Long-distance dialers: hang up on new fees

Just signing up with a provider does not guarantee you will get that company's best rates, warns the San Francisco-based consumer group, Consumer Action (CA).

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The Big Three long-distance carriers - AT&T, MCI, Sprint - charge rates as high as 30 cents per minute to customers who are not on a calling plan. Other companies have much lower default rates for customers who don't specify a calling plan, the group says.

CA has conducted an annual survey of long distance rates since the mid-'80s. This year's survey involved 19 carriers and 44 discount calling plans.

Among the biggest changes this year, says CA editorial director Linda Sherry, is that local phone companies, in particular SBC and Verizon, have entered the long-distance arena.

"Their basic rates are quite a bit lower" than the Big Three providers, she says.

Other key findings from the study:

• The plan with the lowest rates is not always the best deal if it comes with a monthly fee.

"Across the board, more plans have monthly fees, and we think that when most people do the math, these plans don't become a very good deal," Ms. Sherry says.

• A few lesser-known companies offer discounts or waive monthly fees for customers who sign up online and/or pay their bills automatically with a credit card. Online plans are usually cheaper.

Sherry advises customers to try out some of these carriers. "You don't have much to lose. They go bankrupt, and you simply go to another carrier," she says.

• More providers are offering "buckets of minutes" plans. Customers pay one rate for a certain number of minutes each month. The advantage is primarily for those who spend 200 or more minutes making long distance calls. But "use them or you'll lose them," Sherry warns.

• Consider "dial around" (or "10-10") long-distance plans. These services can give you signficant savings, especially on international calls. You can also use different dial plans, depending on your needs. For instance, one 10-10 service may offer good rates for calls in the US, while another is better for international calls. To compare these plans, visit www.1010PhoneRates.com.

• Personal-computer owners can get a 2-cent rate or lower by prefunding an account with Net2Phone.com and placing calls from their computer to any phone. The company now offers free 5-minute, PC-to-phone calls. To talk longer, you have to fund an account.

• The Big Three carriers add 9.9 percent to long-distance bills each month to recoup the federal universal service fee (USF) they must contribute to bringing phone and Internet service to low-income people and rural areas. Some providers don't charge as much, so ask carriers about the USF charge before signing up.

• The Big Three also charge $1.50 per month for customers who choose to have their long-distance charges combined with their local phone company bill.

• Directory service now costs up to $1.99 for each call. (See top chart, below.) To save money, write down numbers in an address book, use a phone book, or look up numbers on the Internet instead. (Three possibilities: www.directory-assistance.com, www.anywho.com, or www.411.com.) You can also receive directories from other cities for a small charge by calling your local phone company.

• Companies charge their highest rates for operator-assisted collect calls. (See bottom chart, below.) Never allow the operator to dial a collect call - or any call - for you. Do your friends and family a favor by using a prepaid phone card instead. Shop carefully for such a card, because added charges can increase the cost of your calls.

• Before using any company's calling card, ask how to get the best rates. In many cases, you will have to sign up for a calling plan. Calling-card rates vary widely.

A full copy of the Consumer Action survey can be found in the group's website ( www.consumer-action.org). Another source for long distance rates is the Telecommunication Resource & Action Center ( www.trac.org), which sells a rate comparison chart for $5.

STAFF SOURCE: COMSUMER ACTION; STAFF RESEARCH