Telephone Discount Plans: Whose Fits Whom

Competition in the long-distance phone market heated up precipitously this month as all the major long-distance carriers started new, nationwide calling plans.

The plans, primarily aimed at people who make a lot of costly calls, can help consumers save a bundle. Better yet, at least for now, you don’t have to be a big spender to qualify for the savings.

In the past, if you spent less than $25 a month on long-distance--calls going 50 miles or farther--you were excluded from the most generous discount plans. But in this latest round of price cutting, the Big Three--AT&T;, MCI and Sprint--have lowered the qualifying threshold to $10--or even less if you sign up soon. In addition, some allow you to add in-state toll calls to the equation--in effect lowering the long-distance minimum and allowing for savings on both types of calls.

For promised savings ranging from 10% to 50%, it’s worth taking a look at the competing plans, particularly if you spend a lot on long-distance and so-called local long-distance calls (generally, calls 15 to 50 miles from home).

You should realize, however, that the savings are not deducted from your entire phone bill. In other words, if your phone bill amounts to $50 a month, a 10% savings on toll calls won’t save you $5.

That’s because a substantial portion of a monthly bill consists of service charges, taxes and fees for specialized calling plans, rather than for individual calls. Many of these fees and service charges are rising, not falling. Why? The phone companies maintain that in the past, high per-call charges subsidized the costs of supplying and maintaining phone lines in every house. When the toll markets were opened to competition and per-call charges fell, the subsidies began to evaporate. Now--at least in theory--everyone is paying for the value they receive and no one is subsidizing anyone else.

How do you determine which plan is best for you? It largely depends on how you use your phone.

The Sprint Sense program is by far the easiest to understand. Under it, you pay one of two rates: 10 cents a minute for calls made between 7 p.m. and 7 a.m., or 22 cents a minute for calls between 7 a.m. and 7 p.m. It doesn’t matter where you call, whom you call or whether your friends are on the same program. It’s a flat rate.

Sprint usually charges a monthly service fee of $3 if your long-distance calls add up to less than $25 a month. But those who sign up before April 1 get a “charter membership” in the program, so the $3 fee is waived permanently, said Wally Meyer, vice president of marketing and sales for Sprint’s consumer services group. Sprint is also giving 100 minutes of phone time to newcomers--a $10 to $22 value.

Both AT&T; and MCI base their rates on three calling periods: day (8 a.m. to 5 p.m.), evening (5 p.m. to 11 p.m.) and late-night/weekend (11 p.m. to 8 a.m. weekdays, all day Saturday and Sunday until 5 p.m.)--and on “mileage bands,” which means the farther you call, the more you pay. However, the mileage bands mean little these days. By and large, the “base rate” varies by only a penny or two regardless of whether you’re calling Las Vegas, Denver, New York or Chicago.

The base rates at MCI and AT&T; are also nearly identical. Daytime rates range between 27 and 28 cents a minute; evening rates are 16 to 17 cents; late-night and weekend rates run between 14 and 15 cents.

Both companies offer discounts on these base rates. The amount of the discount varies with how much you spend.

The AT&T; True Savings plan offers a 10% discount to anyone whose monthly AT&T; phone bill exceeds $10. That can be for long-distance or local long-distance. If your bill amounts to $25 or more, the discount is 20%; those who spend $75 a month or more get 30% off the base rates.

In dollars and cents, the discounted per-minute fees range from a high of 25 cents (10% off the 28-cent rate) to slightly less than 10 cents (30% off the 14-cent rate).

If you spend less than $10, you pay the loftier base rates, but there’s no monthly service charge for participating in the program.

MCI’s program is similar, but the thresholds are different, and it adds the company’s Friends and Family gimmick. Members of New Friends and Family save 25% off the base rates on every direct-dial call, provided they spend $10 a month on MCI.

If you spend $50 a month, you get a 30% discount. And if you call another Friends and Family member, you save 50% on that phone call.

Translation: Per-minute prices range between 21 cents and 6 cents, depending on when and whom you call.

You pay the higher base rates if your calls add up to less than $10 in a given month. There is no monthly fee for participating in the program.

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In the end, the MCI program is the cheapest for those who use the phone a lot during the day and make almost all their calls to other MCI customers. The Sprint plan is best for those who generally make long-distance calls at night to a widely dispersed group.

AT&T;’s program is somewhat more expensive than either of the other options. Nonetheless, if you’re among the estimated 40% to 50% of Americans who don’t use any discount calling plan, any of the three programs is likely to save you money.

* More Personal Finance: From tax strategies to derivatives, the TimesLink on-line service has scores of frequently asked questions about money and investing. To get the straight answers from Times columnists Carla Lazzareschi and Kathy Kristof, sign on to TimesLink and “jump” to keyword “Finance.”

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