MCI enters market for local toll calls

Sprint also to compete with Bell Atlantic for in-state long-distance

Race for consumers is on

Competition in Md., Va. is result of 1996 law granting equal access

Telecommunications

May 07, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

MCI WorldCom Inc. will take on Bell Atlantic Corp. beginning today for a share of a coveted market -- long-distance calls placed within Maryland and Virginia.

Sprint Corp. also has plans to enter the in-state long-distance market in Maryland this month. Expect other competitors as well, say analysts.

The surge in competition for in-state long-distance phone customers -- also known as "local toll" customers -- is due to the Telecommunications Act of 1996, which required local phone companies to grant equal access in their markets by today.

As a result, Marylanders will be able to choose not only what company provides them with nationwide long-distance service, but also in-state toll calls.

At stake in Maryland for Bell Atlantic is $52.7 million in revenue.

Bell Atlantic, however, is still barred from competing in the nationwide long-distance market -- a market it wants desperately to enter so it can offer customers a full menu of telecommunications services.

MCI's move does not come as a surprise to Bell Atlantic, which was expecting competition by today's deadline, said Sandra Arnette, a spokeswoman.

Analysts say consumers can expect a battle for their loyalty.

"The local toll market is a very significant segment. It's been one of the most attacked markets" in the telecommunications industry, said Fred Voit, a consumer communications analyst for the Yankee Group, a Boston market research company.

Yankee estimates the local toll market at $4 billion nationwide.

The high stakes include not just customers for in-state long- distance calls, but over time long-distance customers as well, said Voit.

The reason is that eventually MCI, AT&T, Sprint and other long-distance carriers will face competition from local carriers like Bell Atlantic, said Voit. Once regional phone companies can show the Federal Communications Commission that they've opened up their market to competition, they are to be cleared to compete in the long-distance service.

"The more hooks you can get into a customer early, the more likely they'll go with you for all the services they need," from Internet to long- and local-distance calling, said Voit.

Joyce Dorris, brand marketing director for MCI WorldCom, said the company is looking forward to competing for local long-distance customers in Maryland because the state ranks among the highest in the nation for telephone usage.

Arnette, spokeswoman for Bell Atlantic, said MCI's decision highlights an imbalance in the telecommunications market.

"This adds to the unlevel playing field Bell Atlantic competes in," said Arnette. "While they can compete for local toll customers, we are barred from competing in the long-distance market, which we'd love to do. We want to be able to offer customers a complete package of services."

Bell Atlantic has already encountered competition for in-state long-distance customers from heavily marketed "dial around" services, in which customers must dial an access code usually beginning with the prefix 10-10. MCI is among those that offer this service.

Bell Atlantic has also encountered competition for in-state long distance in the business market from upstart telecommunications outfits.

MCI WorldCom, which has a 19 percent share of the nation's long-distance market, said it already competes for local long-distance customers in 70 percent of the country. It already competes with Bell Atlantic in New Jersey and New York.

MCI WorldCom, best known for providing nationwide long-distance telephone and Internet services to businesses, said it will offer a flat rate in Maryland of 7 cents per minute to its best customers -- those signed up for its premium long-distance service, MCI One Advantage.

MCI long-distance customers on its weekend and evening calling plan will get the 7-cent rate only on weekends and evenings. From 7 a.m. to 7 p.m. weekdays, those customers will be charged 15 cents per minute.

Catherine Goodson, corporate communications director for Kansas City-based Sprint, said it plans to offer its long-distance service subscribers in-state toll service at 10 cents a minute.

The company plans a direct- mail marketing push in Maryland next month, she said.

Bell Atlantic toll charges vary depending on how far the call must travel and at what time it is placed. The carrier plans to roll out discount packages on local toll calls for business customers in Maryland later this year, said Arnette. The program is available in Washington.

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