It's official: Another price war is underway in long-distance telephone service.
MCI WorldCom Inc. yesterday put basketball superstar Michael Jordan and Looney Tunes cartoon characters to work pitching a new residential calling plan that gives consumers nickel-a-minute rates on weekday evenings and all day Saturdays and Sundays.
AT&T Corp. fired the first shot in the new round of conflict in July by lowering its per-minute rates by 2 cents for non-discount subscribers. A month later, Sprint Corp., the third member of the industry's Big Three, let fly with 5-cent calling in the evenings.
Nickel calling is becoming standard fare in competition that is played out in ads on TV screens and in newspapers. But while talking with friends who live across the country has become dramatically cheaper in recent years, consumers have often ended up paying more for local service.
To get the long-distance savings, consumers need to study plans closely and see if one is beneficial in terms of their calling patterns, consumer advocates say. Savings are generally not automatic -- people must contact their long-distance companies and request to be put on the plan of their choice. AT&T, for instance, offers 5-cent Sundays, but only for those who request it.
Under the "MCI 5 Cents Everyday" campaign, consumers will be offered a rate of 5 cents a minute for 108 hours a week, effective from 7 p.m. to 7 a.m. on weeknights and all day on the weekend. To get this deal, consumers will have to pay a monthly $1.95 fee and spend a minimum of $5 a month, with the monthly fee counting toward that sum. During daytime hours, consumers will pay 25 cents a minute.
Like other long-distance carriers, MCI officials said their new plan is a way to pass along to customers corporate savings in "access charges," the federally regulated fees that long-distance companies pay to local phone firms for access to their networks to begin and end calls.
MCI officials deny that the new plan is a direct response to recent moves by competitors. They said they had deliberated about the plan since early last fall and filmed commercials featuring Jordan and the Looney Tunes characters in December. "We were just waiting for the right time to launch it," said John Donoghue, MCI WorldCom's senior vice president of consumer marketing.
MCI's plan bears some resemblance to the "Nickel Nights" plan that Sprint introduced two weeks ago, giving consumers 5-cent rates for calls between 7 p.m. and midnight every evening -- a total of 35 hours a week -- for a monthly $5.95 fee. During other hours, Sprint customers pay 10 cents a minute.
Consumer advocates aren't impressed with this type of plan. They point out that many consumers think they are paying lower rates than they actually are, because consumers often need to enroll in specific plans or pay a monthly fee to get the lowest rate. If customers aren't on a special plan, they could be paying 24 cents a minute or more.
"Even for MCI customers, deciding to switch isn't a slam-dunk," said Samuel Simon, director of the Telecommunications Research & Action Center, an advocacy group that tracks long-distance calling plans. "They should actually do their own rate comparisons."
Simon said TRAC's preliminary analysis indicates that low-volume users, in particular, lose out on the new MCI plan, mostly because of its $5 monthly minimum requirement.
Some consumer advocates say the Federal Communications Commission should bear some responsibility for the neglect of low-volume users because the commission has hesitated to dictate how long-distance carriers pass along their savings from local phone companies to their customers.
FCC officials said they are generally pleased with the savings the long-distance carriers have passed along. Yog Varma, deputy chief of the agency's Common Carrier Bureau, said he hopes that reductions will increase later this year.
At the same time, the FCC is investigating the effects of access charge reductions on low-volume users to determine whether they have benefited from the regulatory changes.
Overall, it is striking how quickly long-distance rates have fallen. Long-distance prices have continued to drop since Ma Bell was broken up in 1984. Rates that were once 35 and 40 cents per minute have given way to discounts of 5 cents. Much of that is due to cuts in access fees as well as competitive pressure.
In 1995, Sprint pioneered flat rate discount plans, charging 10 cents a minute, 24 hours a day, seven days a week. Other long-distance companies have also rolled out flat monthly rate calling plans.
MCI WorldCom's new plan could threaten AT&T's popularity, analysts said. "Over the years, AT&T's weak link has been their consumer long-distance business, and this bullet is aimed right at that part of their business," said Jeffrey Kagan, an Atlanta-based telecom analyst.
AT&T officials yesterday declined to comment directly on MCI's new initiative, saying the company's current plans remain competitive in the marketplace. Under AT&T plans, officials said, consumers don't need to worry about what time they are calling.
AT&T's most popular option is the One Rate Plus Plan, which charges consumers 10 cents a minute seven days a week, for a $4.95 monthly fee. A variation of that plan, which consumers must request specifically, offers Sundays for 5 cents a minute at no extra cost.
AT&T spokesman Mark Siegel said the company will be able to keep its lead by selling long-distance along with communications services such as wireless, local calling, cable television and Internet access.
Here are rates and schedules for the most popular long-distance discount plans, along with their Web addresses and customer service numbers:
AT&T One Rate: 15 cents a minute 24 hours a day, 7 days a week. No monthly fee.
AT&T One Rate Plus: 10 cents a minute 24 hours a day, 7 days a week. Can request 5-cent Sundays. Monthly fee: $4.95.
MCI 5 Cents Everyday: 5 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: 5 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: 10 cents a minute 24 hours a day, 7 days a week. Monthly fee: $4.95.
Nickel Nights: 5 cents a minute every day from 7 p.m. to midnight*. 10 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, the Yankee Group