Table of Contents

• Basic long distance rates up 55% since 2000
• Local-long distance bundles are not ‘one size fits all’
• Interstate Calling Plans
• CA's Interstate Long Distance Rates Survey 2004
• Tale of two bundles, two cities
• Phone features offer privacy and convenience for a price
• Take your cell phone number to go
• Local-Long Distance Bundles
• Have your computer call my computer
• Traps abound for unwary 10-10 dial-around users

Please note that you are prohibited from using CA's name or any reference to its surveys in advertising or for any other commercial purpose.

Basic long distance rates up 55% since 2000
Phone deregulation’s promise of lower rates not fulfilled

MInterstate long distance basic rates at the nation’s largest long distance carriers have increased by more than 55% since 2000. The five carriers whose basic rates were analyzed by Consumer Action (CA) for its 2004 Residential Telephone Rate Survey are AT&T, MCI, SBC Long Distance, Sprint and Verizon.

Basic (or default) rates are the rates paid by customers not on a calling plan. CA has tracked long distance basic rates charged by major phone companies for close to two decades.

The federal Telecommunications Act of 1996 opened local telephone service to competition. Most experts predicted that competition would result in lower rates for consumers, but CA’s findings disprove this theory, at least for people who are not on a calling plan.

“Consumers were supposed to be the winners of deregulation,” said CA Executive Director Ken McEldowney. “Instead we find that consumers are paying 55% more now than in 2000 for the same calls. I’d say we lost, not won.”

Savvy consumers with access to the Internet can shop around to find long distance plans that drastically undercut basic rates. But phone users who do not subscribe to a calling plan are paying very high rates every time they place a long distance call from their homes.

Calling basket increases

CA has tracked a long distance calling basket of 126 minutes of basic rate calls in all rate periods for close to two decades. The totals for all five companies has jumped from $109.83 in 2000, when SBC and Verizon (then Bell Atlantic) started to compete in the long distance market, to $170.86 today.

In 2000 AT&T charged $27.93 for the calls; it now charges $33.14 when a new basic rate monthly fee of $3.95 is factored in.

MCI charged $28.56 in 2000 and now charges $40.70, including its own basic rate monthly fee of $5. (MCI implemented a monthly fee for basic rate customers in 2002.) Sprint in 2000 charged $29.40 in contrast to $39.90 today.

While basic rates at the five companies have jumped sharply, the rates charged by SBC and Verizon remain significantly lower than those of AT&T, MCI and Sprint. SBC’s cost to carry the calling basket has increased from $11.34 in 2000 to $25.60, while Verizon’s rates have gone from $12.60 to $31.50 for the same calls.
(See chart showing basic rates from the five companies.)

Calling card calls

Calling card basic rates have jumped considerably in one year for AT&T, MCI and SBC Long Distance. CA compared the cost of a 10-minute weekday, daytime interstate calling card call using each company’s own card and access number. Among the five carriers, Sprint and Verizon kept the cost steady. Sprint charges $10.15 for the call and Verizon, $5.

The largest per cent increase was found at SBC, which increased the cost of the call 40% in one year, from $4.25 to $5.95. MCI is charging 25% more (from $11.40 to $14.25) and AT&T’s rate has jumped 12%, from $10.15 to $11.40.

Collect calls

Using the same 10-minute weekday, daytime interstate call, CA compared the least expensive way to make a collect call offered by each company. Among four of the five carriers, the cost of the call increased from 7.7% (AT&T) to 32.53% (SBC Long Distance) in one year. Verizon is charging the same $12.35 for the call while the higher prices are $13.89 for AT&T, $14.80 for MCI (up 14.8%), $13.85 for SBC and $14.89 for Sprint (up 15.5%).

Directory assistance

Directory assistance rates are at the same high levels they were at last year, with the exception of SBC, which increased its rate of $1.40 per call to $1.50 for in-state information requests and $2.49 for look-ups in another state. (See directory assistance chart.)

Calling plans

CA looked at 47 state-to-state long distance calling plans from 22 carriers. (See all interstate long distance calling plans.) Of the calling plans surveyed, 23 (or 48%) had monthly fees, 19 (or 40%) had no fees and 5 (or 11%) had monthly minimum spending requirements.

“In contrast to rising basic rates, calling plans offer great bargains for consumers,” said CA Editorial Director Linda Sherry, who conducted the survey. “The major companies have few options without monthly fees, but there are plenty of carriers who have long distance calling plans with low rates and no fees.”

Sherry noted that CA compiles a chart of the lowest per-minute plan rates to assist consumers in shopping for long distance service. Appearing on pages 4 and 5, this year’s chart lists rates from 2.5¢ (SBC Value Plus 500) to 10¢ per minute (AT&T One Rate 10¢ Plan, Cox Communication’s Long Distance Standard Plan and Excel’s Dime Deal 2000).

This year’s survey found monthly fees ranging from 75¢ (Big Zoo) to $40 (Sprint’s 1000 AnyTime plan). Minimum spending requirements ranged from $5 (AT&T One Rate 10¢ Plan, AT&T 5¢ Nights, AT&T eWeekends Plan) to $10 (Qwest 6¢ Plan).

Local-long distance bundles are not ‘one size fits all’

This year Consumer Action (CA) found carriers offering an unprecedented number of local-long distance bundles. A bundle is a package of services including local and long distance service, optional calling features such as caller ID and call waiting and unlimited local calls. Depending on the plan, unlimited local toll calls and long distance calls also may be included.

CA looked at 17 local-long distance bundles available from eight companies and found that monthly fees range from the $11.99 that MCI charges in some places for its bare-bones Neighborhood Standard local plan to the $64.95 charged by AT&T for the One Rate Advantage plan in some states.

CA Editorial Director Linda Sherry, who conducted the survey, warns that “these service packages are definitely not one size fits all. Heavy phone users may save money, but even if you need every product and the unlimited calls the plans offer, and that’s a big if, in most cases you’ll save only a few bucks a month.”

CA also found that “unlimited” calls may be limited. If you think you can surf the Internet all day on a dial-up modem you may find that the carrier’s rules forbid it. MCI’s The Neighborhood plan, for instance, does not allow continuous dial-up usage. CA found this in the fine print: “If after signing up for The Neighborhood you are on the Internet for significant periods of time (and you have not signed up for high- speed Internet service), you may be assessed an additional monthly charge for Internet/data use, be disconnected, or be moved to a different product.”
For the first time, a cable company—Cox Communications—is included in CA’s survey. Cox is providing digital phone service and local-long distance bundles in some communities nationwide, including San Diego and Orange County, CA; Connecticut and Rhode Island; Las Vegas, NV and parts of Virginia. (For more information, visit Cox on the Internet at www.cox.com.)



It can be challenging to compare the plans on a national basis as the rates vary widely by state and even municipality. CA took a look at how much an SBC customer based in San Francisco and a Verizon customer based in Washington, DC, would save by purchasing a local-long distance bundle. (See charts.)

In San Francisco, SBC customers can buy the company’s All Distance Connections plan for $48.95. This includes voice mail, caller ID, call waiting and three-way calling, with unlimited local, local toll, in-state and interstate calls. CA added up the cost of the calling features, an unlimited local toll plan and 500 minutes of long distance (more than eight hours of interstate chat) per month for a total of $54.22.

In Washington, DC, Verizon markets its similar Freedom bundle for $49.95. The sum of its parts (with unlimited local calls and 300 minutes of long distance) add up to $59.23.

“The examples show that very heavy phone users and feature junkies would save money,” noted Sherry. “The average long distance customer uses about 200 minutes per month. If you’re an average phone user, you probably don’t want all those features or the endless phone time, so you can put together a more reasonably priced package on your own.”

Cell phone users may have even less reason to purchase one of the local-long distance bundles. If you use a cell phone for most of your calls and your plan has unrestricted toll and long distance minutes, a landline bundle might not make sense.

When comparing bundles, remember that advertised prices don’t include taxes and fees of 15% or more and that your new carrier may charge a month ahead. If so, your first bill with the new provider could be a whopper with two months of charges.

If you are considering a bundle, do the math, advises CA. Add up the features you want and see if the bundle is really such a value.

If your package includes a DSL high-speed Internet connection, you may be asked to lock in to a contract of a year or more or face stiff early termination fees. These fees are charged even if you have to move and the same company does not offer service at your new location. Even if you stay at the same place, it may not be possible to switch local phone companies and keep your DSL with the old company without triggering a termination fee.

(In some states, local phone companies are requred to offer DSL even if the customer chooses another phone company to provide local service. Call your local public service commission to see if such a law exists in your state.)

“Don’t be sold on a plan when you don’t need one,” advises Sherry, noting that local flat rate or measured service is priced very reasonably in many areas.

Carriers are aggressively marketing their local-long distance bundles. MCI’s Neighborhood service has signed up three million customers, accounting for more than half of its consumer revenue. AT&T now gets about a quarter of its consumer revenue from its local-long distance bundles.

“These plans are profit centers for carriers and they are pushing them like crazy,” Sherry said.

Interstate Calling Plans

Interstate Long Distance Rates Survey 2004

How to use this survey

This chart shows the lowest per-minute rates on interstate calls from 21 phone companies, during the Daytime (Peak) and Evening, Night & Weekend (Off-Peak) rate periods. (See plan descriptions in the Interstate Calling Plans for complete information on each plan, carrier contact numbers and web site addresses.)

Calling plans are broken into the following categories: plans with no monthly fees or minimum usage requirements; plans with monthly fees or minimums; plans that require customers to set up service online and require automatic billing to a credit or debit card; “bucket of minutes” plans which give you a set number of minutes for one monthly fee; prepaid plans, for which you pay in advance for long distance minutes, and “unlimited” plans which allow you to place as many calls as you wish during the month at no additional charge.

Most carriers offer more than one calling plan. The rates quoted are connected to the specific calling plans listed. Use the chart and listings only as a guide—rates and calling plans can change at any time.

Key to symbols used on the chart

* Lower rate applies if local access number is used instead of toll-free access.
# With online billing, there is a monthly fee.
** Includes toll calls are included.
*** Unlimited calls to AT&T customers are included; 7¢ per minute to others.
### Unlimited evening calls included in monthly price.

Tale of two bundles, two cities

Phone features offer privacy and convenience for a price

Optional phone services—some people can’t live without them while others consider them a waste of money. The special features offered by local phone companies offer privacy and convenience for a price and often come bundled with local and long distance. Prices for these features range from $1.50 to $7.95 per month depending on where you live and which company you do business with.

Caller ID: If your phone is equipped with a caller ID display device, this service allows you to see the number or name (or both) of the calling party if the caller has not blocked the number.

Anonymous call rejection: Rejects incoming calls from callers whose number is not identified on caller ID. (You do not need a caller ID device to use this service, however it may be free of charge with caller ID service.) If callers with blocked numbers wish to get through, they must unblock their numbers when calling.

Privacy management: A call screening service that works with caller ID to intercept unidentified incoming calls and ask callers to identify themselves in order to complete the call. Then the service relays a message to you about who is calling.

Call screening: Allows you to block calls to your line placed from certain phone numbers.

Call waiting: Alerts you to another call while you are on the phone by making a clicking noise on the line. You can toggle to the other call by pressing a specific key on your dialing pad. For an additional fee, you may be able to view the number and name of the person calling on your caller ID device while you are on the phone.

Voice mail: Like an answering machine, this service allows callers to leave a message, which you can hear later by calling a number to retrieve your messages. If you use a voice mail service, change your password frequently and create passwords that outsiders are unlikely to guess. There have been many cases of third party billing international toll fraud via voice mail access and phone companies often consider the phone customer liable for the cost of any fraudulent calls.

Call forwarding: Allows you to forward calls to another number when your line is busy or when you are away from home. Some companies offer options on the service for an additional fee that allow you to forward calls after a designated number of rings, dial in remotely to direct calls to another number and forward calls from certain numbers but not others.

Call return: Places a call to the number used by the last person who called you.

Repeat dialing: Repeatedly redials a busy phone number until it becomes available.

Speed calling: Allows you to program one-button shortcuts for a specific number of frequently dialed numbers. The more numbers that the system allows you to store, the more you’ll pay for the service.

Call blocking: You may be able to restrict access to certain numbers, such as pay-per-use numbers (area code 900 or prefix 976) or long distance calls. Depending on the service, there may be a fee.

Priority ringing: Allows you to choose a distinctive ring for certain callers so that you will know when those people are calling you.

Three-way calling: Enables you to make conference calls by connecting to two other numbers at the same time.

Some features, such as call return, repeat dialing and three-way calling, can be used on a pay-per-use basis. This means that you are charged only when you use the feature. This may require that you dial a series of numbers to begin the call, such as *69 for call return or *66 for repeat dialing.

Take your cell phone number to go

In late 2003, the Federal Communications Commission (FCC) passed rules requiring wireless local number portability. This means that you can keep your phone number when you switch mobile phone providers.

You can keep (or “port”) your number during a switch only if you remain in the same metropolitan area. If you are moving out of the area, carriers are not required to give you the same number.

The new rules took effect in November in 100 large population metropolitan areas and should be universal by May 24.

You may have to buy a new phone in order to keep your number. Wireless phones from one company are often incompatible with competitors’ systems.

Keeping your cell phone number despite switching carriers can be a convenience. It means that you won’t have to contact family, friends and associates to give them a new number.

The new rules also allow you to switch your landline number to a cell phone, but this might not be an option with every carrier.

Wireless number portability rules will not help you to cancel a current cell phone contract without penalty. If you decide to change carriers, make sure your current cell phone contract is not subject to an early termination fee unless you want to pay an additional $150-$250 for the switch.

While you are responsible for any outstanding balances on the old phone, carriers are not allowed to refuse to transfer a number because a termination fee or outstanding balance has not been paid. Carriers are allowed to charge a fee when you port your number.

Don’t terminate your existing service before switching carriers because you can only move an existing number. Allow your new carrier to handle the transfer. Providing your new carrier with a copy of your cell phone bill will help insure that the transfer goes smoothly.

A switch between wireless carriers could take only a few hours. Moving your landline number to a wireless phone could take a few days. If things don’t go smoothly, contact your new carrier about the problem. If you can’t resolve the problem, you can complain to the FCC by calling 888-CALL-FCC.

Local-Long Distance Bundles

(For company contact information, check your local phone directory or see long distance listings for web site information.)

Have your computer call my computer

Source : Net2Phone (www.net2phone.com)

For several years, early adopters with IBM-compatible personal computers have been making free or very cheap long distance and international calls using “voice over Internet protocol” (VOIP). Companies such as Net2Phone and Free World Dialup were pioneers in the market, but now bigger companies—both long distance providers and cable TV outfits—are staking claim to the technology.

VOIP is an emerging technology that inexpensively carries phone calls over Internet-style networks. Internet telephony, or VOIP, allows the human voice to be transmitted over the Internet in real time.

Experts say that VOIP today is as clear as landline phone service and better than some cell phone connections. The service is free for PC-to-PC connections and as low as 2¢ per min-ute for PC-to-phone use. Recently software was released to allow Mac owners running OS X to use Internet telephony.

In December, AT&T announced that it would offer VOIP services to consumers and businesses in most major U.S. cities by the end of next year. Time Warner cable will, over the next year, use the technology to offer flat-rate phone service to most of the 18 million households in its municipal franchise areas.

Benefits and roadblocks

The big companies like VOIP because they can avoid the access fees that local phone firms charge for carrying a call. A few roadblocks, such as concern that VOIP calls evade federal wiretapping laws, will have to be ironed out should the companies want to capture more of the landline market from local phone providers.

Debate has emerged over whether Internet telephone service should be regulated by the government. Consumer Action believes that telephone service must be reliable and universally available and that to insure that it is will require thoughtful government oversight. Vital questions include how to maintain cost-effective universal access, ensure reliability and require that VOIP carriers provide connections to local 911 emergency services and pay their fair share of regulatory fees and surcharges.

Guest Columnist

Traps abound for unwary 10-10 dial-around users

by Rich Sayers

(Sayers is editor of 10-10PhoneRates.com and Phone-bill-alert.com, two free services that help consumers stay up-to-date on phone rates and terms.)

Dial-around “10-10” services can save consumers money—especially on international calls and in states with high intrastate rates. But don’t get burned by rate and fee hikes, billing problems and other traps for the unwary.

Huge rate hike

Users of the popular 10-10-220 service might get a big shock when they realize the rate for a 20-minute call is now $1.74. That’s a 75% increase from the heavily advertised rate of 99¢ for 20 minutes and 7¢ per minute for extra minutes. As of Nov. 1, 2003, 10-10-220 users get 15 minutes for 99¢ and pay 15¢ per additional minute. MCI’s TelecomUSA division, which runs 10-10-220, did not notify users of the change.

Connect fees change

AT&T’s 10-10-345 (promoted via direct mail and ethnic media) increased its connection fees for most international calls starting Nov. 1, 2003. The per-call connection fee went from 30¢ to as much as 99¢. This burns users who make short calls, get answering machines or call areas with frequent disconnections. 10-10-345 users were not notified unless they subscribed to an email alert service.

Low-usage fee

WorldxChange, a discount dial-around company, added a new low usage fee to several of its plans in October. Users of 10-10-629, 101-5335 and 101-6789 who make less than $3 worth of calls each month now get hit with a $2.50 fee. Customers who opt for online billing rather than a paper bill are exempt from this fee. Again, users were not notified.

Billing surprises

Watch your bills carefully. Between May and December more than 100 complaints about 10-10-987 billing problems were received by 10-10PhoneRates.com. Most of the people who complained reported being billed $1.87 per minute on U.S. calls. Others noted being billed up to 90 times the advertised rates on international calls.

MCI blamed the local phone companies for mistakenly routing the calls the wrong way. However, this does not seem to be random routing error because more than 90% of the reported errors were billed by MCI, the company that owns 10-10-987. It’s also alarming that many consumers reported that they were denied rate adjustments or were pressured to switch their long-distance service to MCI in order to get a partial adjustment. Some consumers who were promised refunds are still waiting for them more than three months later.

Advance registration

Resellers such as Everdial do not own 10-10 access codes. They work with companies like Primus that buy phone time wholesale from MCI, Sprint and other companies. Consumers are required to register their phone number with resellers before they are told which 10-10 code to dial. But if people dial the 10-10 access code on a second phone line that was not registered, the calls are billed by the underlying carrier at much higher default rates.

Register all your new phone lines with a reseller before dialing the 10-10 code on those lines. And don’t give out the 10-10 code to others when telling them about this type of dial-around service—they won’t get the discounted rates until they sign up. Provide your referrals with the customer service number or web site address instead.

Grandfathered rates

Some dial around plans continue to bill current customers at older, higher rates. When lower rates are offered to attract new customers, existing users don’t benefit from the lower promotional rates. Visit the 10-10PhoneRates site frequently to stay up to date with lower rates—then you can ask the company to bill you at the new rates.

Web sites with old rates

Some carriers’ web sites carry outdated or erroneous information more often than others. Always double-check rates via the carrier’s toll free customer service line before placing calls. We have found incorrect rates on the 10-10-345.com, VarTec.com and WorldxChange sites.

Some examples:
• A wrong 10-10-811 rate to call Turkey on VarTec.com for 10 months. The per-minute rate for prior users is 46¢, but the site still quotes 25¢. 10-10PhoneRates.com informed VarTec of this error on numerous occasions, but it has not been corrected. We’ve heard from consumers who were burned and who even after complaining have not received rate adjustments.

• The 10-10-345.com site shows a 39¢ connection fee on calls to Germany, but its toll-free customer service line and its ads say the fee to connect calls to Germany is 59¢. An email from 10-10-345 promoted a 5¢ per minute rate to China when the actual rate was 10¢, plus a 99¢ per-call connection fee.

• WorldxChange’s dial-around overview page brags that it has “no monthly fees” although it has a new low-usage fee disclosed only in fine print on another page. Many of the company’s sales agents publish their own web pages that often list outdated rates and fees. Why don’t they just link to the rates on the WorldxChange pages, which are almost always complete and up-to-date?

2004 predictions

It has become common in the industry to charge higher rates on international calls placed to mobile phones. Services such as 10-10-297 and 10-10-987 don’t yet charge more to call mobile phones in Europe, Asia and Latin America but we think it’s likely that they will increase these rates in 2004. Unless users make a lot of short calls so that the 39¢ connect fee boosts the per-minute rates, the companies can’t make a profit on international calls placed to mobile devices.

As more households switch local service away from regional Bell companies, their ability to use traditional dial-around access services will diminish. Most dial-around providers do not have billing arrangements with alternative local service providers. As an alternative, consumers can use toll-free access dial-around services.