Home 800 Numbers: Talk of the Town? : * Telecommunications: AT&T; has joined MCI and Sprint in offering the service. If you chat a lot, you can save money. If you don’t, you won’t.
Here’s a way to get your friends and family to phone more often: Pay their telephone bills.
American Telephone & Telegraph last week came out with a personal 800 number, designed especially for people who expect fewer than three hours of toll-free calls each week. MCI and Sprint launched similar personal 800 services a year ago. They contend that people who love to talk can save a lot of money with the service.
The 800 numbers are aimed at people who accept many collect calls--or would like to. MCI said its 800 service is especially popular with parents who have children away at college, for example. The 800 numbers are also popular with people who can’t persuade elderly parents to call collect, MCI said.
Consumer activists say the 800 numbers have some big drawbacks. Unless you spend a lot of time on the phone, an 800 number is expensive. Consumers must pay a monthly charge of $5 to $15 for the service, even if they get few 800 calls. Wrong numbers can present big problems too, particularly since Sprint and AT&T; offer consumers no way to screen unwanted calls.
“All you have to do is be a couple digits off from Hilton Hotels, and whammo,” Los Angeles communications consultant Lauren Weinstein said.
Consumer response to personal 800 numbers has been tepid. Only an estimated 35,000 people signed up for the services when they first came out a year ago. The market is expected to grow, but not dramatically. Sprint product manager John Heiman predicted that 500,000 people will have 800 numbers by the end of 1992.
The long-distance carriers look to personal 800 numbers to revive the formerly robust $5-billion, 800-number business. Helped along by an explosion in telemarketing, revenue from toll-free 800 numbers leaped by 20% a year in the 1980s. Growth has cooled to 10% to 15% a year, according to the Federal Communications Commission, partly because most large-volume customers already have 800 numbers.
The introduction of personal 800 numbers comes as the dynamics of the toll-free market appear to be changing. New York communications consultant Courtney Munroe said AT&T;'s revenue from 800 numbers slipped in 1990 for the first time in a decade, while MCI and Sprint watched their 800 revenue nearly double.
AT&T;'s leadership in 800 services is hardly endangered; Munroe estimated that it took in $4.2 billion last year, while MCI reaped $425 million and Sprint $160 million. Munroe said AT&T;'s decision to announce a personal 800 number was partly a defensive move to prevent further erosion of its 800 business, which “over time could represent a significant number to AT&T.;”
Long-distance carriers view the nation’s 250 million residential telephone customers as a vast, untapped reservoir of possible 800 users. “The potential for growth is enormous,” Sprint’s Heiman said.
But it isn’t known how many residential customers want an 800 number. Consultant Munroe speculated that growth will come from small business, or the so-called work-at-home market made up of such people as accountants, free-lance writers and sales professionals. AT&T; has targeted the small business market in its television commercials.
Sprint said a sizable number of its customers use 800 numbers for work-related calls. Sprint has found a market for 800 numbers among people who spend a lot of time away from home, such as truck drivers. “We are finding the lines between personal use and business use are blurred,” said Heiman, the Sprint product manager.
He says most of the people who have Sprint’s 800 service use it for personal reasons--to talk with elderly parents or college children. Some divorced parents who don’t have child custody get a toll-free number for their children.
Communications experts point out that the 800 numbers have drawbacks. Consumers may find themselves paying for wrong numbers and unwanted calls from telemarketers or cranks. “I can imagine getting a lot of calls from strangers,” said Audrie Krause, executive director of the San Francisco consumer group Towards Utility Rate Normalization (TURN).
MCI says it protects consumers with a security system. An 800 caller must dial a secret four-digit access code for the call to go through. But consultants say MCI’s four-digit code, while comforting to consumers, may be too cumbersome for small business owners. And competitors say MCI’s system isn’t foolproof.
“I think it’s a lot easier to misdial a 14-digit number than a 10-digit number,” Sprint’s Heiman said.
Consumers also have to consider costs. Charges vary by carrier. AT&T; and MCI offer relatively low monthly fees, but high per-minute charges. Sprint has a high monthly fee, but its usage charges are generally lower and fluctuate by time-of-day.
MCI estimates that people who accept more than five eight-minute collect calls monthly can save money with its 800 number. But for people who take fewer calls, it may not make sense, consumer activists said.
“I think its good only if you have tons and tons of friends, and you want to pay their phone bills,” TURN’s Krause said. “I’d be shocked if it’s successful.”
Dialing for Dollars
Seal Beach home renovator Sharyn Transue talks for about 30 minutes on the telephone with her family in Muskogee, Okla., each week. She also keeps in weekly touch with friends in Falls Church, Va., but talks less. Would she benefit from a personal 800 number? We used one of Sharyn’s recent telephone bills to make comparisons.
AT&T; MCI US Sprint 800 charges $31.93 $25.75 $21.49 800 fee $6.00 $5.00 $15.00 Total $37.93 $30.75 $36.49 AT&T; MCI US Sprint Collect tolls $21.40 $21.32 $21.12 Operator fee $9.40 $9.40 $8.75 Total $30.80 $30.72 $29.87
The rates for personal 800 numbers differ from one long-distance carrier to the next. Here’s what the top three companies charge.
AT&T;: Flat rate of 31 cents per minute and $6 a month.
MCI: Flat rate of 25 cents per minute and $5 a month.
US Sprint: rate varies by time of day, from 24 cents to 14 cents, and $15 a month.