MCI Tries to Ring Up Sales With Collect Call Service : Telecommunications: The long-distance carrier launches an 800 number with sharply lower prices.
The price of collect calling is going down.
MCI Telecommunications Corp. said Wednesday that it is launching a new 800 service that will handle collect calls from anywhere in the country at rates as much as 44% lower than those of American Telephone & Telegraph.
MCI’s move, the first in recent memory to reduce collect call charges, raises the possibility of yet another telephone price war, this one among long-distance carriers over the $3-billion-a-year collect calling market.
But AT&T;, which is believed to handle about 75% of the nation’s collect calls, said it planned no immediate response. Further, a spokesman said the company believes that “price sensitive callers are always better off” using a calling card rather than making collect calls.
Besides cutting the cost of collect calls, MCI’s plan can simplify a process that has been complicated in recent years by the exploding number of new companies offering pay phone services in hotels, airports and other public places. The plan is also the first to exploit the new availability of 800 phone numbers that went into effect May 1 at the order of the Federal Communications Commission.
Rather than having to remember the five-digit access code for the long distance company of their choice or facing the frustration of being unable to dial an operator from a pay phone, MCI offers consumers a number: (800) COLLECT. The number connects a caller to an MCI operator who puts through the collect call; the recipient is then billed by MCI regardless of whether he is an MCI customer or not.
“We really have moved the choice now to the consumers,” said Gerald Taylor, president of MCI’s consumer markets division. Taylor noted that while “reversing the charges” has been available for nearly 100 years, the service had been not been updated to reflect the new technologies available.
AT&T;, the nation’s largest long-distance provider, issued a statement saying MCI had developed a “more cumbersome” way to reach operators and noted its operators are reached simply by pressing 0 on many phones.
MCI said its new rates will range from 22% to 44% below those for an AT&T; operator-assisted call, depending on time of day and distance. The savings may be even greater compared to some smaller, private long-distance companies. Depending on distance, MCI will charge $2.40 to $4.09 for a 10-minute call made through the new service. That’s less than what it charges on a pay phone directly tied to MCI.
Taylor said the service could generate a 30% increase in the estimated 1 billion collect calls made annually nationwide. He added that MCI hopes the new program will increase MCI’s share of the market from its current level of 11% to as much as 40%.
The (800) COLLECT line went into operation Wednesday morning, Taylor said, and can connect callers to 110 countries.
The company had to wait until May 1 to get the telephone number that spells COLLECT. That was the day the FCC allowed users of toll-free numbers to choose any long distance carrier, an important change, particularly for companies with vanity numbers. The numbers that form the word COLLECT until May 1 could only be offered by another long-distance company, and MCI didn’t want to become a customer of a rival. MCI said it didn’t know which company held the numbers.
Calling Collect The 1993 collect call market is estimated at $3 billion. AT&T; holds the lions share.
AT&T;: 75%
MCI: 11%
Sprint: 5%
Others: 9%
Public pay phone: 57% Someone Else’s home: 31% Home: 29% Hotel/Motel: 18% Office: 15% School,dorm, hospital: 14% Military base: 12% Airport: 3% Source: MCI
