I think all local phone utilities are kinda bad. My hometown (a suburb of Madison, WI) has always been served by GTE, then Verizon after it's merger with the Baby Bell. Madison was always served by Wisconsin Bell, which became Ameritech post AT&T breakup, and now merged into SBC.
GTE always was years behind the state of the art in phone services. Touch-Tone dialing service was an extra cost on my bill until 1990. Caller ID was offered only years after it was available to the area Wis Bell cities, and it only gave a usable ID if the call originated in my hometown initially. I still have to pay extra to call any of the other suburban Madison cities, but those other communities can call all around with local service. DSL service was only initially offered late in 2001, and this is especially bad because GTE/Verizon has it's state headquarters just 1 mile from my home. It seems they provide new services everywhere else but here first.
I always hear other people complain about their phone service almost everywhere. The lower monthly bill offered by AT&T in your case likely has hidden costs for extra services. Of course they might be feeling the heat from people cancelling landline service in favor of cellular only service and being forced to lower rates. Try to get written details if you can.