AT&T JUMPS IN WITH 7 CALL PLAN VS. MCI, SPRINT: PRICING CALLED CHEAPER OVERALL THAN RIVALS' 5 PER MINUTE RATES

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AT&T Corp. resurrected actor Paul Reiser last week in a new ad campaign to convince customers that 7 cents per minute is better than 5 cents per minute.

That may seem impossible. But this is long-distance pricing and nothing is as it seems.

Both MCI WorldCom and Sprint Corp. recently unveiled 5 cents per minute pricing for nights and weekends. However, AT&T wanted to offer one rate all the time, so it settled on 7 cents per minute.

AT&T realizes the problem it faces.

"We're up against the top-of-mind reaction of '7 cents, why not 5 cents?' Not everyone is going to be examining long-distance plans carefully," said an AT&T spokesman.

MATCH IF ASKED

He said that AT&T will match the competitors' offers if asked, but added that AT&T feels that customers would be losing out if they wanted the 5 cents at night deal, because 7 cents all the time comes out cheaper.

That's where the explanatory new ad campaign, created by Y&R Advertising, New York, comes in. AT&T wouldn't discuss budgets, but executives characterized the media spending as aggressive.

Some analysts believe that's necessary to convince customers.

"I think AT&T is underestimating how difficult this is going to be," said telecom consultant Jeffrey Kagan. "They're going to have to spend a lot of money."

AT&T holds a commanding 60% market share in the long-distance market; Nos. 2 and 3 MCI and Sprint have about 20% and 10% shares respectively.

This is not the first time AT&T has used a "simplification" tactic to sell its services, said Brian Adamik, senior VP at consultancy Yankee Group. When Sprint was making waves with its dime-a-minute (on nights and weekends) plan several years ago, AT&T came back with 15 cents per minute all the time.

They also did it when MCI was winning customers with its 20%-off Friends & Family plan in the early '80s. AT&T retaliated with a campaign offering 20% off all the time and claimed MCI only gave the 20% discount some of the time.

'NEUTRALIZE THE MESSAGE'

"AT&T is very good at surgically targeting its competition," Mr. Adamik said. "In this case, it's more important for AT&T to tarnish MCI and Sprint. I don't believe that they think in their heart of hearts that this will grow market share. But it will neutralize the 5 cents message."

AT&T announced at the same time a new wireless program called the Family Plan. Advertising from Foote, Cone & Belding, San Francisco, breaks this week. The Family Plan allows unlimited calls to five family members and a home number and

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