It was a television ad that gave AT&T its first--of many--bloody noses.

On March 17, 1980, an MCI commercial hit consumers--and AT&T--where they felt it most: the wallet. The split screen ad showed one person making a call on AT&T and another making a call on MCI. Meters at the bottom of the screen showed how much each call cost. When the callers hung up and the meters stopped ticking, it was clear that the MCI caller paid less. For the first time, AT&T customers began to wonder: what gives?

Last year, MCI and Sprint both ganged up on American Telephone & Telegraph two days after a computer snafu paralyzed air traffic in New York and disrupted long-distance calls nationally. One MCI print ad featured its five-digit access code across a full page in the Wall Street Journal. "Remember this number the next time AT&T's system goes down," it said.

In American advertising history, perhaps nothing else compares to the fiery marketing battles being waged today by the long-distance phone carriers. Marketing experts say the strategy has been elevated to extremely complex--if not desperate--levels never seen on Madison Avenue. "The game is no longer to reach out and touch someone," said Sam Craig, marketing department chairman at New York University. "It's to reach out and grab someone."

What's more, the amount of money spent on the long-distance ad campaigns is staggering: nearly $1 billion by the three major carriers last year. At stake is each carrier's share in the $56-billion long-distance industry. And with slow growth predicted in the future, each carrier is maneuvering for anything that can bump up market share.

What makes the phone campaigns so unique isn't just the amount of money that goes into them, but the intricate layers of strategy behind them. "If the brainpower that goes into long-distance advertising was to be suddenly redirected toward solving some real problem, like a cure for cancer, I'm embarrassed to say we might be well on our way toward licking the disease," said a senior marketing official for one of the Big Three long-distance carriers.

Behind all of the industry's name-calling and fact-stretching are three distinct marketing campaigns that have evolved into something more akin to the dirtiest of political battles. "It's very much like a political campaign," said Thomas Messner, founding partner of MCI's New York agency, Messner Vetere Berger Carey Schmetterer. "Except this campaign never ends."