By John Burgess
No journalist likes confessing that a previous piece of writing told less than the full story, especially when the omission meant that money flowed from his or her own pocket.
Make that my own pocket. To explain: A while back I wrote in this space about the wonders of the low-cost international phone call. I vas spending some time in London and, having lived abroad in the days when a call home was a costly luxury that took hours, even days to set up, I couldn’t get over how cheap and easy things were now. With an MCI Communications Corp. international calling plan, I could call my family here for 12 cents a minute.
All I had to do was dial a toll-free number in Britain, enter my MCI credit-card number and dial my home number. Back here my wife could get that 12-cent rate too, calling direct from home to any number in Britain or using the credit card from any other U.S. phone.
New technology and deregulation are driving prices down through the floor, I wrote. All of which was true. But then my wife and I were talking family finances on a transatlantic line one day and it turned out there were some unpleasant numbers in the phone bill that recently had arrived. A 16-minute call I made with our card from London to my brother in upstate New York cost $27.84. A one-minute call from London to my brother-in-law’s place in Florida cost $5.04. The list went on. What’s going on? she asked.
Surely there’s a mistake, I replied. So I called MCI customer service. After several conversations with people at the company, I learned there wasn’t a mistake. According to MCI, if you’re on their international plan and use your MCI card in Britain to call a number in the United States other than your home number, you pay a $3.49 surcharge for each call, $2.05 for the first minute and $1.52 for each additional minute.
In other words, you can pay up to 46 times as much for a call going in one direction across the ocean as in the other. That’s the extreme example, the one-minute call. A 15-minute call works out at about $1.79 a minute, or a mere 15 times higher than the 12-cent rate.
Clearly, new technology is not the only thing helping MCI to price some calls at 12 cents a minute. MCI — in fairness, many other long-distance companies, too — is hanging onto high prices when it can and is using them to offset the low prices to which they give so much publicity.
With its One Rate Global plan, AT&T charges 14 cents a minute if you call your home number from Britain, but hits you with heavy charges like MCI’s if you call any other U.S. number. AT&T does offer 14-cent calling to any number from Britain if you’re a member of its Easy Reach 500 plan, which carries a monthly fee of $7.95.
Of course, I can only blame myself for the surprise I felt. The smart consumer (and reporter) confirms everything. I knew in the dark reaches of my mind that the 12-cent rate applied only to calls to my home number. Dialing others, I imagined, might cost 35 or maybe even 50 cents a minute. But $5? It never occurred to me.
After the bill was paid I got on the phone in Washington to determine why there is such a big discrepancy.
First of all, in these day of deregulation, there is no federal regulator approving the rates. Documents detailing what is charged are filed at the Federal Communications Commission as a matter of public record, but the FCC has no authority to accept or reject them.
Second, the cost to the long-distance company of carrying a credit card call from Britain to the United States is not substantially different than the cost of carrying it in the other direction. According to the FCC, MCI has to pay a phone company in Britain a surcharge of 3 cents to 13 cents for each credit card call originating there, but that’s it.
In talking with MCI’s people, I heard a lot about what a great deal the 12-cent rate was and how so many calls are to the home number. But why the discrepancy on those credit card calls, I asked? “A competitive marketplace sets prices and this is what the competitive landscape has set as reasonable charges,” said MCI spokesman Brad Burns. That is, the question is how does the price and convenience compare with the other options open to an American traveling in Britain.
That person has no home phone there, so can’t sign up for direct dialing. It’s basically pay phones or calling from a hotel.
British Telecom charges a flat rate of about $1.22 a minute from pay phones, by coin or prepaid phone card, to the United States. That’s less than the MCI card. Hotels may be more expensive than the card, however: The fashionable Grosvenor House hotel in London, for example, charges about $20 for a two-minute call to the United States dialed from a room, with each subsequent minute billed at about $3.60.
For the price you pay, MCI gives you a security blanket — a wallet-sized card that tells you which toll-free access numbers to call in foreign countries and how to place a call. No need to learn how to use a local pay phone or talk to a foreign operator. These things rise in allure in a non-English speaking country. Plus you get the bill at home, rather than having to pay as you go.
But I’d guess that ignorance also has something to do with it. Long-distance companies get you to sign up on the strength of that good rate to your home. You pay the piper with the calls you make to other numbers back in the States. The rates for these calls are by no means widely publicized; I’d guess that most people don’t know how much they’re paying until they get the bill.
There’s a point I’ve made often in this column over the years, but it bears repetition: Developing a new technology often is simple compared with breaking through the very human barriers of money, custom and whim that so often prevent it from being applied in its purest way.
Anyway, if I go back to Britain, I’m going to get some coins for the pay phone.
John Burgess’s e-mail address is email@example.com
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