Six months ago a friend told Charles Kellam about a new telephone service that could save him money on his long-distance calls.
Thanks to the tip, Kellam, a marketing consultant who lives in Crystal City, estimates that he is now paying 25 to 30 percent less each month for phone calls to cities in other states.
The savings include personal and business calls for the Kellams, who are among a growing number of consumers here and across the nation who have found they can save money by switching to one of several private long-distance phone systems. Four companies now operating in the Washington area offer deals on long-distance calls in competition with the traditional long distance service available through the Bell System.
The services -- which supplement the usual local service -- clearly offer advantages for some consumers, but not for everyone. In some cases, a consumer could end up paying more. Anyone who spends less that $20 a month on long-distance calls isn't likely to save money on the private phone network. oAnd consumers won't save any money unless the friends and relatives they telephone live in the cities served by the private phone companies.
Quality of service is another question haunting the private systems.Some users say it isn't consistently as good as the Bell System. They say it takes longer to make connections because more numbers have to be dialed. And they say that the line to the computer is sometimes busy, requiring repeated dialings.
But for many consumers, the potential savings are worth the effort. A Washington-area customer, for example, can talk for 12 minutes to someone in Los Angeles and pay 94 cents -- less than half the Bell System charge of $1.98, based on the rates for the weekend or after 11 p.m. on weeknights. The 94-cent rate doesn't include any registration fee, monthly charge or other cost that the private user may have to pay.
Officials of the American Telephone and Telegraph Co. (AT&T) acknowledge that their rates are higher than the private company rates, based solely on a comparison of rates between cities. That is because AT&T's long distance rates represent average costs for the rural and urban areas served, said Web Chamberlain of C&P Telephone, a subsidiary of AT&T. The private companies, however, choose only densely populated major metropolitan areas that have a high volume of calls and therefore offer the most profit potential.
Moreover, the AT&T philosophy has been to establish rates for long distance calls that would subsidize local service and hold down the price of the basic monthly phone bill, Chamberlin said.
The largest of the four private phone companies here is MCI Telecommunications Corp. with an estimated 120,000 residential customers nationwide. The other three, with a total of about 30,000 residential customers, are U.S. Transmission Systems Inc. operated by ITT, Southern Pacific Communications and Western Union. Here is a summary of their programs and charges in addition to the cost of each specific call made on their long-distance system:
MCI. Monthly rates of $10 for 24-hour service and $5 for service at night from 5 p.m. to 8 a.m. and all times on weekends. Serves 85 metropolitan areas. Telephone 251-8900 for Washington area sales information.
ITT. A one-time registration fee of $5 to $10 and monthly rates ranging from $5 to $30, depending on type of service selected. Serves 103 metropolitan areas; the only company serving Florida. For residential sales information, call 800-221-7267.
SP. One-time registration fee of $15 for residential users and monthly fee of $5 to $10. Also has a charge per call of 10 to 15 cents. Serves 138 metropolitan areas. Sales information is 527-4929 in Arlington.
WU. A minimum monthly use charge of $40 and a charge per call of 3.08 cents per minute. Serves 29 metropolitan areas and is the only company serving Seattle. Sales information at 624-0183.
Since the services are so new, consumer problems have yet to be defined. Customer Kellam said the quality of his MCI service is as good as Bell: "Except for the [smaller] bill, I haven't noticed any difference," he said. "
But one Washington woman who subscribes to MCI said the quality isn't consistent. "Sometimes the connection isn't as good as I want . . . and one time, when I was talking to my mother in California, we were cut off in the middle of our conversation."
A consumer trying to determine if one of the new services will save money should review previous telephone bills. How much have the long distance charges been?Are the calls to out-of-state cities served by the new private phone companies? What is the difference in the cost of the calls on phone bills over the past several months compared to the cost of the calls if they had been made through the new services?
In making the cost comparison, consumers must calculate any extra costs associated with the long-distance services. Some of the extra costs are obvious -- the $5 to $10 monthly fee that the subscriber must pay to have access to the system to make the call.
But there are other, less-visible fees that would apply to some customers using the services. For example, most Washington-area residents pay a flat amount for their local telephone service, regardless of the number of local calls they make. But some residents and all businesses here have metered service, so that they pay according to the number of local calls they make each month.
That is an important distinction for anyone using the private long distance services, because a customer must make a local call to get to the long distance computer. If the long distance number is busy, then more than one local call to the computer may be necessary. As a result, the caller's local monthly Bell bill may rise if the local calls to the private company's long distance computer bump the consumer into a more expensive local service category.