MCI TOUTS SUCCESS OF 10-321 SERVICE: CLAIMS SUBSIDIARY'S DIAL-AROUND ADS REACHING AT&T'S CUSTOMER BASE

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MCI Communications Corp.'s 10-321 service, aimed directly at AT&T's customer base, went national last week, and company executives are calling it the fastest-growing product MCI has ever introduced.

With 10-321, managed through MCI's wholly owned Telecom USA subsidiary, users dial the five digits to circumvent other long-distance providers.

Introduced in January, the service was available in 21 markets until last week. Actor John Lithgow became ad spokesman for the "Dial 10-321" campaign by Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York, in August.

"10-321 is succeeding 30% above our expectations," said John Donoghue, MCI VP-advertising. "Our research has shown us that more than 80% of 10-321 users subscribe to AT&T."

SAVINGS GUARANTEES

MCI guarantees a savings over AT&T's regular long-distance rates for short calls and 50% savings on calls longer than 20 minutes.

The company's original objective was to target the 40% of long-distance callers who had never switched carriers since the 1984 breakup of AT&T. The two goals were to tap into those revenues as well as stop AT&T from using that money to advertise against MCI, Mr. Donoghue said.

The service is supported by radio and TV, plus direct marketing.

About half of MCI's ad budget is in support of 10-321 and its 1-800-COLLECT service, said Mr. Donoghue. He declined to specify a budget, but last year MCI spent $333.5 million on media advertising, according to Competitive Media Reporting.

Because many of the target customers were also low spenders, getting them to switch directly to MCI was considered too expensive, Mr. Donoghue said. The average cost of switching a customer is $40; if a customer makes only $5 in long-distance calls, with half going to the local carrier and with billing expenses factored in, amortizing that $40 would take a long time.

REACHING AT&T CUSTOMERS

The 10-321 "dial around" service has served MCI well in getting those customers, he said.

Rival AT&T Corp. is not taking the challenge lying down. Recent AT&T TV spots featuring actor Paul Reiser cite 10-321 and say the 50% savings only comes after 20 minutes on the phone.

Foote, Cone & Belding, New York, handled that advertising.

While AT&T offers its own 1-800-DIAL-ATT service, it has no directly competitive five-digit "dial around" number.

"The biggest difference between our approach and MCI's approach," said an AT&T spokesman, "is we let customers know this is an AT&T product, whereas they, for reasons they can explain, don't tell people it's MCI."

Mr. Donoghue said in response that consumers aren't confused by the fact the service is run by Telecom USA, which, he said, is viewed as a big, reliable telecom company.

TELECOM OWNERSHIP

By law, MCI is technically not allowed to market the 10-321 five-digit code, which had originally been assigned to Telecom USA and which thus owns the 10-321 code.

MCI does not brand its 1-800-COLLECT service as MCI either, said Mr. Donoghue,

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