With the heightened competition comes a wave of aggressive new advertising, as growth finally begins to slow in the booming $70 billion market.
"This is going to be one of the most intense years for telecommunications advertising warfare yet, with growth slowing and each marketer sending forth new programs to keep consumers off guard," said Jeffrey Kagan, president of Atlanta-based Kagan Telecom Associates.
Penny-conscious consumers certainly must turn to their calculators now to determine which program offers the best savings. Mr. Kagan said No. 2 MCI Communications Corp.'s newest rates are the lowest in many cases. However, a caller can get the best deal of all by using No. 3 Sprint and dialing someone at least 2,000 miles away late at night. Yet, AT&T offers the best loyalty rewards programs.
"It's clearly a war of confusion," Mr. Kagan said, "and advertising is the weapon."
The latest shake-ups began when MCI announced Friends & Family Connections early this month, offering consumers high tech products packaged with long-distance savings. Including a new discount calling program called New Friends & Family, the effort is backed by a $5 million network TV campaign created by Messner Vetere Berger McNamee Schmetterer/Euro RSCG, New York.
MCI's new deal gives consumers who spend at least $10 monthly on long-distance a 25% savings off basic rates, resembling AT&T's True USA offering a 20% discount for regular spending plus the option of logging frequent flier points through long-distance calling. MCI one-ups AT&T by giving New Friends & Family members a deep discount of 50% when dialing another MCI customer.
Enter Sprint Sense, a flat-rate savings program introduced Jan. 9 charging customers an ultra-steep daytime rate of 22cents per minute. It's offset by a bargain 10cents per minute between 7 p.m. and 7 a.m., when Sprint says most consumers make their calls. The twist: The rate applies regardless of where you call in the U.S. J. Walter Thompson USA, San Francisco, is supplying four 30-second spots.
Sprint is sweetening the deal by offering Sprint Sense free for its first 90 days; afterward, users will be assessed a $3 monthly fee if they spend less than $10 on long-distance calls.
AT&T's True push continues in network spots from FCB/Leber Katz Partners, New York.