Basic rates jump, but so do potential savings from calling plans and new providers
Major carriers’ interstate long distance basic rates have risen steeply, according to the latest Long Distance Rates Survey of 21 carriers and 47 discount calling plans. Basic rates, the highest rates paid by customers not on a calling plan, jumped 17.5% in one year at the Big Three carriers (AT&T, MCI and Sprint).Besides the steep jump in basic rates to as high as 35¢ per minute for weekday, daytime calls (Big Three), Consumer Action (CA) found large increases for:
- Calling card calls: The cost of placing a 10-minute weekday, daytime calling card call from Chicago to Los Angeles, using each company’s own card and access number, jumped 30% to $11.40 using MCI, 26.8% to $10.15 using Sprint and 42.8% to $5 for Verizon. AT&T’s charge for carrying the call ($10.15) is unchanged since last year, as is SBC’s ($4.25).
The total for these calls includes the per-call surcharge: this year, MCI’s surcharge rose from $1.25 per call to $1.50 and Sprint’s from 99¢ to $1.25. Surcharges levied by AT&T ($1.25) and SBC (75¢) remained the same. Verizon reports that it does not have a per-call surcharge on calling card calls. - Collect calls: The cost of a 10-minute, daytime collect call from Chicago to Los Angeles dialed using Big Three toll-free collect call access numbers shot up 52% across the board since last year. All three companies charged the same rate and implement-ed the same increase—from $8.49 to $12.89.
The cost for this collect call when you ask the operator to help is even higher: $15.40 for AT&T; $16.44 for MCI and $14.40 for Sprint. The cost of an operator-assisted collect call has remained steady for AT&T and Sprint—MCI increased its cost 18% since a year ago. - Directory assistance: In one year, the cost of asking for directory assistance by dialing the area code plus 555-1212 jumped 25% to $2.49 for MCI and Sprint customers. SBC customers, now paying $1.40 per call, have seen a whopping 47% increase. AT&T ($1.99) and Verizon ($1.25) remain the same.
In a worst case scenario, AT&T and Sprint customers using a discount international calling plan with rates of 9¢ per minute to the United Kingdom would end up paying 31¢ per minute if calling a cell phone because of the 22¢ per-minute surcharge added by both companies.
Linda Sherry, who conducted the survey, noted that most people are used to the notion that when calling a cell phone, the cell phone’s owner pays for the call. “This isn’t true everywhere overseas,” she noted, “which makes this a costly trap for the unwary.”
This year Consumer Action looked at 47 state-to-state long distance calling plans. (See a list of all interstate long distance calling plans) Of the calling plans surveyed, 31 (or 66%) had monthly fees, 11 (or 23%) had no fee and 5 (or 11%) had monthly minimum spending requirements. Monthly fees ranged from 75¢ (Big Zoo) to $59.99 (MCI’s Neighborhood Complete). Minimum spending requirements ranged from $5 to $10.
Calling plan rates ranged from 2.5¢ to 11.5¢ per minute.
The plans fall into several categories:
- One-rate plans. These plans offer one per-minute rate around the clock.
- Two-rate plans. These plans offer two rates—typically, a higher per-minute rate applies in the daytime and a lower rate in the evening, at night and on weekends.
- Online plans. These plans require that customers set up service through the company’s web site, and often include an online billing requirement and automatic credit card payment.
- “Buckets of minutes” plans. These plans give you a certain number of long distance minutes per month for one charge. When you use more than your allowance of minutes, a slightly higher per-minute rate applies for additional minutes. If you don’t use all the minutes in one month, you lose them—unused minutes don’t roll over to the next month.
- Prepaid plans. These plans require that customers pay in advance for long distance minutes.
- “Unlimited” plans. This new twist allows you unlimited calls in return for a set monthly fee.
“Unlimited plans are a new concept to hit the market since we last surveyed long distance rates,” noted Sherry. “Two plans like this showed up. AT&T has a plan that allows you unlimited minutes when talking to other AT&T customers, while you pay 7¢ per minute for calls to other people. MCI’s Neighborhood is a package of phone services that includes unlimited state-to-state long distance as well as local phone service and other optional services such as call waiting. Both have hefty monthly fees.”
Save up to 72%
CA analyzed how much Big Three customers can save by having a calling plan and found that savings of up to 72% are possible if you avoid paying the three companies’ highest basic rates. Using the same calling basket of 126 minutes of interstate calls it has tracked for 17 years, CA found that AT&T customers could save between $21.93-$25.20 per month, MCI customers between $13.80-$18.91 and Sprint customers $12.15-$24.88 just by enrolling in one of their calling plans.To assist consumers in shopping for long distance service, CA compiles a chart of the lowest per-minute plan rates. Appearing on the interstate long distance calling plans, this year’s chart features six online plans with interstate rates of 4.5¢ to 9¢ per minute. Internet sign-up and automatic credit card billing usually are required for online calling plans.To assist consumers in shopping for long distance service, CA compiles a chart of the lowest per-minute plan rates. Appearing on pages 4 and 5, this year’s chart features six online plans with interstate rates of 4.5¢ to 9¢ per minute. Internet sign-up and automatic credit card billing usually are required for online calling plans.
“If you’re willing to use the Internet for sign-up, billing and even customer service via e-mail, you can find substantial savings because none of the plans we list have monthly fees,” said Sherry.
Prepaid providers
This year two online prepaid long distance providers have been added to the survey.BigZoo and OneSuite operate strictly via their web sites, selling prepaid long distance time charged to a credit or debit card. (See interstate calling plans for more details about their services.)
Both services require customers to use either a toll-free or local access number and a personal identification number (PIN). However, they offer automatic PIN recognition, which can save the trouble of dialing the PIN when calling from your home phone. (To make using the access numbers easier, you can use your phone’s speed dialer.)
Sherry said these services have advantages, including lower rates and not having to worry about an unexpectedly large bill. “You can really budget your long distance charges by using a prepaid service,” she said.
The services can be used from any phone, although a payphone surcharge applies.
Long distance comparison sites try to sell you—but that may not be a bad thing
By Michael IacuessaWith slumping sales causing major long distance carriers to raise rates and fees, consumers have more incentive than ever to search for an inexpensive provider. When consumers go shopping for long distance deals on the web, they often end up at one of the many web sites run by telecom brokers who make money from commissions.
Many of the lowest long distance rates around are offered by companies that buy time in bulk from the major carriers and resell it to the public. By some estimates, there are hundreds of companies selling long distance services and this can make it difficult for consumers to find the carrier that best suits their calling patterns.
To fill that need, many web sites have emerged to offer comparisons between providers, including lists of companies with the cheapest rates and consumer information on long distance service. The sites also direct shoppers to certain providers in exchange for a commission. That may raise questions of reliability but the owners say they have consumers’ best interests in mind.
William Van Hefner, president of The Digest, an on-line newsletter covering the telecommunications industry, said comparison web sites make money on “click-throughs.” That is when a shopper is directed to and signs up with a long distance company via the comparison web site.
The Digest’s sister site, Telcom-pare.com, started in 1999, is an agent for 20 to 30 long distance companies. Van Hefner insists it makes little difference to his company which one a consumer selects because all pay his company the same click-through rate.
“I don’t have any reason to choose one over the other,” he said. “So I would prefer ones that generate the least number of complaints and have a good reputation and customer service.”
While there are countless web sites offering long distance comparisons, Van Hefner said only a handful tend to get heavy traffic. He believes the successful ones are popular because they take a consumer-friendly approach.
At Telcompare.com, providers are ranked in the order customers find most popular. The site is picky about the providers it lists.
No slammers, crammers
“We won’t add someone if they have a history of repeated slamming or cramming,” said Van Hefner. Slamming is when a company takes over a person’s long distance service without permission. Cramming is when a customer is billed for services that were never authorized.SaveOnPhone.com, by contrast, tries to be the most comprehensive long distance comparison site, listing every provider it knows to exist—even if the company does not offer commissions.
Like many others, SaveOnPhone has a rate calculator that allows you to type in information about your own calling patterns. It then returns a list of 10 long distance plans that might work for you.
Company vice-president Bill Hardekopf says the system is an objective one and does not favor firms that offer commissions to SaveOnPhone.
Calculations take into account in-state and state-to-state rates, billing increments, minimum charges and Universal Service Fund (USF) charges. (The USF is a fee companies must pay to the federal government to help provide phone and Internet service to schools and remote rural areas).
“The comparison sites tend to sell the plans of many of the same cut-rate long distance providers,” said Linda Sherry of Consumer Action. “Some sites seem to exist only to sell long distance, while others have a track record of providing objective information on how to select long distance service.”
Sherry advises that consumers visit several of the sites before conducting business with one. “It’s an educational process in itself to visit these sites.”
As a consumer advocate, Sherry has one sore point. “Some of the rate calculators ask for your entire phone number. They only need the area code and prefix to give you applicable rates. If you’re asked to type in your whole number, I’d look to see if the site has a strong privacy policy before continuing or you might be inviting telemarketers to call.”
While per-minute rate comparisons are usually obvious, other factors, such as billing increments can have quite an effect. Companies that bill in six-second increments instead of the standard one minute can shave your long distance bill considerably.
The USF fee also can vary from company to company. Providers are taxed 6.8% on what they collect but many pass a higher percentage on to consumers.
“Most of them charge a higher amount,” said Hardekopf, noting that major carriers charge consumers up to 11%. “That’s some of the fine print stuff some of the long distance providers are not up front about.”
ABTolls.com, another comparison site, puts each provider through a blind shopping test before choosing whether to list it. Currently, it lists 170 long distance companies.
“We actually call as an anonymous consumer to see how they represent themselves, to see whether or not they are responsive to the customer, including hold times,” said co-founder Dr. Marc-David Seidel.
Not all listed companies pay ABTolls a commission if a consumer signs up through the site, but the company does disclose which companies are sponsors.
ABTolls, started in 1997, is run by three partners—Seidel, Justin Pollock and Scott McCoy—all of whom have other full-time jobs. Seidel says new long distance companies usually find ABTolls on their own and ask to be listed. Other companies are recommended by the site’s users.
Seidel recommends that consumers who are seeking a new long distance provider should “look at the plan and make sure it makes sense for their calling patterns. They should understand what the hidden costs are. There’s a lot of companies out there that are just not reputable.”
ABTolls has a custom pricing tool (TollChaser.com) which offers net rates alongside the advertised rates. It asks visitors for an unusually in-depth calling profile, including the number of state-to-state and out-of-state calls, total monthly minutes and the time of day that calls are usually made. Seidel said recommending the best provider for each household is impossible without knowing these variables.
Pays to look closely
Even with the help of comparison sites, customers need to look pretty closely. The rates and terms can be different depending on where you live.Some of the companies that are highly rated for value include Isterra, and Pioneer Telephone—sold only through resellers—and ZoneLD. But Isterra’s in-state rates can vary by up to 9¢ per minute. Ditto for Zone LD, which offers Wisconsin residents an in-state rate of 4.5¢ per minute but charges West Virginia residents 16.1¢ per minute on in-state calls.
Pioneer has low 4.9¢ per minute overseas rates to France and England, but requires automatic credit card billing.
“What’s good for one individual may not be good for someone else,” said Seidel, perhaps explaining why his sites have become so popular with consumers who find comparison shopping a time-consuming and tedious process.
Set your ‘sites’ for comparing discount long distance rates
AB Tolls(http://abtolls.com) For all plans featured, ABTolls displays actual per-minute rates and monthly costs after fees, surcharges, minimums and taxes have been figured in. From ABTolls, you can click through to its sister site, Tollchaser.com, which offers “customizable” rate comparisons based on details you provide about your long distance calling patterns.
Discount Long Distance Rates (www.discountlongdistancerates.com)
This site run by Rachael Hoffman allows you to browse its providers or use its online calculator to figure out a “good fit” before you click through to the company of your choice to seal the deal.
LD Wiz (http://ldwiz.com) Telecom consultant Bruce Galle provides detailed information for the plans he offers on his site, including in-state rates, intrastate rates and fees such as the Universal Service Fee (USF).
Lower My Bills (www.lowermybills.com) Recommends alternative providers to help consumers save on various bills, including long distance, and allows you to sign up online for the services of your choice.
Phone Bill Busters (www.phone-bill-busters.com) Represents discount long distance and cellular carriers and provides detailed information, including in-state rates, intrastate rates and fees such as the Universal Service Fee (USF).
Save On Phone (www.saveonphone.com) This site uses its own rating system that gives each carrier 100 points to start and deducts points for unfriendly consumer practices such as call rounding, minimum charges, monthly fees and higher-than-average fees and surcharges.
TelCompare (www.telcompare.com) The long distance plans sold on this site are chosen by William Van Hefner, founder of The Discount Long Distance Digest (www.thedigest.com), and he offers an “unconditional money-back guarantee” to consumers who purchase listed plans.
Interstate Calling Plans
ADELPHIA (888) 374-8444 • www.adelphia.com
Calling plan : Adelphia Long Distance
- Type : One-rate plan
- Monthly fee : None
- Rate periods included : All
- Plan description : Calls are 8¢ per minute. Calls are billed in six-second increments. Stand-alone billing only.
A T & T (800) 222-0300 • www.att.com
Calling plan : Unlimited Plan
- Type : One-rate plan
- Monthly fee : $19.95
- Rate periods included : All
- Plan description : ncludes unlimited calls to other AT&T long distance customers; calls to non-AT&T customers are 7¢ per minute.
- Type : One-rate plan
- Monthly fee : $3.95
- Rate periods included : All
- Plan description : Calls are 7¢ per minute.
- Type : One-rate plan
- Monthly fee : None. $5 minimum monthly usage requirement.
- Rate periods included : All
- Plan description : Calls are 10¢ per minute.
- Type : Online two-rate plan
- Monthly fee : None. $5 minimum monthly usage requirement.
- Rate periods included : Peak (weekdays) and Off-Peak (Saturday and Sunday).
- Plan description : Peak calls are 9¢ per minute and Off-Peak, 5¢. Online billing is required (no paper bills are available with this plan).
- Type : Two-rate plan
- Monthly fee : $4.95
- Rate periods included : Peak (weekdays) and Off-Peak (Saturday and Sunday).
- Plan description : Peak calls are 7¢ and Off-Peak, 5¢.
- Type : Two-rate plan
- Monthly fee : None. $5 minimum monthly usage requirement.
- Rate periods included : Peak (7 a.m.-7 p.m.) and Off-Peak (7 p.m.-7 a.m.)
- Plan description : Peak calls are 10¢ and Off-Peak, 5¢.
BIG ZOO Toll Free Number : None • www.bigzoo.com
Calling plan : BigZooLong Distance Service
- Type : Online prepaid one-rate plan
- Monthly fee : 75¢
- Rate periods included : All
- Plan description : Calls in the continental U.S. are 2.9¢ (local access); 3.9¢ (toll free access). (Calls to Hawaii and Alaska are 16.3¢ per minute. Calls cannot be placed from Hawaii or Alaska.) You sign up on the company’s web site (see above) and pay using a credit or debit card. Payphone calls are subject to a 55¢ charge. You can view all of your calling activity by signing in to your account on BigZoo’s web site. For first-time users, the minimum amount is $5; on subsequent recharges, the minimum is $10. BigZoo PINs expire six months from the date of purchase or last recharge, whichever is more recent. Note: some of the international rates show below have been rounded to the nearest 1/10th of a cent.
Australia: 5.9¢ for most continental calls (to a cell phone, 32.4¢)
Brazil: 17.4¢ (to a cell phone, 35.4¢)
Canada: 4.4¢
England: 4.5¢
Mexico (Mexico City): 11.9¢
Taiwan: 6.5¢; 5.4¢ (Taipei) (to a cell phone, 15.4¢)
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