New Ways to Get Price Breaks on Long-Distance Phone

Tired of those obnoxious and confusing television ads about which long-distance phone company offers the lowest rates?

A California-based consumer group has now taken the guesswork out of finding the cheapest long-distance carrier.

A survey conducted by Consumer Action found that all three major long-distance firms - AT&T, MCI, and Sprint - offer discount plans with savings of roughly 31 percent on an average monthly bill. That means callers who usually spend $25 on long-distance telephone calls per month can make the same calls for $17.

But there's a catch. To qualify, consumers must contact their long-distance company and ask to enroll in the "flat-rate" calling plan.

The flat-rate plans are the result of increased competition among long-distance carriers. They are designed to attract savvy consumers who actively shop for the best prices.

The Consumer Action survey shows there is a significant price to pay for not being a savvy consumer. Long-distance users who do not enroll in flat-rate discount plans are paying on average 25 percent more for their long-distance calls in 1997 than in 1992.

That's the little secret long-distance companies don't announce in their television advertising.

In addition to the three major carriers, several smaller firms have entered the market. In January, GTE began offering long-distance service, including a flat-rate discount plan that is cheaper than the major firms' plans by a penny a minute. Other companies offering discount plans include Excel Telecommunications, Express Tel, Frontier Communications, LCI International, Matrix, Transnational Communications, US Long Distance, Var Tec, Working Assets, and World Com.

Standard long-distance service includes variable charges depending on the time of day and destination of the call. In contrast, flat-rate plans set one price for all calls at all times of day to all destinations. Some companies also offer a hybrid plan that charges two different per-minute rates, one for "peak" weekday hours, another for "off-peak" times such as nights and weekends.

Consumer Action recommends long-distance users analyze when they make the most long-distance calls and enroll in a plan that fits their calling schedule.

"[W]e found that people whose monthly bills are less than $10 can save more than ever before," says Ken McEldowney of Consumer Action. "Until a couple of years ago, most ... calling plans offered volume discounts on monthly bills. Many of these discounts were not available to consumers who spent less than $10 on long-distance calls."