AT&T; to Raise Cable-TV Fees 4.8%; Price Hikes on Equipment to Follow

AT&T; Broadband, the nation’s largest cable operator, plans to boost cable-TV prices by an average of 4.8% starting in February. The company also said Tuesday that it will begin increasing equipment and installation prices.

The announcement came a day after AT&T; and Sprint raised a fee that all long-distance calling customers pay to subsidize the high cost of providing telephone service in rural areas and some other markets.

The monthly subscription for AT&T; Broadband’s standard cable-TV package, which is received by 63% of the company’s 16 million customers, will increase by 4.8% starting in February. Some customers receiving expanded services will see price increases averaging 6.55%, the company said in a news release.

The price increases are far lower than some announced by the company last year. To compensate for costly upgrades of its networks, AT&T; split with others in the industry and increased rates by 20% in a few of its service areas last year.

After cable prices were deregulated a few years ago, the industry made a concerted effort to keep annual rate hikes below 5% to keep regulators from imposing new restrictions. The industry’s restraint has also been driven by fierce competition from satellite TV services such as DirecTV.

AT&T; Broadband, slated to be spun off as an independent company under the breakup plan announced by AT&T; in October, also said some of its cable systems will increase equipment and installation prices in February. The other systems will boost those charges later this year in accordance with federal guidelines.

The debt-plagued company said the increase in cable prices will offset the rising costs of providing service and upgrading its systems for telephone connections and advanced digital services, including high-speed Internet access.

Investors initially cheered as AT&T; plowed more than $100 billion into buying and upgrading cable systems over the last two years, but they soon grew impatient with the company’s progress, forcing management to adopt the breakup plan.

In the long-distance arena, another big trouble spot, AT&T; has raised the universal service fee to 9.9% of a customer’s long-distance charges, from 8.6%.

The increase is meant to reflect a Jan. 1 increase in the fees phone companies are paying the Federal Communications Commission to keep phone connections affordable in less lucrative markets.

Like AT&T;, the nation’s largest long-distance company, with 60 million customers, Sprint has decided to pass on the increase to consumers, also raising its universal service fee to 9.6% from 8.6%. WorldCom said Tuesday that it hasn’t decided whether to follow suit.

AT&T; shares rose $1 to $18.25 on the New York Stock Exchange on Tuesday. They tumbled 66% in 2000.