AT&T Announces $3 Monthly Minimum for All New Residential Customers.

NEW YORK--(BUSINESS WIRE)--Aug. 14, 1998--

Also unveils new Lifeline program that exempts low-income  customers from minimum

In an important step to cover the costs of providing service to all residential customers, AT&T said today it will institute a $3 monthly minimum usage charge for all new residential customers.

The monthly minimum is effective Aug. 15 for all new residential customers who sign up for a calling plan. The charge will apply to new customers on the company's basic schedule effective Aug. 21. Current customers are exempt from the minimum even if they move, although it will apply to anyone who changes his or her calling plan on or after Jan. 1, 1999.

The company noted that low-income customers -- whether new or existing --will also be exempt from the minimum simply by enrolling in a new AT&T Lifeline Program. The company has worked to make enrollment in this program as easy as possible for consumers. Customers enrolled in a state telephone assistance program simply call AT&T toll-free, provide proof of eligibility, and they will be enrolled in the AT&T Lifeline Program.

Customers subject to the minimum will pay the charge only for those months when their long distance charges are less than $3, and they will pay only the difference between $3 and what they spend during the month. For example, someone who spends $2.50 in a given month will pay just 50 cents more to meet the minimum requirement.

Customers who choose any residential calling plan with a monthly fee automatically are exempt from any minimum requirement, even if their monthly calling is less than $3 in a given month.

Based on current spending levels, AT&T estimates that, in any month, 85 percent of its new customers will spend more than $3 a month and will be not be affected by the minimum.

The costs of serving customers who spend less than $3 a month on long distance calling cause AT&T to lose approximately $300 million annually. The new minimum, combined with aggressive expense reduction, is part of the company's overall effort to cover these costs.

"Being fair to all customers is important to us - new, current, high-volume customers, occasional callers, and those with low incomes,' said George Burnett, vice president in AT&T's consumer markets division. "We believe today's action, which has customers pay their share of costs, is the right approach for AT&T's consumer business and the company as a whole."

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