By Published on .

It was a costly detour, but long-distance marketers are returning to traditional brand-building efforts after 18 months of running up enormous ad spending on a bevy of alternative, "dial-around" services.

The return to basics comes as a few new key players like Qwest Communications International boost spending. This foreshadows rising competition in the $80 billion overall long-distance market, split about evenly between consumer and business.


When local and regional telecommunications companies start to offer long-distance services and long-distance providers move into local markets, they will look more and more alike. "When that happens, the brand will be a key differentiator," says Jeffrey Kagan, an Atlanta-based telecommunications industry analyst.

AT&T Corp., MCI WorldCom and Sprint Corp. are already pouring millions into advertising campaigns aimed at rebuilding loyalty, unifying long-distance, intra-state, digital cellular and Internet services in images rooted in reliability, service and value.

But the recent foray into dial-around services shows how quickly a new service can grab the marketing spotlight.

The dial-arounds began in 1997 when small, nimble players marketed discount long-distance services, urging callers to bypass direct-dial brand carriers by dialing multi-digit codes. A cacophony of 30-second TV spots used imagination-stretching gimmicks to get people to remember one set of dial-around numbers over another.

MCI WorldCom quickly amassed its own suite of dial-arounds, spending $274 million on three services -- 10/10/220, 10/10/321, and 10/10/9000, a dial-around directory service.

A battery of other companies plied their dial-around wares, but Sprint, the nation's No. 3 consumer long-distance marketer, opted to skip the battle after briefly testing a dial-around.


AT&T stood still for months before launching in October its 10/10/345 service that it branded Lucky Dog Phone Co. AT&T backed Lucky Dog with $26.8 million in media in the fourth quarter, 1998.

"AT&T used its traditional strategy of killing the market by participation; when the market leader came in with huge spending power, it effectively neutralized the dial-around market," says Brian Adamik, a telecommunications analyst and senior VP at Boston-based Yankee Group.

Dial-around services are still alive, but the long-distance industry has metamorphosed yet again. The new direction began this year when MCI WorldCom and Sprint offered nickel-a-minute deals at selected times to get consumers interested in switching carriers again.

MCI WorldCom debuted five-cent Sundays last spring; Sprint followed in June with "Nickel Nights," giving consumers the five-cent minute rate on nights and weekends as long as they paid regular rates, averaging 10 cents a minute, during regular hours.

Sprint claims its unwavering commitment to offering consumer value has built strong loyalty among its customers: "We made the decision we shouldn't pretend to be someone else and offer 10-10 numbers; we only want to give people good value and we feel it's paid off," says Greg Field, director of domestic marketing.


Sprint's move propelled MCI WorldCom to expand its own deal in August, extending the nickel-a-minute rates from Sundays to week nights and weekends using network TV spots with spokesman Michael Jordan.

AT&T reacted late last month with its new One Rate 7 Cents plan, in which consumers pay $5.95 a month or switch to AT&T for intra-state calling and pay $4.95 to get the new lower rate 24 hours a day.

The Big 3 aren't alone in these deals. IDT Corp. is preparing a 5 cents a minute at any time plan with a flat monthly fee of $3.95, and Qwest offers a flat-rate, 5-cent plan that carries a $9.99 monthly fee that must be charged to a credit card.


Analysts say the five-cent wars have kicked the long-distance industry back to life, while driving ad efforts toward brand building. "All this advertising by the big three hasn't really changed the market-share dynamics," Mr. Kagan says.

Although long-distance marketers say they have high hopes for offering bundled (cellular, Internet and local plus intra-state) services in the near future, so far efforts to convince consumers to opt for one plan for all services, like AT&T's Personal Network, have not clicked.

"Bundling doesn't work because there is no streamlined package that serves everyone's needs yet; until AT&T figures out a better way to bundle its services it won't be spending a lot of money promoting its Personal Network," contends

Most Popular
In this article: