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Vigilance Will Be Vital When Phone Changes Start

Telecom: Confusion is expected to reign as carriers go after big businesses first.


When Congress passed a landmark telecommunications reform law in February, lawmakers promised it would bring a host of new choices and lower rates in a broad range of communications services.

Already, about 60 companies have gained California Public Utilities Commission approval to sell local phone service--thus promising to bring the kind of competition to that market that already exists in the long-distance business.

But small-business owners in particular will have to be vigilant if they want to take full advantage of the newly competitive environment. Confusion will reign for some time as giants such as Pacific Bell and AT&T Corp. as well as dozens of unknown newcomers begin offering an array of special packages and highly conditional discounts.

Consultants say you should forget about big price cuts for the moment. Moreover, most small businesses and consumers will probably have to wait awhile before they have many meaningful alternatives for local service.

"The carriers are going to go after the bigger businesses first," said Robert Wolf, principal consultant at Millennium Telecom of Glendale. "People who have more volume get better rates already. But people in home offices with one or two lines probably will not see a significant impact initially."

Here are a few tips on surviving the new telecommunications regime:

* Know thyself. Before you do anything else, sit down with a stack of your recent phone bills--at least three or four months' worth. Study your calling patterns. Do you find yourself making a lot of quick local calls? Or do you spend more time yakking with folks in Yakima?

Categorize your calls as local (those within a 12-mile radius of home), local toll (regional calls outside the 12-mile radius) and long-distance. How many calls were made using calling cards, which typically carry a convenience surcharge over and above the usage rates?

Most important, figure out how much you're paying per minute of usage. This will be critical in deciding what to do next.

* Cut to the chase. Starting late summer or early fall, your mail is going to be chock-full of letters promising "40% off your phone bill!" or some such deal. Take it all with a grain of salt. What the copywriters are likely to mean is 40% off a competitor's highest rates, which won't take into account calling plans or discounts you may already get.

Instead, ask the company for its per-minute charges on the kinds of calls you typically make. This should be an exact figure for both local and long-distance calls. Compare it with what you currently pay. If the company hedges, move on.

* Ask about service. Some of the carriers may offer great service plans. Others may not care if your line sounds like two paper cups joined by waxy string. The important thing is to ask what happens when you have a problem.

Of course, they're probably going to promise they'll take care of you. But nailing down some specifics will help. How long has the company been in business? If it's a reseller, from which phone company was the service bought? What's the charge for service repairs? What's the accuracy rate for billing? Is billing done in-house or contracted out?

* Read the fine print. As credit card users know, marketers never hesitate to offer "special rates" if that gets you to sign up for a product. The problem is that you're often stuck with something that in the long term costs more than you thought it would.

The brave new world of telecommunications is no different. Many companies will ply "promotional" rates that are really sucker deals for unwary consumers. For instance, three months of half-priced calling won't do you much good if the regular prices are higher than everyone else's.

Also look for hidden conditions and fees. Some companies may have legitimately low usage rates but make the money up in other ways, such as high calling card surcharges. Others may tout discounts that apply to hours and days when you seldom use the phone.

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