AT&T is raising prices on all of its key data and voice services today. The move is likely to boost costs even for AT&T users on term contracts, most of whom do not have protection against price hikes because of the telecom industry's unique tariffing system.
The long distance giant is raising prices of all its frame relay ports and permanent virtual circuits by 5%, on top of a similar increase last March. AT&T is also raising all its private line prices, with the greatest hit coming on high-capacity circuits. Below T-1 speed, the prices go up 4%, while T-1 prices go up 6%. All circuits above 1.5M bit/sec, including fractional T-3, full T-3 and OC-3 private lines, are being boosted 10%.
Users with combined voice and data contracts won't get any relief either. Virtually all of AT&T's plans for business voice services are seeing price increases today. AT&T is raising by 3.9% the price of most large business services, such as Software Defined Network for outbound calls and Megacom 800 for inbound calls delivered over a T-1 access line. Prices for voice services for small and medium-sized businesses are generally going up 6.9%.
AT&T's move reflects the continuing high cost of WAN bandwidth, exacerbated by what analysts call a growing competition between ISPs and corporate users for high-capacity circuits. "Demand is outrunning comfortable supply," an AT&T spokeswoman said. "People are getting [circuits] but the wait is getting longer."
The impact is not limited to AT&T customers. MCI Communications Corp. recently released prices for its previously announced networkMCI Broadband Connections, a point-to-point SONET service. A New York-to-Chicago T-3 circuit under the new service costs nearly $78,400 a month just for the long distance link between MCI central offices, according to an MCI tariff recently filed with the Federal Communications Commission. A T-3 access link in both cities is required to complete the point-to-point connection and costs extra.
But a special factor for AT&T is its own catch-up effort to build SONET connections under an $8 billion investment program announced last winter. AT&T officials said today's price increases partly reflect the cost of that program. The carrier will have 30 regional SONET rings in place by the end of this year, 50 by the end of next year. The goal of SONET is to reduce outages by automatically re-routing traffic in reverse direction around a ring in case of a physical cut or electrical failure.
Users with growing volume still have one way to reverse the price hikes: get carriers to renegotiate their contracts. According to analysts and user attorneys, most such renegotiations result in significant price decreases for individual users, especially if the user issues a competitive request for proposals. But while a term contract is still in effect, the carrier can raise rates because a change in a carrier tariff filed with the government takes precedence over the terms of a private contract.
The FCC last year tried to ditch this system by abolishing long distance tariffs, in a ruling that was to have taken effect in September. But MCI earlier this year won a court stay of the rule, with a final court ruling on the matter still pending.
