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Amid Intense Competition, AT&T, Sprint Unveil Calling Plans in North Carolina

Posted on: Friday, 9 January 2004, 06:00 CST

Jan. 9--AT&T and Sprint introduced new calling options in the state Thursday, bolstering efforts to attract and retain customers as telephone competition intensifies.

AT&T began selling local service to North Carolina consumers traditionally served by BellSouth, including those in Raleigh. Sprint started a plan with unlimited local and long distance calls, its first such offering to the 1.5 million local phone customers it serves in the state.

Their action comes as rivals erode the market of the historic heavyweights. Twenty years after the breakup of American Telephone and Telegraph Co. defined local and long distance companies, distinctions between carriers have crumbled.

Long distance service has become a low-cost commodity, forcing companies such as AT&T and MCI to sell local service to stay viable.

BellSouth and other large local phone companies, losing subscribers to those rivals and mobile-phone companies, have introduced packages with long distance, mobile and high-speed Internet service to compete.

Alternative companies such as Vonage of New Jersey and Time Warner Cable transmit phone calls more cheaply using Internet-based technology, further disrupting the market. They're prompting phone carriers to expand bundled packages to include television service and, eventually, analysts say, lower-priced calling.

"Consumers are going to start moving toward providers that offer service the way they want it," said Kate Griffin, a senior analyst with the Yankee Group, a market research firm, in Boston. "If you aren't offering a bundle, you're going to continue to be eaten away" as customers switch to companies that sell all services.

Phone competition has been slower to take hold in North Carolina than in other parts of the country. As of June 2003, about 9 percent of telephone lines in the state were served by rivals of the dominant local-phone companies. The figures are the most recent available from the Federal Communications Commission. The amount is below the national rate of 15 percent and far below the rate in New York, for example, where rivals had 28 percent of the market.

Even so, North Carolina consumers are seeing options expand. Time Warner Cable this month will begin selling phone service in Cary. It plans to expand the offering across the Triangle this year.

Subscribers in BellSouth's territory, which includes Raleigh and Chapel Hill, have seen their choices flourish most. Companies such as MCI and ITC-DeltaCom, which bought BTI of Raleigh last year, have targeted its customers first. They lease pieces of BellSouth's network to operate.

AT&T is using the same model. Among its products is a package of unlimited local and long distance service, plus a choice of features including caller ID for $54.95 per month. BellSouth charges $54.99 for a similar plan. AT&T has signed up 3.8 million customers in 27 states with its local-phone offers.

It won't soon pitch its local service to consumers in Sprint's territory, which includes Clayton, Fayetteville and most of Eastern North Carolina. It says Sprint's network lease rates are too high in the region, a more rural territory, making service uneconomical.

"We are certainly always working on the operational agreements as well as the financial and business agreements with other providers," said Kevin Crull, senior vice president of AT&T Consumer. "But we don't have that with Sprint today."

Other land-line carriers also have bypassed residential customers in Sprint's region, or at least large swaths of it. Still, Sprint said competition is growing, especially from mobile-phone carriers. They often sell plans with many minutes of calls and free long distance service.

And switching to mobile service became easier last year. Federal rules took effect letting customers move their home telephone numbers to mobile phones, cutting the cord to traditional carriers.

"We want to be the provider of choice, and we're trying to stay ahead of the curve," said Tom Matthews, a Sprint spokesman.

Its new plan includes unlimited local and long distance calling, features such as call waiting and premium services including voice mail for $63.95 a month. Additional discounts are offered to those who sign up for high-speed Internet service and mobile calling from Sprint's PCS division.

"Obviously, it is a competitive gesture," Matthews said.

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(c) 2004, The News & Observer, Raleigh, N.C. Distributed by Knight Ridder/Tribune Business News.

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