SBC's entry into the state long-distance market means more competition, not necessarily savings
<<<... Even faced with SBC's marketing blitz, AT&T and MCI need to raise rates to compete in the long term, Sayers said. "The rate increases happening now are in part due to shifting usage from wireline to wireless phones and e-mail," Sayers said. "AT&T and MCI need to stem revenue losses. Sprint has said it is looking at increases as well." But long-distance prices aren't rising across the board. The large phone companies still offer deals for high-volume, high spending customers. Take SBC's new offerings, for instance. To take advantage of its best prices, consumers have to sign up for a "Total Connections" package, which combines dial-up or high-speed Internet service, a Cingular Wireless calling plan, long-distance and local service and such features as call waiting or voice mail for about $85 a month. (Cingular Wireless is co-owned by SBC and BellSouth.) For those who sign up for the Total Connections package, the savings can be substantial, Sayers said. Total Connections customers also can purchase "buckets" of long-distance minutes, paying $5 for 200 minutes or $10 or 500 minutes, which is about 2 cents to 2.5 cents a minute. Most large long- distance carriers charge from 5 cents to 9 cents a minute as their lowest rate, and often those rates have limits on when a customer can call. The Total Connections per-minute rate is so low that AT&T recently filed a protest with the California Public Utilities Commission, saying SBC's rates were below its costs and amounted to unfair competition because SBC was using earnings from its other businesses to subsidize its long-distance offerings. The rates for SBC's regular long-distance service are 7 cents to 10 cents a minute, depending on the plan. Frank Mona, executive director of SBC's consumer marketing in California, acknowledged that customers who buy more get better deals. "If you are a customer that is buying a full set of services, you are going to get a great rate," he said. But SBC isn't the only phone company that's trying to get customers to "bundle" services. Some industry analysts say MCI's recent rate increases are an attempt not only to pump up revenue but move customers to its Neighborhood plan, which offers unlimited local and long-distance calling for about $50 a month. "The companies are trying to use pricing to drive certain products like bundles. The more services a customer uses, the more profitable that customer is, so the companies are trying to encourage customers to be more profitable by promoting bundles," Kagan said. "The best prices are on bundles, not on stand-alone services." But the complex service packages make it difficult for consumers to comparison shop, said Michael Shames, executive director of Utility Consumers' Action Network, a consumer advocacy group...