New phone rate rules transmit mixed signals to business.

Most businesses are expected to benefit if the California Public Utilities Commission agrees next year with Pacific Bell's request to raise basic service rates and lower toll call rates. But other companies which use private lines, such as banks and alarm companies, will be hit hard by price increases.

"We're not looking at any savings," said Jerry Milano, executive director of the California Bankers Clearinghouse, a bankers association and the clearinghouse for checks between banks. "We're looking at huge increases at a time that our industry is under severe strain."

Pacific Bell and GTE say they need to raise service prices to compete with long-distance companies to provide short-haul, long-distance service. If approved, the new rates would go into effect in 1993.

Under the plan, basic rates for businesses would increase by 30 percent, while toll call rates would decrease by at least 30 percent, according to Pac Bell officials. The amount of savings would depend on how much calling a business does, according to PUC officials.

"I think it's a good deal for most businesses," said Jack Leutza, a program manager for the Division of Rate-Payer Advocates at the PUC. Businesses "do a lot of long distance calling. To the degree any customer uses toll calling, you're looking at a 30 to 50 percent decrease in rates."

Pacific Bell must raise basic service rates in order to lower toll rates, said Jerry Oliver, Pacific Bell's director of state regulatory issues. For a long time, high-priced toll rates have subsidized below-cost basic service rates, he said.

"Our toll prices are three to four times the cost we incur to provide the service," Oliver said.

The reason that Pac Bell wants to raise local service rates is so it can compete with long-distance companies, such as American Telephone & Telegraph Co., to provide lower toll calls within its own service area, Oliver said. The PUC may rule next year that the long-distance companies can provide the service, he noted.

Pacific Bell has already filed a complaint with the utilities commission, charging that some long-distance companies are already selling low-cost toll call service within Pacific Bell's boundaries, Oliver added.

Long-distance carriers are currently charging much lower rates for callers phoning thousands of miles away than Pac Bell is charging for calls of less than 100 miles distance, Pac Bell officials said.

For example, a four-minute, daytime call from Los Angeles to Atlanta carried by AT&T costs 99 cents, said Michael Runzler, Pacific Bell spokesman. A four-minute call from Los Angeles to Ventura, carried during the same time of day by Pacific Bell, costs $1.21, Runzler said.

Under the new proposal, the price of the same call from Los Angeles to Ventura would drop to 66 cents, Runzler said.

TURN, a San Francisco-based consumer advocacy group called Toward Utility Rate Normalization, takes the position that the rate changes will be good for businesses, but bad for residential customers, said spokeswoman Melia Franklin.

The group contends Pac Bell is trying to woo business customers with what they say are below-cost priced services. She noted that the basic service charge rate hike is twice as high for businesses as for consumers. The basic rate will go up 30 percent for business and 60 percent for consumers, she said.

"Businesses tend to make much more toll calls. We think they're basically sticking their captive residential customers with a big, huge rate hike," Franklin said. In order to break even, a residential customer would have to make 12 toll calls a month, she said.

Oliver countered Pacific Bell will still provide basic telephone service for residential customers who are at 150 percent of the poverty line at a cost below $3, if the rate hikes are approved.

One business group that is not happy about the rate hikes are the banks, said Milano.

Banks use about 10 percent of the telephone services in the state, said Milano of the California Bankers Clearinghouse. They use them for everything from a 24-hour hotline for customers seeking information about their checking account to private phone lines for credit card authorization.

Inside every automatic teller machine, Milano said, there are at least three phone lines -- a data line, a business line and an alarm system that uses a phone line. The bankers' group estimates the cost of running a single ATM would triple, from about $50 a month to about $150 a month.

Phone lines also connect bank branches and tellers use phone lines to enter basic banking information, he said.

"That's why banks are interested in telephone rates," he said. "When the telephone company indicates they're going to start shifting around phone rates, we become concerned."

Although banks are big phone users, there is not a lot of use of toll calling, Milano said. So banks will not be able to reap much savings from the decrease in toll rates, he noted.