Why does AT&T gouge people?
by Chris Seidel


April, 2000

This month AT&T charged me $72.00 for 12 minutes of phone time. The phone bill listed 12 phone calls of 1 minute each. My girlfriend Kim had gone to a Drosophila conference in Pittsburgh Pennsylvania. She had called home to Berkeley California several times, but most of the time I wasn't around so the machine picked up. AT&T charged six dollars for the brief connection each time the machine answered.

All in all we paid $119 to AT&T this month for a total of 57 minutes of phone time. That's about %10 of a graduate student's monthly salary. To someone on minimum wage that's more than half a week's work.

I was curious to know why 1 minute of phone time through AT&T cost 6 dollars. What kinds of things can one get for less than the cost of a single minute of AT&T phone time?

1.) Lunch
At the Hummingbird Cafe on Euclid Ave I can get a Roast Beef Sandwich and a big glass of fresh carrot juice for $4.00 even.

2.) Mattinee
A 2 hour full length feature film at Shattuck Cinemas $5.50

3.) A whole week of internet service
For $20.00 per month I get a 56k modem connection to the internet with unlimited access. That's about 5 bucks to rent a week on someone else's network.

4.) A whole hour of someone's time.
Minimum wage is $5.15.

Why had ATT charged so much for a couple of phone calls? ATT was my default long distance carrier on my home phone service. I remember how they used to call and ask me to switch to their service when I was signed up with MCI. The high charges on my phone bill were all calling card calls. I had told Kim to use our PacBell calling card to call home while she was on the road. The rate for other AT&T charges on the phone bill was very reasonable. I called AT&T to ask them why they charged so much money for such an apparently small thing as 1 minute of domestic phone time. I used to call England for less than the rate they charged me. The poor AT&T operator was friendly but informed me that I didn't have an account with AT&T, and that's why they had charged me so much. I explained that AT&T was my long distance carrier on my home phone, and asked how could I not have an account with them when I'm actually signed up for their service? She didn't have a good answer, but simply repeated her previous statement.

I had checked over previous phonebills to see with what other carriers had charged for calling card calls in the same situation. Two other companies had charged me about a dollar for the same thing that AT&T had charged me $6. I asked the operator why AT&T charged more than 3 times what other companies charged for the same thing? She replied that the service with AT&T was 3 times better.

I felt sorry for her because she was being friendly and trying to answer my questions, but I was giving her a hard time for something that wasn't her fault and for which she couldn't really do anything. I asked her if she thought 1 minute of phone time was really worth $6, and mentioned all the other things six dollars could buy. What executive at AT&T had decided that it's a good idea to charge so much for something that other companies charge much less for? I have a good 30 years of phone calls ahead of me. Why doesn't AT&T have to worry about screwing people such that for the rest of my life I'll decide never to do business with them again?

I told her that I realized that there was nothing she could do but that I wanted to know what executive at her company had made the decision to charge people some number that has little relationship to what something is actually worth. Of course, worth is a slippery concept with most business executives I've talked to.

Anyway, I avoid AT&T now. They've made my phone business choice easier. The other day they called on the phone wondering if I wanted to do business with them, since they saw that I had recently switched carriers. The answer came easy.