Where choice and competition exist in a marketplace, bargains abound. And few industries are as fiercely competitive as long-distance phone service.
That competition has led to significantly lower rates and new ways of talking across the miles in recent years. That will remain true despite recently announced mergers involving long-distance carriers AT&T Corp. and MCI Inc.
But consumers are being sucked in by heavily promoted phone plans that seem to be bargains but can be more expensive.
Many consumers are overspending on long-distance service by using new "bundled" phone plans, according to a new study by the Telecommunications Research and Action Center.
The industry secret is that unlike many other consumer purchases, telecommunications services are often cheaper when bought a la carte.
"Consumers are overbuying on telephone service to a greater extent than before," said Samuel A. Simon, founder and chairman of Telecommunications Research and Action Center. "While bundled packages appear attractive, for most consumers their value lies more in the convenience of having a single bill rather than as a true money-saver."
A bundle refers to combining many of your telecommunications services with one company on one bill, sometimes for small discounts. For example, some phone companies are offering local and regional calling, long-distance and wireless phone services, as well as DSL Internet service and even satellite TV service. Packages have such names as AT&T One Rate, MCI The Neighborhood, SBC Connections, Sprint Complete Sense and Verizon Freedom.
Many bundles include unlimited long-distance. And that's where the problem lies.
Unlimited long-distance sounds good. But the devil's in the details. You have to consider how much long-distance you use and how much paying for unlimited long-distance is costing you.
The average customer of non-bundled services spends $45.29 a month on home phone service, while bundled customers average $65.70, according to market research firm TNS Telecom.
It turns out that only heavy users of long-distance, those who spend five hours a month or more on long-distance phone calls, benefit from unlimited bundles, TRAC says.
Otherwise, you're probably overpaying.
If you determine that a telecommunications bundle is overkill for your calling needs, consider these tips for trimming your long-distance phone costs:
