A 'switchboard' service sorts out maze of long-distance options
Bruce Lupin says his business is to remove confusion, the confusion that goes with choosing a long-distance phone company. It's easy to see why there is so much puzzlement. With the breakup of American Telephone & Telegraph, businesses and individuals are being peppered with solicitations from the many long-distance phone companies. The regulatory side, steered by the Federal Communications Commission, is a tangle, too. For instance, last week the FCC moved to lower AT&T's rates. But other developments could actually cause AT&T to seek slightly higher rates next year.
Mr. Lupin's business sprang up to make sense out of all this. He pays a visit to small or medium-size businesses in the Washington, D.C., area, talks with managers about phone habits and needs, collects a representative monthly phone bill, and then heads back to Independent Telecommunications Analysis Corporation , the company he started last year in Bethesda, Md.
Two weeks later the customer ends up with a detailed report on long-distance trends and the company's needs, but most important it now has a recommendation on which phone service to use.
Sometimes, the golden answer from Lupin's staff is that the company should stay with the service it's using. Other times, it recommends a switch that shaves 40 percent on a client's phone bill. Even if a company just discovers it should stick with its present long-distance service, says Mr. Lupin, the information is worth the one-time fee (starting at $50).
''(Customers) are being harassed constantly by long-distance companies,'' the young entrepreneur says. ''There are more than 20 in this area. We simplify their life by getting these people off their backs . . . so they can get back to running their business.''
The outlook a year or two from now is that comparison of long-distance companies will be much easier. The companies will have similar rate structures but will try to distinguish themselves through services, analysts say. Also, by that time the FCC expects long-distance rates to have dropped 35 to 40 percent.
In the meantime, the long-distance decision for consumers and businesses is getting more complicated by the day. Lupin says his company has to consider more than 20 factors in deciding on a long-distance company.
Last week the FCC ordered American Telephone & Telegraph to reduce its long-distance rates by 6.1 percent, beginning later this month. It ruled that AT&T could charge 50 cents for long-distance directory-assistance calls, with the first two each month being free. Last Friday, however, AT&T filed a petition with the FCC to speed up its equipment depreciation rate. If the petition is granted, AT&T would require a slight increase in revenues to cover the increased expense. It is possible that this new revenue could come from a minor rate increase next year. On the other hand, it could also come from productivity savings.
The FCC also approved the monthly $6-per-line access charge for businesses with multiple-line phones, effective late this month. Finally, it lowered the charges that AT&T and other long-distance companies need to pay for access to local switching systems. That could result in general rate decreases among all the long-distance companies.
More complications are on the way. Next year residential users will begin paying $4 a month for access to local lines. This will reduce long-distance rates substantially. Also, not all companies will survive the long-distance competition; you might be left dangling. Right now, some of the long-distance companies are at or near capacity - so some consumers cannot sign up even if they want to.
Sprint, for instance, is clogged up in the evenings in New York City and Washington, D.C. A Sprint spokesman says it is spending heavily on new equipment and that no cities that come up for ''presubscription'' this year will have any capacity problems. (Presubscription refers to the time when people must choose a long-distance company. The schedule stretches out for a period of three years. Your local phone company will let you know when you have to make a choice.)
Meanwhile, the alternative long-distance companies are changing their charges with the speed of light. Sprint dropped monthly service charges early this year. Now MCI says it will have no minimums or fees, ''just the cost of your calls,'' according to Gary Tobin, MCI spokesman. Telesaver Inc., based in Owings Mills, Md., dropped its service and setup fees but simply shifted those costs to rate increases. Allnet, based in Chicago, is reviewing its whole fee structure, as is Western Union Long Distance Services, formerly Metrophone.
Surprisingly, these changes are in the name of simplicity, long-distance executives say. They want to rearrange their rate structures to match competitors'. This should allow consumers to easily compare alternative firms with AT&T.
''I think an easy comparison is essential,'' says Melvyn Goodman, president of Allnet. ''The biggest single marketing obstacle is (customer) confusion.''
Mr. Goodman and other executives believe price competition and general havoc will continue until the presubscription process is over and all the long-distance companies are on a more equal footing. After that, the companies will look similar, ''except for a distinguishing characteristic,'' Goodman says.
That characteristic will be noticeable in services. Some of the long-distance companies are gearing up to provide home-security, overseas telex, answering, and paging services. Some companies, like Western Union Long Distance, want to become one-stop shopping centers for a whole slew of communication needs.
Until then, price competition will be intense, especially since these companies are trying to sign up as many customers before presubscription as they can. They entice customers with premiums, like free phones, and with package deals, like AT&T's proposed ''Reach out, America'' service. A customer would pay week-nights and all weekend. The FCC will rule on the proposal by June 7.