CONSUMER AFTER MA BELL

IT’S BEEN SIX months since the official breakup of AT&T into its several autonomous components (including local service, long distance and equipment), and many of us are still trying to get used to the new system. Southwestern Bell still operates local service; that is, it’s in charge of your dial tone, nearby calls and special services such as call waiting or call forwarding, but it doesn’t control much else. One division of AT&T handles long-distance calls, and another will lease telephones to you if you don’t want to buy them. While Southwestern Bell sends you separate bills for these AT&T services, Bell is no longer the point of contact for telephone repairs or long-distance bill complaints. You have to take your phone to a service center for repairs and call an “800” number if you have questions about your long-distance bill. To add to the confusion, all the rates are changing. But there are ways to take some of the expense and hassle out of each of these transactions.

If you want telephone service, you’re still going to have to deal with Southwestern Bell. Currently, the basic monthly charge for services is $10.10 (extra fees for touch-tone service, call forwarding and call waiting). The company had proposed raising this basic rate to $16.70; recently, however, Bell won an increase of only 30 cents a month by the Texas Public Utilities Commission.

However, long distance telephone companies (including AT&T will have to foot the bill for $668 million per year (access fee) to Southwestern Bell. It’s likely that these companies will need to raise their long-distance rates in order to recover this expense. So, despite the small increase in regular monthly charges, it’s a certainty that your dial tone is going to become a more costly commodity.

One little-known alternative is that Bell offers a cheaper limited service, the “call allowable or local measured service rate,” which, for $6.65 per month allows you 25 calls per month and charges 8 cents for each call over 25. Even if you make more than 25 calls each month, this low-rate service may be for you. At 8 cents a call, you’d have to make 40 additional calls before your monthly bill would reach the current $10.10. Like the basic service fee, the monthly call allowable rate will likely go up, although it should remain 30 percent lower. Absolute costs are certain to go up, but at higher basic rates, the call allowable service will be a better bargain, since a larger number of calls can be made before reaching the new flat rate. Although there’s a steep charge for changing services, it can be made up in about a year. The Texas Public Utilities Commission will conduct local public-comment hearings this summer, prior to the official hearing in September. If you’re an infrequent caller, travel a lot, use the office phone or are just plain unfriendly, you should consider changing to this service.

If you’re still leasing a telephone, stop! Go out and buy one from a reputable dealer and manufacturer. A good, basic phone costs between $25 and $50 and should last for 20 years. It will pay for itself in a year or two, leaving you 18 “free” years to go. (Or if you want your phone to walk with you, talk to you or dial for you, you can buy fancier equipment.)

Quite a few options for long-distance service are or will soon be available. For several years, AT&T has faced competitors in the long-distance business. Companies such as MCI and SPRINT have become well-known alternatives. Other companies, such as Longer Distance, Metrofone, LDS and Allnet, are smaller but offer similar services. These services usually consist of low per-minute costs on calls for a small, flat, monthly, one-time or minimum fee. Presently, the user is required to have a touch-tone phone (except for LDS) and to punch in a seven-digit local number, then a five- or six-digit personal access code before proceeding with the 10-digit area code and number. Within a year, however, equal access will be available in the Dallas/Fort Worth area. That means that all Bell customers will be asked which system-AT&T or a competitor-they want to have as their primary long-distance supplier. That first-choice system will be on a two-digit dial system (as Bell’s one-digit “1-plus” longdistance service is now). You’ll be able to access more than one system if you choose, but your alternate choices will require four digits. The following is a list of your choices.

AT&T, despite recent competition, still retains 92 to 95 percent of the long-distance market. While it has proposed a 10-percent reduction in long-distance rates, it still will be the most expensive service per minute. But it also will be the only one to offer such services as operator assistance (LDS offers some), person-to-person, collect calls and out-of-town directory assistance. Longdistance directory assistance will no longer be free. It will cost 50 cents per call- enough to make you want to consider building an addition to your house just to stock out-of-town telephone books. AT&T claims (and many consumers agree) that the quality of its connection is better as well. For now, AT&T is also the only company that offers overseas calls, although its largest competitors are likely to do so in the future. If you use directory or operator assistance or make overseas calls, you will probably want some form of AT&T service. But for savings on ordinary “reaching out and touching,” you should consider one of the competitors for your primary service.

The largest competitors operate their own independent microwave telephone systems, although they use AT&T’s lines as backup and for remote areas. The largest independent company, with perhaps 4 percent of the market, is MCI. It offers service nearly everywhere in the continental United States and Puerto Rico, as well as some service to Canada. Its “Expressphone” service offers three options for residential long-distance calls:

*Full service costs $10 per month flat fee (plus a per-call charge) and offers 24-hour discount service.

*”Supersaver” service costs a $5 flat fee per month plus a per-call charge. It also allows calls 24 hours a day but charges more on daytime calls.

*Basic service is a one-shot $10 fee, but it offers much less of a per-call discount.

All flat fees can be reduced by 20 percent (to $8 or $4) by signing up through your American Express card. If you’re traveling, it will cost you $5 per month to get a “travel card” in order for you to use your account in other cities.

The second largest system is GTE’s SPRINT. It also serves the United States and will add service to Canada this year. For a $5 flat fee per month plus call costs, it offers discounted services 22 hours a day on weekdays (11 a.m. to 9 a.m.) and all day weekends and holidays. An out-of-town code is free.

Other systems include ITT’s Longer Distance, Combined Network’s Allnet, Metromedia’s LDS and Western Union’s Metro-fone. Longer Distance and Allnet, like MCI and SPRINT, charge a flat monthly fee of $5. Metrofone doesn’t, but it requires a minimum bill of $10. LDS has a set-up charge of $50 or $10 (depending on the type of service); it charges $5 per month for full service and nothing for part-time service.

Like AT&T, these competitors divide their dialing hours into day, evening and night rates, with day being the most expensive time to call and night the cheapest. Day hours are generally from 8 a.m. to 5 p.m.; evening, 5 p.m. to 11 p.m.; night, 11 p.m. to 8 a.m. and all or part of the weekend (although the designation may vary slightly according to the company).

All companies offer per-minute rates at a 5- to 50-percent discount over current AT&T rates, depending on where and when you call. Even if AT&T does lower its rates sometime this year, the competition undoubtedly will still offer less expensive service.

To decide whether to go with a competitor and, if so, which one, you should look at the number of calls you make, how long they are, where you make them and whether you want an out-of-town calling code.

You must first look at your total current long-distance bill to see if your savings on an alternate system will exceed the $5 or $10 minimum monthly fee. The rule of thumb is that savings begin on a $25 to $30 per month long-distance bill. Obviously, a $10 fee will take more calls to pay back than a $5 fee would take. Also, a 20-percent average discount will require more calls to break even than a 30-percent discount would require. But only your own calling habits can determine what your actual discount will be. Overall, your savings will be greater during the evening and night hours and on calls to major cities. Since AT&T’s highest per-min-ute rate is for the first minute, short calls save more per minute than long ones. If you need a high degree of flexibility, you should go with a 24-hour service.

You should assess your own calling patterns and then request that the company furnish you with actual rates for the calls you typically make. Let them recompute a few months of your actual phone bills. (They may balk a bit at this request, but that’s what sales reps are for, right?) After you receive information from a few companies about how your particular needs can be met, you’ll be able to make the best choice. For example, with an average 30-percent discount on a plan that costs $3, you can break even on a $17 long-distance phone bill. A 20-percent discount on a $10 plan requires a $50 longdistance bill to break even.

SPRINT and ITT, for example, appear to have day rates that are somewhat higher than MCI or Western Union, offering perhaps no more than a 10- or 15-percent discount on the average, although their evening and night rates are somewhat lower (offering up to 50 percent).

Obviously, if your current bills are high, any company will offer some savings. In choosing, you should go with a large, well-established, reputable company and steer clear of smaller, less extensive ones. Also, look for companies with an accessible local office.

Given the highly competitive and volatilestate of the long-distance business, the onlycertainty is change. Rates and services offered are bound to be revised many times asMCI and SPRINT go after a larger piece ofAT&T’s pie. (AT&T, of course, won’t sharewillingly.) For the next few years, thisshould result in lower costs and higherquality in long-distance service for everyone.