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Phone Cos. Going The Distance

For producer Kevin Fry, making it in Hollywood means making a lot of long-distance telephone calls, reports CBS News Correspondent Sandra Hughes.

Fry spends about $300 a month on his calls. He feels they are way out of hand. There is no way to know exactly what you are being charged for."

But consumers like Fry could be in for big savings if they pay attention to new long-distance rate offers, like the latest from AT&T: 7 cents a minute, 24-hours a day. With that offer, says AT&T's Mark Siegel, " We were responding to the marketplace and customer's need for simplicity and a great value."

Making a long-distance phone call used to be a big, labor-intensive event. Just 15 years ago, the average rate was 40 cents a minute. Now, new technology and lower government fees have combined to make long distance calling pretty cheap.

Long-distance companies like Sprint are slashing rates to 5 cents a minute for some calls; holding at 10 cents a minute, AT&T faced losing customers if it didn't cut rates too.

But it's not just other long-distance companies that have AT&T worried about its market share -- typically free of long-distance charges and roaming fees, more and more people are using their wireless phones exclusively for long-distance calls.

It all boils down to a boon for consumers, who through package deals could soon be paying nothing to make an interstate call. Telecommunications consultant Jeffrey Kagan thinks you'll see lots of services bundled together.

"Wireless phone service, Internet service, cable television service -- you can make a lot of money on those services," he explains. "I think we are looking at the day of free long distance before we know it."

The big savings, however, are only for calls to other states -- not other area codes within the same state or town. These details are confusing to a lot of people.

"They advertise 7 cents as a bargain, but when you look at your total bill, that seems to be going up; so I don't know if you are saving any money," says one consumer.

And if 5 to 7 cents a minute encourages people to make more long-distance calls than usual, the phone companies' gamble pays off.

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