- The Washington Times - Thursday, August 22, 2002

MCI will raise rates next month on some of its long-distance plans, as it scrambles to squeeze more profits out of its less-popular services.
On Sept. 1, MCI customers using any of three calling plans will pay more per minute or pay a higher monthly fee, and will pay an extra 10 cents per minute for operator assistance. Fewer than 10 percent of MCI's customers will be affected, said company spokeswoman Audrey Waters.
MCI is a subsidiary of WorldCom Inc., the telecommunications provider that filed the largest bankruptcy in history in July. Miss Waters said the rate increases had been discussed before the bankruptcy.
The monthly fee for MCI's 7 Cent Value calling plan will increase from $2.95 to $3.95 per month. Users of MCI Anytime Connection will pay 14 cents per minute instead of 12 cents per minute on state-to-state calls, and users of MCI Anytime Classic will pay 8 cents per minute instead of 7 cents per minute on state-to-state calls.
In addition, MCI said it will no longer prorate charges for customers who cancel monthly service plans before the end of the month.
The rate increases come on the heels of a flurry of similar rises in the last few months. Rates for calls on 31 international plans rose an average of 10 percent in July, and rates on 38 international plans had similar increases in May. The prices for some domestic weekend plans went up as much as 70 percent, say those who track such information.
Some analysts cautioned that the moves could backfire by causing customers to switch long-distance providers.
"If they're losing money, they want to get more money but I would opt for more cost-cutting and efficiency measures," said Rich Sayers, operator of a Web site called bye-bye-mci.com, which monitors the company. "This gives people an excuse to shop around."
Mr. Sayers said the rate increases mark more proof that MCI is no longer the cheaper equivalent of its largest competitor, AT&T.;
"People who initially went to them were getting away from AT&T;," he said. "I think it's ironic that MCI started out as a discount alternative."
Other analysts said the rate increases were essentially cost-cutting moves, because they likely would wean customers off services that had small profit margins. Most MCI customers now use the Neighborhood or MCI Anytime Advantage calling plans.
"Some of these plans were not really profitable," said Rick Black, an analyst with Blaylock and Partners, a New York investment bank. "What MCI is trying to do is position itself optimally to make a profit. There are certain customers you don't want."

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