Archive for Sunday, September 22, 1996

PHONE OPTIONS CONFUSING FOR BUSINESSES

September 22, 1996

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Small businesses are fighting to stay abreast of the rapid-fire changes in the telecommunications industry, and trying not to get burned in the process.

You're starting a business. You need phone service.

If only it were that simple.

Sweeping changes in the telecommunications industry have made the selection of long-distance services, cellular services and Internet access services about as easy as finding a rotary-dial phone.

If you study your options, however, the choices can also be surprisingly straightforward.

Mike O'Donnell, who is starting a business consulting firm in downtown Lawrence, acknowledged that searching for a telecommunications company can be a headache.

"There are a lot of telecommunication companies out there looking for long distance dollars," O'Donnell said. "The cellular business, which has exploded off the map, Internet access -- all of these are making it pretty confusing for new businesses or emerging businesses."

And you need a scorecard just to keep up with the players.

"There's a lot of consolidation going on," said Ken McEldowney, executive director of Consumer Action, a San Francisco-based consumer advocacy group.

After the AT&T breakup in 1984 and subsequent regulations governing phone service, long distance companies began to sprout.

Including the "Big Three" -- AT&T, Sprint and MCI -- there are at least 15 long distance companies currently providing nationwide service. Most have calling plans, making direct comparisons of rates among companies more complicated.

The communication revolution has also spawned spinoffs, such as prepaid calling cards.

Prepaid calling cards are typically used through business promotions. A customer receives 10 minutes of free long distance with a new bank checking account or an automobile test drive, for example.

To sort through the morass, McEldowney recommends service seekers conduct their own comprehensive surveys of long distance companies' plans to find out which one will suit their needs.

"Small business customers, they have to start out thinking about how they use the phone," McEldowney said. "If they make a lot of local calls, if they make a lot of long distance or international calls, or if they want several different lines."

Companies have also started bundling fax, Internet, cellular and long distance services, simplifying service but adding to rate confusion.

O'Donnell said he chose International Discount Telecommunication for the simple reason that a flat fee long-distance service would give him unlimited access to the Internet.

He said he will eventually buy his Internet services from a cable company that will allow him to go on-line through a television.

"Ultimately that will be the best option for me," he said. "Then I won't have to tie up a fax line and plug in my computer."

Shani and Steven Andersen of Lawrence both have their own new businesses.

Shani Andersen, of Andersen and Associates, said the rat race motivated her to stick with MCI, which had been providing the Andersens' home service.

"Maybe it was because of the level of confusion that we stuck with someone we knew," Andersen said. "Familiarity played a large role in that."

No matter which company you choose, McEldowney said services should be evaluated in a few months to make sure the promises weren't as thin as the bill sheet.

In a survey of the three major long-distance carriers, Consumer Action found that AT&T, MCI and Sprint had actually increased basic rates in the wake of several new calling plans.

That rate instability is a direct result of a highly competitive market and an endless supply of U.S. residents needing long distance, O'Donnell said.

"One of the factors is getting burned by those who promise you the world, switch you, then you end up paying much more than before," O'Donnell said.

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