Businessweek Archives

Is Ma Bell Soaking Seniors?


Up Front: I-WAY PATROL

IS MA BELL SOAKING SENIORS?

IS AT&T EXPLOITING THE elderly? The United Seniors Health Cooperative and other consumer groups charge that the $75 billion telecommunications giant is taking advantage of senior citizens by not clearly pointing out that it's cheaper to own a telephone than to rent one. The consumer groups are up in arms over the fact that 5.5 million customers shell out an average of $63 a year to lease a phone that could cost as little as $25 to buy. They argue that the elderly are unaware of the alternatives or too set in their ways to change. AT&T says it clearly discloses rental costs and options.

In fact, it seems that in the race to the Information Superhighway, people of all ages are content to putt along on the back roads. AT&T says only 30% of its renters are over 65. (Almost half the renters are still paying for rotary phones.) AT&T won't say how much it makes, but analysts estimate the company has raked in $3 billion since 1984, when consumers were first offered the chance to buy their phones.

What's the appeal of renting? Says longtime lessee Peter Szekely, 43, of Washington D.C.: "It was really easy to lease. I just had to keep doing what I've been doing." Szekely admits it would be hard to plead ignorance--AT&T mails out bills for leased phones separately from other phone bills and includes information on how to buy a phone with each bill. AT&T points out that about half of the company's lessees also own at least one phone, and in 1994 some 1 million of them exchanged a leased phone for another leased model.EDITED BY IRA SAGER, WITH PAUL ENG By Catherine Arnst


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus