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Kandel on AT&T shuffle
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June 9, 2000: 6:16 a.m. ET
Ma Bell angers regulators by promising rate cuts -- then announcing hikes
By CNN Financial Editor Myron Kandel
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NEW YORK (CNNfn) - Hell, the saying goes, hath no fury like a woman scorned. Well, AT&T found out this week that misleading federal regulators can be even worse.
In what must be one of the most embarrassing recent corporate goofs, the nation's biggest long-distance phone company has had to put on hold its plan to raise rates for millions of its customers. That, after good old Ma Bell made itself look a bit like Madame Defarge, maybe even with a touch of Marie Antoinette.
 The rate increase itself wasn't the real problem. It was the way it was handled -- or, rather, mishandled. Just last week the company and the Federal Communications Commission heralded how phone customers were going to benefit from a government-ordered reduction in the fees that long-distance companies pay to local carriers to connect their calls. Everybody --especially the regulators -- basked in the glow of supposedly lower costs.
At the same time, however, AT&T was filing notice with the commission that it was raising rates, some very substantially.
When The New York Times front-paged that story on Wednesday, FCC chairman William E. Kennard and other commission officials were outraged. Kennard got on the horn with AT&T chairman C. Michael Armstrong and other company executives. (I'm not sure what long-distance service he used for those calls.) He said the company had promised to pass on savings to its customers, but its new rate plan wasn't doing that.
Another FCC commissioner, Gloria Tristani, was quoted as saying tersely: "I was totally misled by AT&T." Consumer groups, notably Consumers Union and the Consumer Federation of America, also joined the outcry.
The heat was so intense that the company announced later on Wednesday that it was putting off some, though not all, of the rate increases. A top official said it would thoroughly review the plan, but might decide to go ahead when that process was completed. In any event, the company said, consumers would be fully informed about any forthcoming changes.
It was that lack of full information that particularly bothered Kennard. He said AT&T had promised to tell its customers which plan would be most cost-effective for them. "This was not done," he asserted, adding that he would hold the company to that commitment.
The dust has not yet settled, or should I say the static. Regulators are the last people anyone in the fast-changing telecommunications business wants to trifle with. But AT&T has done just that. It needs to do some fast and major fence mending. In the process, maybe the consumer will get some real benefits after all. 
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