- The Washington Times - Monday, March 10, 2003

Major phone companies Sprint, MCI and AT&T; are jacking up rates on some residential long-distance plans in a bid to recoup revenue lost to competition from cell phones, e-mail and regional phone companies.
Some rate increases took effect on March 1 while others will begin in April.
"[Phone companies] market share is decreasing, and their revenue is decreasing because of lower-priced carriers, e-mail and cell-phone plans" that offer free long-distance service, said Bill Hordekoff, chief executive of SaveOnPhone.com, a Web site promoting niche and low-priced phone carriers.
MCI on April 1 will raise rates on four state-to-state long-distance plans. Sprint on March 1 raised monthly charges on two calling plans, and said it was resetting account information for some members of a program that provided rebates on phone service. Members of the Sprint Sense Cash Back program who have not redeemed their rebates over the last 27 months will have their account balances set back to zero on April 1.
AT&T; raised the price of its One Rate long-distance plan from 9 cents to 10 cents per minute on March 1. Also, the company raised some rates for long-distance calls made within the same state.
MCI is a subsidiary of WorldCom Inc., which declared bankruptcy last year. Analysts said the parent company's struggles have led MCI to raise phone rates more than any other company in the past year. MCI's April rate increases follow others in December, January and February.
This latest round of rate increases by AT&T; follows a January increase in charges for collect calls and calls made with calling cards.AT&T; also raised the monthly rate for its 7-cents-per-minute plan in January.
Phone companies defended the rate increases, and said the majority of subscribers would not pay more for long-distance service.
"We always are evaluating our plans to see that our fixed costs are being recovered," said Sprint spokeswoman Leslie Letts. "None of the rate increases affect any of our lead calling plans."
It was not clear how many customers would be affected by the rate increases; companies declined to provide subscribership information on specific plans. AT&T; has about 50 million residential long-distance subscribers, MCI has about 18 million and Sprint has about 10 million.
Observers of phone companies said major long-distance providers are facing stiff competition from several fronts and have to raise rates to compensate for lost revenue.
"Pricing pressures will likely continue due to increased competition, as we see telecom firms crossing each others' territories and Baby Bells entering long-distance markets," said Todd Rosenbluth, a telecom analyst with Standard and Poor's.
Companies see another competitive threat from smaller providers entering the marketplace.
ZoneLD, Pioneer Telephone and Isterra can offer long-distance service for less than 5 cents per minute, with low monthly fees, mainly because they spend little on marketing.
Ms. Letts, of Sprint, said long-distance service no longer is profitable on its own and now is being marketed as part of packages including wireless and Internet services.
"We really don't see long-distance as a stand-alone product anymore," Ms. Letts said.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide