AT&T bails out of 900 numbers

NEW YORK -- AT&T is bailing out of a major part of the pay-for-service telephone business, dealing a serious blow to psychics, sex lines and other companies that use 900 numbers.

"This could be the final death knell for the 900 business," said Ed Lavergne, a Washington lawyer who has worked with the telecommunications industry.

AT&T stopped providing billing services for new 900 customers as of Jan. 1, and will discontinue billing for all such numbers on Dec. 31. The decision was primarily a financial one, said AT&T spokeswoman Jean Hurt. "The market has kind of changed," she said.

But she acknowledged that the tawdry reputation of some 900 services and concerns about AT&T's image may have played a part. "I think that entered into it, probably. As with so many things, you just look at what you're getting out of it and what you're putting into it."

MCI also offers 900 numbers. "We don't have any plans to make any immediate changes," said spokeswoman Audrey Waters.

The 900 business was created in the 1980s. While 800 numbers are free to the caller and paid by the person or company at the other end, callers pay the freight for 900 numbers. A popular psychic, for example, charges $4.99 a minute.

Up to now, AT&T and MCI have billed callers through local telephone companies.

AT&T's cut? According to Peter Brennan, director of development for the People2People Group, the biggest purveyor of personal ads in the United States, AT&T's basic rates were 35 cents a minute for transporting the calls, and 12 percent of gross charges for billing.

Too many 'chargebacks'

But Albert Angel, whose company, ICN, runs 900 services for the Weather Channel and state lotteries, among others, says customers can refuse to pay 900 bills, insisting they didn't make the calls. Often, he said, denial sets in when spouses see bills from psychic or sex lines.

Under the law, their telephone service cannot be taken away if they refuse to pay; the worst that can happen is that their phones would be blocked from making 900 calls in the future.

Angel said AT&T did not do a good job of administering its 900 services, failing to properly screen companies with which it contracted. As a result, he said, "chargebacks" -- calls that were billed and never collected -- "got out of control."