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AT&T has lost another battle in its war with MCI Communications Corp.

AT&T has made the surprising decision to surrender the fight against 1-800-COLLECT, the long-distance discount collect calling brand that MCI introduced last May.

Saying consumers were "confused and angry" by dueling collect calling services, No. 1 AT&T said last week it has pulled the plug on 1-800-OPERATOR, the copycat service brought out six weeks after 1-800-COLLECT.

The move comes just a few months after another expensive marketing misstep-AT&T's decision to kill its "i plan." The latest action suggests continuing chaos in the marketing department of the company's consumer long-distance sector.

And it has also given MCI cause to claim complete victory in the $3 billion collect calling segment.

AT&T spent as much as $10 million on multimedia advertising through Young & Rubicam, New York, for 1-800-OPERATOR since introducing it in July. Some of the costly spots even featured film director and actor Spike Lee.

Now AT&T says it's returning to using 1-800-CALL-ATT as an umbrella for its collect calling and calling card services, starting with a 30-second network TV spot that broke last week from N W Ayer, one of five AT&T agencies.

Ironically, the spot creates even more confusion. The commercial opens by using both the 1-800-COLLECT and 1-800-OPERATOR logos to show a young woman becoming exasperated by all the choices, finally opting for 1-800-CALL-ATT.

"We think it's really rather odd that AT&T is actually promoting our brand in this new TV spot," said Patty Proferes, MCI's director of 1-800-COLLECT.

But analysts say AT&T's latest about-face is a sign it's getting back on track and recognizing the strength of its core brand.

"They're finally waking up to the fact that the long-distance industry is a marketing business, not a technology business. AT&T's brand may be the most important thing going for it, and they're smart to rediscover that," said Craig W. Ellis, a telecommunications analyst with Wheat First Butcher & Singer, Richmond, Va.

MCI cut through the competition clutter in the $65 billion long-distance industry last year. As it created Friends & Family for discount calling plans, MCI developed 1-800-COLLECT as a stand-alone brand to target mobile, young consumers-without any mention of MCI.

Backed by an estimated $10 million to $15 million campaign from Messner Vetere Berger McNamee Schmetter/Euro RSCG, New York, MCI said it has grabbed "the majority" of the collect calling market.

AT&T thought it could do the same by offering similar collect calling discounts with 1-800-OPERATOR. However, consumers couldn't differentiate between the two services, AT&T said.

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