How'd You Like To Rent This Baby?

By Sean Gregory

Roberta Sweetow, 67, keeps the hulking black rotary phone, the one she has had since 1964, on her nightstand in case her husband Herb, 74, receives an early-morning call to substitute teach in a Skokie, Ill., high school. Sweetow purchased the phone for $9 last year, after finally noticing a charge buried in her bill every three months: $18 to lease a telephone. "I realized I've paid over $1,000 for a phone I hardly use," she says. "Who in the world rents a telephone?"

Lots, say lawyers representing approximately 44 million customers in a $10 billion class action against AT&T, which administered the post-Ma Bell leasing program from 1984 to 1996, and Lucent, its consumer-products spin-off, which runs the program today. The suit, set for trial Aug. 5 in Illinois, alleges that after the Bell breakup, AT&T failed to adequately inform customers of their options to lease, purchase or return their old telephones. Customers who took no action continued to be charged for renting their phones, a fee recorded on their bill in vague line items like TRAD ROT DSK MISC (traditional desktop rotary). Several former AT&T and Lucent employees say the companies pressured them to keep people leasing. AT&T says the suit has no merit and promises to defend itself "vigorously," and on Friday the Federal Communications Commission issued a call for public comment, which could delay the trial. Whatever the outcome, there are still AT&T customers who haven't got the message. Some 860,000 households still lease nearly 1 million rotary phones. --By Sean Gregory