Shorter telephone calls may soon be more expensive

September 11, 1994|By Los Angeles Times

WASHINGTON -- In a surprising side effect of new technologies, Americans' telephone calls are suddenly getting much shorter -- and if the phone companies have their way, those short calls will soon get much more expensive.

Despite the nation's long love affair with leisurely phone chats, innovations such as pagers, voice mail, e-mail, electronic credit card readers and fax machines are now abbreviating telephone calls and luring longer connections off the public phone network.

Today, as people leave voice mail rather than call back -- or send e-mail rather than call at all -- some 52 percent of residential phone conversations last one minute or less, compared with 22 percent of such short connections in 1982.

Telephone companies are not at all happy about this. They say it is costing them money -- not because overall phone traffic is down (it isn't), but because the first few seconds of a call, when the initial connection is made, are the most expensive to handle.

Not surprisingly, they have a solution: a new "setup" charge that could make some short-duration calls as much as five times more expensive.

Such changes are likely to anger consumers and could also thwart the development of computer on-line services and other emerging communications technologies.

Phone company finances aside, it is clear that new technologies are drastically altering the way in which the public telephone network is used. In Massachusetts, physicians whose staffs once spent hours placing long-distance and local calls to determine patient eligibility now accomplish the same task in seconds by swiping a wallet-sized ID card though an electronic scanner connected by phone lines to Blue Cross/Blue Shield.

Around the country, retailers are verifying credit cards electronically in seconds, rather than spending minutes on the phone. Companies of all stripes are finding that they can make do with fewer personnel to field live phone calls: Operators and secretaries are being eliminated as electronic voice mail boxes are installed. And marketing is being transformed by computers that tirelessly dial homes to pitch products with a synthesized human voice that does not dally with customers.

"E-mail and voice mail reduces significantly the time" spent on the phone, said Dan Elron, a telecommunications expert at the New York offices of Coopers and Lybrand. The technology, Mr. Elron said, forces people to dispense with "extraneous issues like the weather and deal with things much faster."

"The problem with the current rate structure is you lose the winners and keep the losers," said Ed Lowry, executive director of external affairs for Bell Atlantic Corp.

"We have to be able to give our customers pricing options to keep them and get our rates more in line with costs," he said.

"The phone companies face a material loss of revenue unless they address the situation of the continuing proliferation of short duration calls," said Richard P. Nespola, president of the Management Network Group Inc., a Leawood, Kan., consulting firm.

"The market has changed," he said. "Communications are coming in short bursts."

Some dispute the phone company argument that short calls are more expensive to carry.

"This is telecom tomfoolery," said Bruce Kushnick, president of New Networks Institute, a New York research firm. "Moving electrons over a wire does not cost more money. The telephone companies are simply restating their math" to win rate increases.

Computer on-line services and other heavy users of the public network are fiercely opposed to the new pricing proposals.

"This obviously would have a deleterious impact on the nation's economy and essentially would penalize CompuServe and similarly situated companies for making extremely efficient use of the public switched network," said CompuServe, one of the nation's leading computer on-line services, in a petition filed with the Federal Communications Commission last month.

Instead of pressing for such rate increases, CompuServe said, phone companies "should concentrate on finding less costly ways of setting up calls."

Indeed, some find it peculiar that phone companies would be complaining about changing usage patterns, since new technologies in general are contributing to an unprecedented boom in communications, which in turn is creating major new opportunities for phone companies.

Overall demand for phones is exploding so much, in fact, that the nation could run out of some area codes in the next few years. What's more, some phone innovations, such as voice mail and call waiting, allow millions of calls to be completed today that in the past might have gone unanswered or uncompleted.

But many of the additional lines being hooked up are devoted to fax machines, on-line computers services or other devices that communicate in relatively brief periods of time. Other added capacity does not directly financially benefit the local phone companies. For an industry seeking new revenue streams to modernize their networks, experts say, the trend is ominous.

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