Long distance call

Just like landline calls, long-distance calls on cellular phones cost more than local calls. Long-distance charges on a wireless phone generally cost $0.10 to $0.25 per minute. The boundaries are different, however. Cellular home areas might be 10 times larger than a landline local calling area. A person calling from Vineland, New Jersey, to Philadelphia is subject to long-distance charges on a landline phone. Because both cities are in the same home area, a call on a mobile phone is treated as home airtime and is essentially a local call. But a cellular call from Vineland to Pittsburgh would be subject to long-distance charges in addition to home airtime charges.

Save money on wireless long distance
Cellular long distance is not as competitive as landline long distance, so callers do not have as many ways to cut the cost. Most users do have a few choices, however. First, call your carrier directly and ask for lower rates. Carriers usually have two or three different options. If you are still not satisfied, you can look into other long-distance carriers.

Many of the wireless carriers allow you to use a different company for landline long-distance. Your wireless provider can tell you which long-distance carriers are available. For example, Ameritech Cellular allows its Michigan customers to choose long-distance carriers such as WorldCom to carry the calls. If you already use WorldCom as your landline long-distance provider, your cellular long-distance charges can be billed on your long-distance bill.

Caller ID and calling party pays
Few things are more frustrating than having a phone solicitor call you on your cellular phone. They read their sales script to you, and you have to pay for the call. Most digital wireless phones are able to use caller ID. Your phone displays the number of the caller when your phone rings. If you do not recognize the phone number, you can refuse to answer the call. Screening out unwanted calls is the main purpose of caller ID. By avoiding these calls, you do not have to pay for them. Another way to reduce the cost of inbound calls is to use a fairly new feature called calling party pays.

Calling party pays is a so-called advanced feature, and wireless companies charge a monthly fee of $2 to $5 a month for this service. Once you have signed up for calling party pays, callers cannot reach you by directly dialing your number. If they dial your normal wireless phone number, they will hear a recording that explains that you have enrolled in a caller-pays program. In order to reach you, they must hang up and redial using:

1 + area code + your mobile number

The additional dialing is intended to tell callers this is like a long-distance call—they will pay for it. The caller is normally billed $0.25 a minute, and the charges appear on the caller’s local telephone bill.

Most businesses that use a lot of intracompany calling are better off without calling party pays. With the plan, their wireless bills are lower, but their local telephone bills will increase. With calling party pays, they pay $0.25 to call their own employees, who are in the field using wireless phones. If they cancel this plan, the call is billed on the wireless phone bill as home airtime. If the user has not exceeded the number of home airtime minutes included in the rate plan, the call is essentially free. Otherwise, the call will be billed under normal home airtime rates, which are always lower than calling-party-pays rates.

Full minutes or partial minutes
When shopping for a new wireless service provider, one should consider how the carrier bills the call time. Cellular calls have traditionally been billed in full-minute increments. A 2.5-minute call is billed as a 3-minute call. In the late 1990s, Nextel started billing in 1-second increments. The customer is only billed for two-and-a-half minutes for a 2.5-minute call. Most wireless phone calls are very brief, so the billing increment significantly impacts the actual monthly cost of a wireless phone.

Free first minutes
When PCS service was new, some carriers gave the first minute of a call at no charge. The free first minute was designed to stimulate more calling volume and, therefore, more revenue for the carriers. To find out the impact of the free first minute, simply look at the number of calls you made in a given month. The first minute of that call would have been free with a different carrier. Subtract the number of first minutes from your total airtime and recalculate the bill.

Free nights and weekends
Some carriers offer free nights and weekends for a flat fee of approximately $10 each month. Look at your call detail and add up the current cost of night and weekend calling. If it is regularly more than $10, you should sign up for this discount plan

Long-distance service

Long-distance service consists of three major service types: outbound, inbound, and calling cards. Outbound long distance is what most of us know as direct dial long distance. To complete the call, the caller dials

1 + area code + number

Inbound long distance, also known as toll-free service, refers to a caller dialing an 800 number to reach a business. It is a toll-free call for the caller; the toll shows up on the business’ long-distance bill. Since the finite number of 800 numbers is running out, new numbers such as 888 and 877 are now used for toll-free calling.

Calling cards are most frequently used by callers who are traveling. Rather than use coins in a payphone or cause a charge on a host’s long-distance bill, calling cards offer a caller convenience and itemized billing each month. The complex world of long-distance service is not as baffling if you understand these three categories of any long-distance calling.

How a calling card call works
Calling card long-distance rates are higher than outbound and inbound rates. The cost of a calling card call normally includes a surcharge in addition to the per-minute rate. The surcharge may be as little as $0.15 per call or as much as $2.50 per call for some older cards still in circulation. The surcharge is designed to cover the cost of setting up the call.

During the past few years, the trend is that surcharges are lower or not charged at all. A business today must choose between cards with low rates that have a surcharge, or flat-rate cards that have no surcharge. In general, a business that makes very brief calling card calls should use a flat-rate card. Businesses that make long calls are probably better off with a traditional card that charges a surcharge. On a typical AT&T pricing plan, the surcharge of $0.35 and the cost per minute is the same as the direct dial outbound rate.

Use a discount carrier
The simplest way to cut your costs associated with calling cards is to switch to a discount carrier that specializes in the service. These niche carriers, such as VoiceNet, offer calling card rates that are usually lower than full-service carriers’ rates. VoiceNet advertises heavily in in-flight magazines and uses a wide network of independent sales agents. VoiceNet’s current program is a flat rate $0.149 card with no surcharge, which is one of the lowest rates in the industry.

Occasionally, other discount calling card providers spring up with rates that sound too good to be true. Be careful about doing business with these companies because their actual billed rates may be higher than their actual rates. When choosing a discount carrier, choose a stable carrier that has been in business for more than 2 years.

Once you have chosen the discount long-distance carrier for your calling cards, you should compare the cost. Normally, you can give your current calling card bill to the sales representative who will analyze it and offer a cost comparison. It is a good idea to then do your own comparison.

Prepaid cards
Prepaid calling cards are very lucrative for carriers, which is why they can afford to give them away as gifts so often. These cards are so lucrative because carriers get the revenue from the customer before they actually provide the service. In many cases, the carrier never does provide the service. Calling cards expire, and many are thrown away when they only have a couple of minutes remaining.

Most businesses should stay away from prepaid cards because they hurt cash flows and are difficult to manage. The expense of paying for calling cards before you use them shows up in the company’s books at least 2 months before it would have shown up with traditional pay-after-you-use-them cards. Keeping track of employees who use calling cards is another drawback of prepaid cards. Once the cards are issued, you never know how much they are used because the carrier will not send you a bill that shows the usage.

If you are willing to keep track of all the users yourself, then prepaid cards may be for you. For businesses that use temporary employees or fear their employees will fraudulently use calling cards, then prepaid cards may be the best option.

A few carriers offer a rechargeable prepaid card. ATX, a regional longdistance carrier in the Pennsylvania area, offers a superior rechargeable prepaid card. With rechargeable cards from ATX, a manager can issue cards to traveling employees with a limit, such as $50 per month. If the employee tries to make more calls, he has to call the home office and ask the manager to recharge the card. Rechargeable prepaid cards are very successful in limiting employee abuse and fraud.

Once a perpetrator obtains your calling card number and PIN, he can rack up thousands of dollars in fraudulent billing in just a few days. Using rechargeable prepaid calling cards that have a limit will minimize your risk of being defrauded.

Long distance is now a commodity

Companies that built their own telecommunications networks such as Sprint and MCI began to win market share from AT&T. Hundreds of longdistance resellers also entered the foray. Long Distance Discount Savers was one such company. Later known as LDDS and then as WorldCom, this tiny Mississippi company soon became one of the most dominant telecommunications providers in the world in less than a decade. The 100-year dominant reign of AT&T was definitely over.

Residential and business customers now have more choices than ever for their long-distance service. Over the years, customers have left AT&T for a variety of reasons. Some prefer the more personal service smaller carriers offer. Some left because they think calls may be clearer on another carrier’s network. However, most left AT&T because they have found lower prices elsewhere.

Most industry insiders agree with the statement “long distance is now a commodity.” What they are really saying is that the service the end user receives does not vary from carrier to carrier. The sound quality of a longdistance phone call is so clear now that end users rarely experience any problems when making a long-distance call.

The core issues that separate one long-distance provider from another in today’s marketplace are advanced features, customer service, pricing, billing, and technical support. These are the issues that heavily influence telecom managers and corporate controllers today when negotiating new service with a long-distance provider.

Businesspeople in charge of managing their telecommunications services are under pressure from within their organization to ensure three things:

- Secure customized long-distance service that meets the specific needs of the organization.

- Choose a carrier that will not allow any service outages.

- Secure the lowest pricing available in the industry.

How does a long-distance call work?

Standard phone lines connect an end user to the local phone company’s central office. The central office computer, called a switch, interprets the numbers dialed and then routes the call to its next destination.


How a long-distance call works.
When the central office detects that “1 + area code” has been dialed and determines the call is to another LATA, it knows the call must be handed off to the long-distance carrier. The central office computer then queries a database to find out which long-distance carrier has been selected for the line. The PIC code is used by the local telephone company’s computers to keep track of a customer’s chosen long-distance carrier. Appendix 10B lists the most commonly used PIC codes.

Once the central office computer determines that the call will terminate outside the LATA, it connects the call to the caller’s chosen long-distance carrier. Although the switching equipment at the local carrier’s central office may be exactly the same as the long-distance carrier’s central office, the long-distance carrier’s central office is almost always called a point of presence. That term refers to the fact that the local carrier has a complete phone network within the LATA, while long-distance carriers only have limited network points within the LATA.

When a caller needs to make a long-distance call, the local exchange carrier’s central office directs the call to the nearest point of presence so the call can then be carried by the long-distance carrier. At the terminating end of the call, the long-distance carrier connects to the local carrier’s central office that serves the person being called.

These multiple interconnections and handoffs between central offices take place within milliseconds. The whole process is seamless to the end user, except for the occasional faint clicking sound that may be the result of antiquated equipment in an older central office.

Long-distance calls on local bills

During the past few years, local phone bills have become like credit card accounts. A host of services can be billed on the last pages of your local phone bill, including charges for long distance, 900 calls, collect calls, Internet charges, and miscellaneous fees. Sometimes these charges are legitimate—but often they are fraudulent; and they are always expensive. Regardless of why the charges were billed, a business can always reduce this expense, or eliminate it altogether.

Local telephone companies allow other carriers to tack their charges onto your local bill because they keep a percentage of the charges. Other companies do not mind paying this commission because local carriers collect the money for them. It is a win-win situation for both companies, but not for the customer. The average customer does not question any charges on the local bill. She sees it as an “assumed cost” and pays the bill each month. Even if a customer suspects that the bill is incorrect, he will still pay it, rather than risk having his local service disconnected. In truth, however, local carriers will not disconnect a customer’s service for withholding payment for another company’s charges.

Loose traffic
Loose traffic is a term widely used by AT&T referring to long-distance traffic billing on a local bill, instead of on the master long-distance account. Loose traffic usually bills on the back pages of the local bill or on a separate long-distance bill. Other terms for loose traffic are casual calling, random billing, thrifty billing, or LEC-billed traffic.

Besides the confusing and annoying arrangement of receiving two bills for long distance, the real problem with loose traffic is that it is very expensive. I have seen domestic long-distance rates as high as $7 per minute, but a typical rate is about $0.30 per minute.

Long-distance rates are based on this formula:

gross rate - discount = net rate

Loose traffic rates are high because the calls get no discount. Customers end up being charged the gross rate, also known as the tariff rate. Table 8.1 compares the high cost of loose traffic to the cost of long distance correctly billed on a long-distance bill. The figures are based on the sample phone bill in Chapter 4. Telecom consultants commonly use this format; notice the additional savings attributed to having calls billed in 6-second increments instead of full-minute increments.