AT&T fired another salvo in the long-distance price war yesterday, announcing a new flat-rate calling plan priced at 7 cents a minute.
AT&T Corp. officials said its "One Rate 7 Cents" campaign is a response to pricing changes in the market, especially to 5-cent-a-minute plans introduced by its main competitors, Sprint Corp. and MCI WorldCom Inc.
Under AT&T's new "One Rate 7 Cents" package, consumers will be offered the 7-cent rate all day every day for interstate calls. In addition to the per-minute charges, the plan costs $5.95 a month--or $4.95 for customers who have chosen AT&T for local toll calling.
Using the MCI and Sprint 5-cent plans, consumers get the nickel rate only during certain hours of the day.
"Customers don't have to think about what rate at what time of the day," said C. Michael Armstrong, AT&T's chief executive and chairman. "It's straightforward."
AT&T already has a 10-cent-a-minute plan, which carries a $4.95 monthly fee and allows customers to ask for a 5-cent rate on Sundays. Consumers who sign up for the 7-cent plan won't be eligible for the lower Sunday rate.
Analysts said the new AT&T plan will likely help the company keep customers from jumping ship. But AT&T "will have to educate customers on why their 7-cent flat rate plan is competitive with the 5-cent plans" of its rivals, said Jeffrey Kagan, a telecommunications analyst based in Atlanta.
AT&T plans to launch an aggressive advertising campaign, starting tomorrow, to explain how its new plan works, company officials said. MCI and Sprint officials said yesterday that they aren't worried that the AT&T plan will take away customers. Rather, both carriers have indicated that their new campaigns managed to bring them new customers.
AT&T officials, unlike their counterparts at other long-distance carriers, say their new plan is a way to pass along to customers the government-mandated reductions in "access charges" that long-distance carriers must pay to local phone companies for access to their networks.
Consumer advocates have criticized the new long-distance plans for focusing heavily on high-volume users, who provide the companies more revenue. Low-volume users have generally been ignored by the long-distance carriers, according to the Telecommunications Research and Action Center.
Consumers should study their own calling patterns to find the best plan for them, consumer advocates say.
Here are rates and schedules for common long-distance discount plans, along with the companies' Web addresses and customer service numbers:
AT&T One Rate 7 Cents: Seven cents a minute, 24 hours a day, seven days a week. Monthly fee: $5.95. (If you use AT&T for local toll calls, monthly fee is $4.95.)
AT&T One Rate: 15 cents a minute 24 hours a day, seven days a week for interstate calls. No monthly fee.
AT&T One Rate Plus: 10 cents a minute 24 hours a day, seven days a week. Can request 5-cent Sundays. Monthly fee: $4.95.
MCI 5 Cents Everyday: Five cents a minute every weeknight from 7 p.m. to 7 a.m. and all day Saturday and Sunday; 25 cents a minute from 7 a.m. to 7 p.m. weekdays. Monthly minimum of $5 (includes monthly fee of $1.95).
MCI 5 Cents Everyday Plus: Five cents a minute every weeknight from 7 p.m. to 7 a.m. and all day Saturday and Sunday; 10 cents a minute from 7 a.m. to 7 p.m. weekdays. Monthly fee: $4.95.
Sprint Sense Anytime: Ten cents a minute 24 hours a day, 7 days a week. Monthly fee: $4.95.
Nickel Nights: Five cents a minute every day from 7 p.m. to midnight.* Ten cents a minute the rest of the time. Monthly fee: $5.95.
*If you're in California, it's 5 cents a minute from 5 p.m. to midnight.
Long-distance subscribers in the United States
SOURCES: AT&T, MCI, Sprint, Yankee Group