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AT&T Customers To See New Fee

AT&T's roughly 70 million residential long-distance customers will see a 93-cent monthly fee on their telephone bills starting next month to help pay for inexpensive Internet hookups for schools and libraries.

The fee, which flows into the federal Universal Service Fund, is not a new tax but merely shows up for the first time on phone bills in July. Previously, the charge was included within an assortment of subsidies paid by customers.

AT&T, the largest long-distance carrier in the country, had previously said it would charge customers a 5 percent monthly fee.

AT&T's decision to impose the flat fee is better for customers whose monthly long-distance bills are more than $18.60 but worse for people whose bills are always less.

"We've decided that a flat charge is a better alternative for our residential customers because it is more predictable and simpler to understand than a percentage charge," said Rick Bailey, the company's vice president for federal government affairs.

One consumer group, Consumers Union, criticized AT&T's plan as a "total rip-off." It said people who make few long-distance calls "are getting short-changed by AT&T."

MCI spokeswoman Claire Hassett said Thursday that MCI will charge a percentage rate, but the exact amount has not been set. Sprint spokeswoman Eileen Doherty said the company has not decided how it will collect the fee.

About one-third of the money collected under the decades-old Universal Service Fund is earmarked now for a program to provide cheap Internet access for schools and libraries.

The Federal Communications Commission voted last week to cut the program's funding nearly in half after complaints by consumer groups and some in Congress. Critics of the program have dubbed the fees the "Gore tax" because the vice president supports the idea of inexpensive Internet hookups.

The Clinton administration said reduced costs of long-distance to telephone companies, which are expected to pass the savings to customers, will "greatly exceed any costs for the program to connect classrooms and libraries to the Internet."

"It's a tiny amount of money to the extent that it's broken out in the first place," Gore spokesman Lawrence Haas said. "But the bottom line is: No one is paying more for this program because they are saving more than that elsewhere in their phone bills."

By Ted Bridis

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