MCI will sharply increase rates and fees on some of its long-distance calling plans effective Dec. 1, including almost doubling its 5-cents-a-minute evening and weekend plans to 9 cents.
Industry experts said the pending increases were a sign that fallout from the massive accounting fraud at MCI parent WorldCom Inc. was finally having an adverse impact on the company's flagship consumer unit.
They added that the move also may reflect a desire on the part of MCI to shift the focus of its business to newer, innovative and more profitable calling plans. Most prominent among these is a plan dubbed "The Neighborhood," which offers unlimited local and domestic long-distance calls for $50 to $60 a month.
Nancy Kaplan, a telecommunications consultant for Adventis Corp. in Boston, called the increases "enormous" and said they may reflect a desire to differentiate MCI's product offerings from its competitors, none of which have a plan comparable to The Neighborhood.
But she warned that the sheer steepness of the increases for some of MCI's more traditional plans holds significant risks. "It's hard to imagine how they would maintain (market) share with these kinds of prices," she said.
Samuel Simon, chairman of the Telecommunications Research & Action Center, a Washington, D.C., consumer advocacy group, said the increases demonstrate that "clearly they're trying to recover their billions lost on the backs of residential rate payers."
In the months after the initial exposure of WorldCom's accounting scandals earlier this year, Simon and other consumer advocates had been counseling MCI customers to stay put, arguing that there was no immediate need to panic and switch long-distance carriers.
Now, Simon is changing his tune.
"If you're an MCI consumer, compare now because the odds are there's a much better plan elsewhere because these increases are extraordinary," he said.
MCI spokeswoman Lauren Kallens said most of the plans to be affected by the Dec. 1 rate hikes aren't being actively marketed.
When asked whether the rate hikes were prompted by problems at WorldCom, Kallens said only that "the rate changes are part of normal business practice."
She acknowledged that The Neighborhood is a top priority for MCI.
"We certainly see The Neighborhood as a breakthrough product and where we see the future of the industry," Kallens said. "We're certainly focused on that plan as a company and believe it offers the best value for the consumer."
Z-Tel Technologies Inc. of Tampa has a partnership with MCI under which it provides the company with access to its leased local phone lines as well as back office support. But in a filing with the Securities and Exchange Commission last week, Z-Tel said the two companies had amended their partnership for The Neighborhood so that either side could exit the plan as early as March, six months earlier than stipulated in their original contract.
Evening and weekend rates for state-to-state calls will rise to 9 cents from 5 cents a minute for MCI's Everyday Plus, Everyday Savings and Everyday Classic plans. The weekend rate for the Weekends/All Week plan will also rise to 9 cents from 5 cents. State-to-state rates for One Extra, One Savings II and One Advanced plans will climb a nickel to 25 cents.
Rates for MCI's basic international direct-dial calling service will rise by about 13 percent.
Monthly fees for the company's Anytime Advantage-Savings Option and Select 200-Advantage Option plans will increase $2 each to $5.95 and $12.95, respectively.
Further details can be found on MCI's Web site at www.mci.com. At the bottom of the page, click on "Service Agreement & Rate Schedule." Then click on "Service Agreement & Rate Schedule Information For Residential." Finally, click on "Recent Rate, GSA, and Calling Services Updates."
_ Louis Hau can be reached at hausptimes.com or (813) 226-3404.