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Long-distance rates clink to nickel a minute

Published Sep. 29, 2005

MCI WorldCom and Sprint halve nighttime rates as they get in position for the day when phone, TV and Internet services will be bundled.

Americans are being offered the lowest long-distance rates in recent history as phone companies jockey for customers to whom they can sell other services like local and wireless calling.

Both MCI WorldCom and Sprint have halved their nighttime calling rates to a nickel a minute, sharply undercutting AT&T, the market leader.

In addition to sparking new long-distance business, the moves are designed to position the companies for the day when all types of phone service will be bundled together, along with television and Internet service.

Sprint started the price war last month with a "Nickel Nights" plan charging 5 cents per minute on long-distance calls between 7 p.m. and midnight. Calls at other times are 10 cents a minute, and there's a monthly fee of $5.95.

MCI WorldCom responded Monday by extending its popular "5 Cent Sundays" plan to the entire weekend and weekday calls made between 7 p.m. and 7 a.m. Daytime calling rates on weekdays are 25 cents per minute for customers paying a monthly fee of $1.95, or 10 cents per minute with a monthly fee of $4.95.

AT&T, which charges 15 cents a minute around the clock with no monthly fee or 10 cents a minute with a $4.95 fee, said it has no immediate plans to match the price cuts.

But analysts said it was unlikely the moves by MCI WorldCom and Sprint would go unanswered by AT&T and other competitors.

"The MCI plan will result in a new wave of lower prices for the consumer," said Rex G. Mitchell, an industry analyst for Banc of America Securities in San Francisco. "AT&T will have to improve its plan."

For MCI, which has focused on high-paying business customers, the new calling plan was a sign that the nation's second-biggest long distance company values its share of the consumer market, which Mitchell sees slipping to 11 percent by year-end.

"The consumer market is nothing to sneeze at," said Mitchell, estimating that consumer long-distance revenues will total $41-billion in 1999. AT&T's share of the market, which began the year at more than 60 percent, has been steadily declining and is expected to total just 56 percent by the end of 1999. Sprint's is expected to be 6 percent.