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Long-Distance Gouging Alleged

March 13, 2002
Price-gouging isn't a term we normally associate with long-distance service. But the vast differences in AT&T's call pricing suggest something best described as either gouging or scalping.

10 Mins To Hong Kong
Standard Plan	$38.47
10-10-345	$1.15
Differential	3,300%

For example, look at the variance between AT&T's basic plan, standard rates and AT&T's 10-10-345 service. Calling Hong Kong for 10 minutes costs $1.15 with 10-10-345 and $38.47 at basic standard rates (including 11.5% Universal Service charge on new rates effective April 1st).

Similar AT&T discrepancies are found elsewhere.

Some might point out that the "basic" rate is for consumers who do not sign up for a discount plan. Yet AT&T's own 10-10-345 does not require any commitment or registration to use.

Other casual user dial-around codes with rates as good or better than 10-10-345 include 10-10-629 by WorldxChange and 101-6868 by Pt-1. However, many consumers are not using the lower cost options. Industry data shows that one-third of households using their regular residential carrier to make international calls paid basic rates.

"Consumers need to be aware of the 10-10 codes and how to access cheap international rates on the fly," says consumer advocate Rich Sayers of comparison site 10-10PhoneRates.com. "Whether they make occasional calls to other countries or run into a one-time emergency need, the savings can be huge."

It's also important to know the difference between calling a land-line phone and a mobile phone overseas. Phone companies often have to pay more to complete calls to mobile phones, and increasingly are passing along these costs to the consumer.

The Federal Communications Commission (FCC) has recognized the bipolar nature of international long-distance rates. An October 2001 FCC report notes that residential basic rates went up 28% between 1997 and 2000. Over the same four years, the average price of all international calls for residential users decreased by 30%.

An FCC economist notes, "All consumers, whether high volume users, or occasional callers, have an alternative to basic rates. An occasional caller can use dial-around and get a low rate without paying a monthly fee."

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