News: Analysis & Commentary
IS MCI PLAYING FAST AND LOOSE WITH 800 NUMBERS?
Have you seen the TV ads for MCI's new 1-800-CALL-INFO service offering nationwide telephone directory assistance? You don't need to know the area code of the number you're looking for, and it costs just 75 cents, the same rate AT&T charges for its 555-1212 long-distance directory assistance.
Sounds great, except that the whole idea of a pay-per-call 800 service is giving marketers the willies. "800 is supposed to be synonymous with free," says Dianne Wynne, telecommunications vice-president at Charles Schwab Corp., which receives 76 million 800 calls a year. Schwab and other heavy 800 users worry that MCI Communications Corp.'s scheme will confuse their customers, who may make fewer 800 calls as a result. "If some are charging for 800 numbers and some not, customers will have a hard time identifying which 800 numbers they'll have to pay for," says Joan Conlin, director of customer services at catalog retailer Lands' End Inc.
MCI notes that it is not charging for the 800 call itself, but rather for the service it is providing--a subtle distinction, but technically correct. "The 800 number is toll-free, and it should remain toll-free," says Patricia K. Proferes, who heads the new service for MCI. Operators and print and TV ads inform callers that the service itself costs 75 cents.
But some students of consumer behavior doubt callers will get the idea. Clay Timon, who as chief executive of Landor Associates in San Francisco advises corporations on creating and managing brand images, argues that customers will simply assume they were charged for the call itself. "All you need to do is to be burned once or twice on something that should be free, and it will make you reluctant to use 800 numbers again," Timon says.
Federal legislation in 1992 sought to make a clearer distinction between 800 numbers and 900 pay calls by setting strict guidelines on what services could be sold over an 800 line. Basically, they require a "preexisting agreement" between the caller and the company. The phone industry and the Federal Communications Commission are trying to stop operators of phone-porn lines who are exploiting loopholes in that law to use 800 numbers and bypass restrictions on 900 services.
UNDER REVIEW. MCI says the language in the 1992 law does not prohibit its new service. AT&T begs to differ. It recently filed a complaint with the FCC seeking to strip the 800 number from the MCI service. That's not surprising. MCI says the long-distance directory-assistance business is $1 billion a year and growing 10% a year--and a big chunk of it belongs to AT&T. The FCC agreed to review the MCI service. "We want to protect the integrity of the 800 number," an FCC spokeswoman says.
MCI also hopes to boost its own long-distance business. Its directory-assistance customers are asked if they'd like to have their calls automatically dialed for them for free--calls that are routed through MCI lines at "MCI's low rates." The rate that was quoted to a BUSINESS WEEK reporter, though, was 29% higher than it would have cost to dial the call through his personal MCI long-distance plan. And in a BUSINESS WEEK test, MCI operators took almost five times as long as AT&T's to locate a residential listing (table). If the 75 cents charge doesn't derail CALL-INFO, the glitches might.Russell Mitchell in San Francisco, with Mark Lewyn in Washington and bureau reports