Long Distance Service FAQs – 1

Long Distance Service FAQs – 1

Go to Frequently Asked Questions – Part 2


AT&T, MCI, WORLDCOM, FRONTIER, EXCEL- IS THERE REALLY A DIFFERENCE?
Quite simply, for the vast majority of clients there isn’t a difference. These days there’s little difference in quality among the major vendors (AT&T, MCI, Sprint). Low price is a good criterion (not the only) for choosing a long distance carrier. Due to the incestuous relationship between carriers, it isn’t unusual to have your call travel through several competitors lines before landing at its destination. The call leaves your business on copper wire via your local Bell company, is transferred to the fiber optic network of your carrier, frequently is transferred over a leased line from a competing carrier, and finally sent back to copper wire at the local Bell company of the destination. Many non-AT&T calls do travel, at one point, over the AT&T network or over lines used by AT&T, because it is so extensive and they are so large. With the major companies there definitely is financial stability and name recognition, which you pay for in a higher cost per minute cost.

Tip: Unless you a large company with specific needs (frame relay, dedicated T-1’s) there isn’t that much difference between carriers except price, how the invoice appears and the number of commercials they run.

WHERE DO I BEGIN TO UNDERSTAND MY TELEPHONE BILL?
Let’s assume you have a $135 long distance bill (all day rate calls, excluding taxes, line charges, etc.) with 1,500 minutes, it breaks down as follows: 1,000 minutes of interstate (between states) for $85 and 500 minutes intrastate (within your state) for $50. The simplest step is to determine your current Cost Per Minute (CPM). This is basically like the cost per pound of meat or miles per gallon of gasoline. Begin by taking the total dollar amount and dividing by the number of minutes: this will give you your average CPM. In our example, you spend $85 and use 1,000 minutes, $85/1,000 is 8.5 CPM for interstate and for intrastate the calculation is $50/500 is 10 cents per minute. You are now armed with information, 8.5 CPM interstate and 10 CPM intrastate. You can now compare pricing. You must break this down into the intrastate and interstate pricing in order to compare your specific calling patterns.

Tip: Know your current interstate and Intrastate rates! Look at your specific calling pattern to determine if you have mostly intrastate, interstate or even calls to Mexico. Compare your specific needs to the proposed plan, what good is a 8.5 interstate rate if all your calls are intrastate at 10 cents per minute? You have to shop all the prices, not just the single CPM that sounds good.

WHAT IS THE BIG DEAL BETWEEN SIX SECOND AND 60 SECOND BILLING? (How to slash a component of your long distance costs by 27-93%, in just 6 seconds.)
Regardless of which long distance company you use, be sure your calls are billed in six second, rather than one minute increments, whenever possible. You can save a substantial amount of money, especially if you make many short calls, by installing six second billing.

To determine six second versus 60 second savings, let’s compare calls costing ten cents a minute with billing increments of 60 seconds versus 6 seconds. (Six seconds equals 0.10 minute)

  • Actual call length 0.10 / For a 60 second minimum charge you will be charged for the whole minute 0.10 / For a 6 second minimum charge you will be charged 0.01 / an overspend of 0.09, or 90%.
  • Actual call length 0.50 / For a 60 second minimum charge you will be charged for the whole minute 0.10 / For a 6 second minimum charge you will be charged 0.05 / an overspend of 0.05, or 50%.
  • Actual call length 0.90 / For a 60 second minimum charge you will be charged for the whole minute 0.10 / For a 6 second minimum charge you will be charged 0.09 / an overspend of 0.01, or 10%.

You can see that you save due to six second versus full minute billing.

WHEN IS A HIGHER RATE REALLY MORE COST EFFECTIVE THAN A LOWER PER MINUTE? (It is not a half cent more expensive, it is up to 80% less expensive)
Here is an example: If you are paying more than 4.9 cents a minute for a full minute billing plan and paying 5.49 cents a minute to a six second billing carrier ( 6 second billing) it can be frequently more cost effective to use the 5.49 cent carrier due to the practice of rounding calls up to the next full minute. See all of our low cost, discount long distance rates, starting at about 4 cents a minute. Illustration.

Actual LD Carrier LD Carrier LD Carrier Amount Percentage

  • Actual call length 0.10 / cost at 4.9 cents per minute charge full minute = 0.05 / cost at 5.49 cents per minute charge 6 seconds = 0.01 / an overspend of 0.04 or 80%
  • Actual call length 0.30 / cost at 4.9 cents per minute charge full minute = 0.05 / cost at 5.49 cents per minute charge 6 seconds = 0.02 / an overspend of 0.03 or 60%
  • Actual call length 0.50 / cost at 4.9 cents per minute charge full minute = 0.05 / cost at 5.49 cents per minute charge 6 seconds = 0.03 / an overspend of 0.02 or 40%
  • Actual call length 0.80 / cost at 4.9 cents per minute charge full minute = 0.05 / cost at 5.49 cents per minute charge 6 seconds = 0.05 / no difference
  • Actual call length 1.00 / cost at 4.9 cents per minute charge full minute = 0.05 / cost at 5.49 cents per minute charge 6 seconds = 0.06 / a saving of 0.01 or 20%

WHERE CAN I RECEIVE THE BEST RATES? (Everyone advertises low prices, who really has the lowest rates?)
There are two answers to this questions: It depends and it depends. First, if you deal direct, most major carrier plans, especially for residential or small business, offer little or no discount to the end user. Even if you examine one of AT&T’s lowest rate plans, you may find it has full minute billing, a $4.95 monthly fee and is only good for six months before the price increases. By comparing your rates to rates offered by brokers and resellers, you can typically achieve a 20-50% savings over carrier direct pricing. Because there are hundreds of resellers, the questions now become: How hard do you want to shop? How much analysis do you want to do? How does the new carrier compare in price, in service? How do your find Resellers? Don’t plan on receiving your best offer by dealing with the major carriers directly, at least initially.

The second answer is that “it depends” on your specific calling pattern. For example. I recently had an auto dealership that spent 95% of its long distance charges in the state, and the rest interstate. They could have chosen a 5.9 CPM interstate plan for their business, but that plan had an 8.8 in-state rate. A slightly higher (6.9) interstate rate plan bit with a 5.0 intrastate rate, maximizes their savings according to their specific calling patterns.

Sprint, MCI and AT&T offer basic rates in the 8 to 30 cent per minute range. And if you don’t ask, or know to ask, you get the basic (FULL) price. A typical, well managed company pays 7-12 cents a minute for its long distance calls, generally higher on the AT&T network. They achieve this through negotiation, group discounts or purchasing through a reseller.

Tip: Price a reseller and then compare it the carrier. Check to see if you belong to an organization that has negotiated a special rate with a carrier (then see if it is still more cost effective than a Reseller).

Go to Frequently Asked Questions – Part 2