California AT&T Subscribers To Get Higher Phone Bills Next Year

October 24, 2008 7:25 a.m. EST

Los Angeles, CA (AHN) - AT&T will increase phone rates by 23 percent starting Jan. 1, 2009 for its California subscribers. The hike, the first major boost since 1994, will bring basic monthly subscription to $13.50 from $10.94.

It is expected to affect half of its subscribers in the state, including those who are on Lifeline and measured rate services. Phone customers who have full-featured call plans or those with bundled TV or broadband services will not be affected.

For Lifeline clients, their monthly phone bills will climb by 12 percent to $6.11 from $5.47, while subscribers who are enrolled in AT&T's measured rate service will be charged $7.28 monthly, up from $5.38 after they exceed a set limited number of calls. The increase will be by 25 percent.

AT&T, the largest U.S. phone firm, has 6.5 million subscribers in California and almost all the residents of the Bay Area.

The company, together with other phone operators, was set to start using market-based pricing by 2009 since legislation that placed a cap on rate increases was set to expire by end of 2008. To protect consumers, the California Public Utilities Commission placed a cap on increase in September for two more years until 2011. The price hike allowed by the commission was up to $3.25 monthly for 2009 and 2010 for basic subscribers.

Despite the rate hikes, AT&T maintained its prices are among the lowest in the U.S. compared to its competitors like Verizon, whose basic rates is at a minimum of $17 monthly.

AT&T reported on Thursday a third quarter profit below analysts' projections because the firm subsidized the cost of Apple's iPhone 3G to attract subscribers. The company's net income rose 5.5 percent to $3.2 billion or $0.55 a share, from $3.06 billion or $0.50 a year ago.