Newspaper article THE JOURNAL RECORD

Phone Wars Produce More Cut-Rate Calling Plans

Newspaper article THE JOURNAL RECORD

Phone Wars Produce More Cut-Rate Calling Plans

Article excerpt

Competition in the long-distance phone market heated precipitously in January as all the major long-distance carriers launched new national calling plans.

The plans, primarily aimed at people who make a lot of costly calls, can help consumers save a bundle. Better yet, at least for now, you don't have to be a big spender to qualify for the savings.

In the past, if you spent less than $25 a month on long distance _ calls going 50 miles or more _ you were excluded from the most generous discount plans. But in this latest round of price cutting, the Big Three _ AT T, MCI and Sprint _ dropped the qualifying threshold to $10 or less, if you sign up quickly. In addition, some allow you to add instate toll calls into the equation _ effectively lowering the long-distance threshold and providing savings on both types of calls.

With promised savings ranging from 10 percent to 50 percent, it's worth taking a look at the competing plans, particularly if you spend a lot on long-distance and so-called "local longdistance" calling.

However, you should realize that the savings are not deducted from your entire phone bill. In other words, if your phone bill amounts to $50 per month, a 10 percent savings on toll calls won't save you $5.

That's because a substantial portion of the bill comprises monthly service charges, taxes and fees for specialized calling plans rather than the cost of individual calls. By and large, these fees and service charges are rising, not falling.

Why? Phone companies maintain that high per-call charges subsidized the cost of providing and maintaining phone lines in every house in the past. When the toll markets opened to competition and per-call charges dropped, such subsidies began to evaporate. Now, at least in theory, everyone is paying for the value they receive and no one is subsidizing anyone else.

How do you determine which plan is best for you? It largely depends on how you use your phone. To understand why, you have to understand the permutations of the three new calling programs.

The "Sprint Sense" program is by far the easiest to understand. When you use the program, you pay one of two rates _ a 10-cent-per-minute rate for calls between 7 p.m. and 7 a.m. and a 22-cent-per-minute rate for daytime calls, between 7 a.m. and 7 p.m. It doesn't matter where you call, whom you call or whether your friends are on the same program. It's a flat rate.

Normally, Sprint charges a monthly service fee of $3 if your long-distance calls are less than $25 per month. But those who sign up before April 1 get a "charter membership" in the program, meaning the $3 fee is waived permanently, says Wally Meyer, vice president of marketing and sales for Sprint's consumer services group. Sprint is also giving 100 minutes of free time to newcomers _ a $10 to $22 value. …

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