Ma Bell Answers Michael Jordan’s Wake-up Call

If this keeps up much longer, they’re going be paying us to make long distance calls. After spending months watching customers switch to lower rates at Sprint and MCI WorldCom the latter bolstered by highly effective ads starring Michael Jordan AT&T on Monday jumped in with a cut-rate plan of its own: seven cents a minute, day or night. Of course, as the ads say, some restrictions apply. To get the sevenpenny rate, you have to pay a $5.95 monthly fee, or $4.95 if you also let AT&T handle your local calls. This is down from the company’s old rate of 15 cents a minute, or 10 if you sent Ma Bell a check every month for $4.95. Got that? Still, the plan is simpler than either Sprint or MCI’s, which charge monthly fees and different rates for day vs. night calls.

The question is, at these rates, can anybody make a nickel? One way is to bundle together services like wireless and toll calls in a single package that the company hopes will allow it to charge less for long distance and still make money. And AT&T is also counting on the FCC to reduce access fees, the amount local phone companies can charge long distance carriers to bring the call into your home. Wall Street doesn’t seem so sure. AT&T shares have fallen 22 percent since hitting a record high last January. And shares of Sprint and MCI WorldCom have been flat for months. On Monday, AT&T shares were down another $1.50, even though the company reported strong growth and earnings. Sometimes reaching out and touching someone can result in a nasty bite on the bottom line.

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