Phone price wars may be far from over; long distance firms face challenge from bells

Article Abstract:

The long distance phone price wars may return with a vengeance as the Baby Bells attempt to reestablish themselves in the long distance market. AT&T, Sprint and MCI believe that customers will respond to a carrier that can provide a comprehensive array of long distance services instead of a carrier that gives the least expensive long distance rate. However, market research indicates that many customers have minimal long distance phone bills and have no desire for any other special services. The Baby Bells have faith they will able to compete using discounts. The current long distance providers have to pay an access fee to the local phone companies in order to connect with their customers. That fee is responsible for up to half of the cost of a long distance call. Access fees do not apply to Baby Bells because their local phone service already provides a customer connection. New competition may force the current long distance companies to develop discounted calling plans.

Marketing, Industry Trend Or Event

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MCI withholds some access payments to Bells

Article Abstract:

MCI said it is withholding approximately $24 million in access payments charges to local Bell telephone companies to connect to their networks, alleging frequent overcharging or incomplete information on the charges. Long-distance carriers, which paid around $25 billion in access fees in 1997, have long complained of overpricing. Local carriers, meanwhile, defend their charges and criticize long-distance carriers's vows to reward customers with lower fees. The latest dispute centers on an FCC mandate that, as of 1998, forces long-distance carriers to pay a flat fee for each telephone use rather than per-minute fees for collecting certain connection charges. MCI and other long-distance carriers collect the charges from their subscribers, but many long-distance carriers have reported billing problems to the FCC since the billing change.

Planning, Company business planning, MCI Communications Corp., MCIC

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Avoiding the toll: the Baby Bells say that if their access fees fall, local phone rates will rise. Are they bluffing?

Article Abstract:

The Baby Bells are threatening to raise local phone rates if the access fees they collect from long-distance carriers fall. The Bells currently collect as much as $21 billion from long-distance carriers each year for access to their local customers. As competition enters the local market, these access fees are expected to shrink. The Bells claim that if they are allowed into other markets, they will be able to make up the lost revenue via other sources. However, if they are hindered, they plan on raising local phone rates to make up for the loss. Consumer advocates and long-distance carriers contend that the Bells are exaggerating their need for the access-fee system and that their local operations bring in enough revenue with little help from access fees.

Industry trend

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