Long-distance competition began in 1984 with the divestiture of AT&T, which gave customers a long-distance choice for the first time. Now, more than 700 long-distance carriers exist, with approximately 200 available in each consumer market. The number will continue to grow.
Despite that number, 60 percent of callers have no discount plan at all and -- lacking motivation to shop around -- have simply stayed with AT&T, which retains about a two-thirds market share.
However, if you know how to shop and compare, you can save hundreds of dollars per year. Long-distance base rates have actually declined nearly 50 percent since deregulation, but the carriers aren't about to make comparison shopping a simple matter.
Shopping for the best long-distance deal is well worth the effort. According to CBS News This Morning money editors Daria and Ken Dolan, most people are overpaying for their long-distance service -- some by as much as 60 percent. And despite the many options available, comparing rates is not as difficult as it might seem at first. Here's how to start:
Figure out what percentage of calls you make during the three main time periods that phone companies base their rates on. Peak time is usually 7 AM to 7 PM weekdays. Off-peak is normally 7 PM to 7AM weekdays, or 7PM Friday to 7AM Monday.
Then, estimate how much you spend on long-distance calls per month, what numbers and area codes you call most often, and the current per-minute rate you pay for these frequent calls. Check your last three month's phone bills if you are not sure.
Next, contact your current long-distance carrier and ask the customer service representative to evaluate your calling pattern. Try to determine if your present plan is the best one to fit your needs.
Then, with your calling pattern in mind, shop around. When considering another long-distance carrier, ask the following questions:
- What is the per-minute charge?
- What are the terms of the contract? Don't sign for a year or more unless you get at great fixed rate deal or other services. That way you're flexible for a better deal, should one come along.
- What are the billing increments? Best is one-second or six-second increments.
- Are there any surcharges? Ask for a no-fee calling card.
Finally, negotiate for the best calling package. Use the lowest rate you hear about and play one carrier off the other.
If you're still confused about which calling plan is best for you, contact the Telecommunications Research and Action Center (TRAC) for the Tele-Tips chart, a side-by-side comparison of 28 calling programs. See their Web site at www.trac.org, or send US$5.00 and a self-addressed, stamped envelope to:
P.O. Box 27279
Washington, D.C. 20005
For more about yor money by "America's First Family of Finance," go to the Dolans Web site.