cyberspacial musings
bits about the real and virtual worlds

16 Apr

MCI’s Flat Rate Service

The Washington Post reported today that MCI was starting flat rate “all-distance” service. This is probably one of the most significant attacks in the great long distance/local carrier wars. MCI is essentially offering flat rate service for everything — local, long distance, voicemail, caller ID, three-way calling, and speed dialing. I priced it out for Virginia at $55.99 per month. This has got to be a crush to many of the smaller long distance carriers who have been competing on a per minute basis. While not everyone needs that much long distance, this should still offer a significant savings for most people. It will likely encourage more long distance land line use, which over the last few years has been whittled away by some of the cellular carriers. It will also help MCI predict its profits more easily — supply and demand will be based almost entirely on subscribers, not how many calls someone makes.

This is terrific for the consumer — probably the best thing to happen since the Ma Bell broke up years ago. It won’t be long before virtually all of the carriers are competing on the basis of monthly subscribers instead of price per call. I’m likely to switch over to the service after a conversation with them (there are one or two calling features that I need to see if they support). Obviously if you don’t use long distance or any of these features, then you should think twice — the key to flat rate pricing is a cost comparison. Make sure that you are spending more on the average for per call billing than you would be for flat rate service.

This approach is a sharp contrast to the way things have been moving in the rest of the world. The customer base elsewhere has continued to work on a “by-the-drink” basis — each call is still billed for cellular and land calls. I don’t expect to see that change quickly — the US is one of the few places where so many people prefer flat rate, “all-you-can-drink” pricing, that it’s hard to compete otherwise. Maybe it’s the consumption mindset of Americans — we don’t want to itemize that which we consume — it’s much more entertaining to go to the all you can eat buffet.

MCI continues that trend with this new plan. Look for AT&T, Verizon, SBC, and others to follow suit soon.

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