Press Release August 9, 1999	Contact: Olivia Wein/David Butler (202) 462-6262 Consumers Union Washington, DC Office

WASHINGTON, D.C. - Consumers should be wary of the pennies-per-minute plans being offered by long-distance telephone service companies, according to Consumers Union, the nonprofit consumer organization that publishes Consumer Reports magazine.

Consumers Union says the new five-cents-a-minute plan offered by MCI Worldcom and similar plans offered by AT&T, Sprint, and other long-distance companies share a major drawback for consumers: The typical consumer does not make enough long-distance calls to save money once the extra costs of monthly fees and service charges are added to the bill.

Consumers Union says the Federal Communications Commission has neglected low-volume users by failing to ensure that long-distance carriers pass their savings to consumers.

"Federal regulations have saved the long-distance companies two-and-a-half billion dollars over the last two years, but those savings are not being reflected in the typical consumer's bill," said Olivia Wein, an economic justice fellow at Consumers Union's Washington DC office. "People who make fewer long-distance calls are getting the short end of the stick in today's market. If you fall into the bottom half of the market, you probably aren't saving money on your bill compared to two years ago. In fact, you could very well be paying more. That's because of the new fees and surcharges tacked onto your bill."

Wein says the pennies-per-minute plans may sound like terrific deals at first - but take a closer look:

The new MCI 5-Cent Everyday has a monthly fee of $1.95 and a weekday rate $.25 cents a minute. However, if you only make 30 minutes of calls in a month (at the 5 cent/minute rate), your rate is not $3.45 ($1.95 monthly fee plus $1.50 in long distance usage) - it's $5.00. This plan, like so many these days, has a $5.00 monthly minimum. Once you add the service charges and access fees, you are paying about $6.82 for 30 minutes of calling during the nickel-a-minute rate. That's closer to 24 cents a minute.

"Long distance companies are charging you anywhere from $5.50 and up every month before you make your first call," said Wein. "Most consumers don't make enough long-distance calls to offset these charges. This why we have asked the FCC to act so that all consumers receive their fair share of the savings enjoyed by the long-distance carriers. The fact that so many consumers are actually pay more under these plans shows that the FCC has failed to do it job in managing deregulation and making sure consumers get a fair deal."