University Daily Kansan, January 14, 1982
Page 7
AT&T breakup could raise KU phone bills
By DEBBIE SEUSY Staff Reporter
Although the ink is not yet dry on the Jan. 8 settlement between the U.S. Justice Department and American Telephone & Telegraph decision by the world's largest corporation to divest itself of 23 subsidiaries, including Southwestern Bell Telephone Co., has left KU administrators speculating that predicted increases in local phone rates could result in high University phone bills and increased housing costs.
"On the average, AT&T subsidized 30 percent of all its companies' operating budgets," William E. Hogan, associate executive vice chancellor, said yesterday. "Those companies have to change their way of working in disization. Therefore the rates will have to change, but we have no way of knowing how they will affect Kansas."
Hogan said there would be a rate increase this year, but it would not be "due to divestiture," as the effects of break-up won't be felt for some time.
J. J. Wilson, housing director, said that any changes in local phone rates would be reflected in increased housing costs, as students who live in University residence halls pay for their local phone contracts through their housing contracts.
"I don't think it's a situation that will unduly affect residents' rates, as utilities have been out of hand in the past few years," he said.
Gary Tobin, spokesman for MCI Communications, a long distance competitor of AT&T, said that any attempts by spun-off subsidiaries to form a public utility have been called by state public utility commissions. Under the agreement, the commissions will authorize all rates and conditions for the local companies.
"There are four local companies whose revenues are larger than our own," Tobin said. "We're talking about $6 billion and $5 billion companies. State commissions aren't going to approve of them raising rates."
Tobin said that MCI approved of U.S. District Judge Harold H. Greene's decision Tuesday to review the complex agreement before affirming it.
"We've been after full divestiture of the system since the beginning," he said. "We approve of the hearings because we would like to get the terms (of the agreement) more clearly defined."
Tobin said MCI would continue to offer long distance rates 20 percent lower than AT&T's, but he said the company didn't plan to speed up its addition of cities which receive the service.
Tobin said 100 cities were added to the list. The number of more would be added this year. MCI also wrote that it
services 40 states and the District of Columbia and, according to Tobin, plans by 1985 to service all 40 states.
Tobin said the main benefit for competitors such as MCI from the agreement is that AT&T will have to pay the same amount as its competitors for access to local lines used to transmit long distance calls.
Toni Stevens, community relations manager of Southwestern Belfair, said that an increase in local rates had been occurring gradually for years.
"There will be a rate increase," she said. "However, this is not because of what just happened."
Stevens said Bell subsidiaries had been trying for years to get local rates "in line" with the costs of local services. Now that the revenue from long distance calls will no longer subsidize local debt, something will have to be done to make up for the lost money, she said.
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