSouth, has gone up 59 percent in the past decade, while Verizon's is up 32 percent.

Basic residential phone service, once the standard offering, is now losing favor to fancier features. Most customers now pay extra for packages that include call waiting, call forwarding, wireless, TV and Internet. The bundles, advanced features and business data services were deregulated years ago.

Basic residential service is still protected by state regulators as a last-resort option for residents who don't want or can't afford costly bundles of communications services.

As the phone companies have raised rates, they have introduced some changes that could benefit customers. For many years, customers were offered three options: local service, long distance and something in between called the expanded calling area, which typically cost 5 cents a minute. Embarq eliminated the expanded calling areas last year.

Last month, AT&T followed suit and eliminated the 22-mile limit on free calls made from Raleigh, instead creating a 55-mile zone for free calls.

"You've basically doubled that free local calling areas for residential customers," said AT&T spokesman Clifton Metcalf."

For years the expanded-calling charges generated complaints, because customers either didn't know about the charges or couldn't accurately gauge how far they were calling from their home, said Buck Moye, an engineer with the Public Staff, the state's consumer protection agency in utility rate cases.

That's not the only change. In the past, AT&T had 10 pricing zones for basic home phone service, depending on the size of the city served. Now the company has one price: $19.95, regardless of location. AT&T got there with a 6.4 percent rate increase for metro areas last month and a 12.4 percent increase for customers in smaller towns.

"We're responding to customer preferences for simplified pricing," Metcalf said.

Other local phone companies are also moving toward uniform pricing.

"Our competitors -- cable phone providers, Internet-based providers and wireless companies -- all offer voice phone service at one price," said Verizon spokesman Harry Mitchell. "A single price is easier for our customers to understand and easier for us to market and administer."