TELEPHONES Many still pay a price for leasing

Close to 1 million consumers, many of them over 75, are still leasing phones.
PHILADELPHIA (AP) -- When Ma Bell broke up in 1984, Betty Jane Hunt continued leasing her telephone -- and did so until just a few years ago, when a friend analyzed her phone bill and discovered the small monthly fee.
The municipal clerk, who hadn't given much thought to the charges on her bill, promptly told AT & amp;T that she wouldn't pay another dime for the phone. After some haggling, she said, the company let her out of the contract. But the damage was already done: Hunt had leased the beige rotary-dial relic, which still hangs in her kitchen, for far more than it would have cost to buy it.
"It was an expensive phone," Hunt, 61, of West Amwell Township, N.J., said with a laugh.
Twenty years after the government's breakup of the Bell monopoly, nearly 1 million consumers still lease their telephone from an affiliate of AT & amp;T, paying anywhere from $4.45 a month for an old-style rotary phone with "conventional bell sound" to $20.95 a month for a cordless phone with built-in digital answering machine.
The result: Customers spend hundreds or even thousands of dollars on a piece of equipment that can be bought for as little as $10. AT & amp;T's Web site touts numerous benefits to leasing, including portability (you can take your phone with you if you move anywhere in the continent) and free accessories such as long cords.
Advocates disagree
But consumer advocates say the program takes advantage of consumers, particularly elderly people, who may easily be confused over what their options are. According to an AARP survey from 1998, the latest year for which figures are available, 6 percent of people 75 or older leased their phone, compared with 2 percent under 65.
"It is such a rip-off," said Chris Baker of AARP's Public Policy Institute. "It's one of the things older people really depend on, and the fact they get abused is pathetic."
Before AT & amp;T was split into seven regional telephone companies, a phone was provided as part of a customer's monthly service plan. Starting in the mid-1980s, customers could buy the old set from AT & amp;T; lease it; or turn the phone in and buy from an equipment maker of their choice. More than 30 million initially chose to lease, but as consumers became more savvy about their options, the number began to decline.
Today, about 970,000 households lease a phone from New York-based North Street Consumer Phone Services LLC, which bought AT & amp;T's telephone leasing business. Lucent Technologies Inc., an AT & amp;T spinoff, continues to manage the program.
Noted on bill
Lucent spokesman John Skalko said phone leasing's benefits include free delivery and free replacement if the set ever breaks. He said customers' phone bills are clearly marked with the lease charge, and include a phone number for people to call to discontinue leasing.
Skalko said the company does not track its leasing customers' ages, but a "lease rewards" program offers discounts on prescription drugs and vision care.
"As long as people continue to want the service, we will continue to provide it," he said.
As part of the antitrust settlement, the regional Bell companies were not permitted to sell or lease telephone equipment, although they could form subsidiaries to do so, said telecom consultant Tom Allibone, who reviews small businesses' phone bills for accuracy. But few of them still offer residential telephone leasing.
San Antonio-based SBC Communications inherited a small number of leasing customers in Connecticut when it bought SNET in 1998, said SBC spokesman Michael Coe. The three other remaining Bells -- Quest, BellSouth and Verizon -- said they don't have leasing programs.
Leasing lawsuit
The former GTE Corp. exited the leasing business in early 2001, shortly after its merger with Bell Atlantic to form Verizon, said Sharon Shaffer, a Philadelphia-based Verizon spokeswoman. A lawsuit filed on behalf of Verizon's California customers in 2000 over the now-defunct leasing program is pending, she said.
Mark Cooper, director of research for the Consumer Federation of America, said he took heart in the relatively small number of people who still lease.
"There are 100 million households who have telephone service in America. The fact that 1 percent of the American people are fooled is not such a bad number," he said.