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Controversial Indiana Utility Regulatory Commission Decision Forces AT&T To End Popular Local Service and Raise Rates

Posted on: Wednesday, 14 January 2004, 06:00 CST

INDIANAPOLIS, Jan. 14 /PRNewswire/ -- AT&T said today it will stop offering its popular Call Plan Unlimited and Unlimited Plus local service plans to Indiana consumers and raise rates for those customers already enrolled in the plans.

These actions come as the result of a controversial decision by the Indiana Utility Regulatory Commission (IURC), which last week issued an order substantially increasing SBC Indiana's wholesale rates known as unbundled network elements or UNEs. The IURC raised by about 30 percent the rates competitors must pay to lease parts of SBC's network and then resell as services to Indiana residential customers. The IURC decision means that SBC Indiana's wholesale prices of about $16.63 per line are now higher than the retail prices it charges its own customers -- about $11.15 per line.

AT&T also said it will pursue court action against the IURC to preserve its ability to offer Indiana consumers competitive local phone service and an alternative to SBC.

"We continue to be very disappointed with the IURC's order," said Kevin Crull, AT&T senior vice president for marketing. "This huge increase in wholesale charges to competitive carriers is unwarranted and a devastating blow to the development of local phone competition in the state. The IURC's order is bad news not just for a substantial portion of our own customers but for Indiana consumers overall, who were just beginning to enjoy the benefits of local phone competition."

AT&T will be forced to raise rates for existing customers on these plans by two dollars a line. Customers who have Call Plan Unlimited or Unlimited Plus plans and use AT&T long-distance services will now pay $18 a month for the service. Customers on these same plans who have another long-distance carrier will now pay $20 a month for the service. Additionally, the company will stop offering the plans to new customers.

These changes will not affect Indiana consumers who are on any of AT&T's other local service plans, including its popular One Rate USA(sm), AT&T's newest bundled calling plan.

In August, AT&T and other local competitors filed thousands of pages of information with the Commission that showed, based on the use of SBC Indiana's own cost models, that competitors are paying nearly $5 a line too much to lease unbundled loops from SBC Indiana. By disregarding this evidence, the IURC has now set wholesale prices that are higher than the neighboring states, including Illinois, Michigan, Ohio and Wisconsin.

Prior to this decision, AT&T had been offering a full array of competitive local exchange services to Indiana consumers.

AT&T believes that the IURC's order violates the wholesale pricing principles mandated by the Telecommunications Act of 1996 and is directly contradicted by the evidence before the IURC in this case. Consequently, AT&T will seek judicial review of the decision under the provisions of the Act. ask the IURC to reconsider its decision.

About AT&T

For more than 125 years, AT&T (NYSE "T") has been known for unparalleled quality and reliability in communications. Backed by the research and development capabilities of AT&T Labs, the company is a global leader in local, long distance, Internet and transaction-based voice and data services.

AT&T 'Safe Harbor'

The foregoing contains "forward-looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside AT&T's control, that could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please see AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of AT&T.

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AT&T

CONTACT: Bob Nersesian, +1-973-326-3643 (office), or +1-908-410-6026(wireless), nersesian@att.com, or Mike Pruyn, +1-312-230-4894 (office), or+1-312-953-1157 (wireless), or mpruyn@att.com, both of AT&T

Web site: http://www.att.com/

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