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Phone Breaks For Small Business

Special Report--ENTERPRISE: At Your Service: Telecommunications


Among all of the concerns of small-business owners, shopping for long-distance service might not rank very high. Sure, small companies want the lowest possible rates without sacrificing quality, and they covet 800 numbers, calling cards, and all of the other services that big businesses take for granted. But few modest-size enterprises can afford a dedicated telecommunications staff, and most have been happy to take what they can get from AT&T, MCI, or Sprint--even if better deals could be found elsewhere.

Enter telephone resellers--about 800 companies that primarily cater to small and midsize businesses. Rather than building their own networks, resellers purchase bulk long-distance capacity at wholesale prices from major carriers, then resell the service to small businesses at discounts of 10% to 35%. "A small-business person who wants to save on their phone bill should immediately look beyond the top three," says Robert Rosenberg, president of market researcher Insight Research Corp.

HYBRIDS. The major carriers and resellers are partners and enemies at the same time. Indeed, the largest long-distance companies--the Big Three, plus WorldCom, Frontier, and LCI International--are hybrids that routinely sell directly to customers in one area while going through resellers in others.

Regardless of who owns which piece of what network, long-distance service has become a commodity. Virtually all carriers employ fiber-optic cable and digital switches and at times route calls through other carriers' lines. What matters, then, is the level of customer service a reseller (or major carrier) can provide, the features it offers, and, of course, the cost.

As usual, read the fine print, and if you haven't heard of a carrier, check references and call the Better Business Bureau, or state regulatory commission. You can also contact the Competitive Telecommunications Assn. or the Telecommunications Resellers Assn., both Washington-based industry groups.

Many resellers try to get to know their customers. Seattle-based MIDCOM Communications dispatches a personal representative in 20 cities to clients who bill more than $500 a month. MIDCOM's rep can go over a phone bill to determine, for example, whether it would be cheaper for a company to put in an 800 number rather than to have its sales force continually phone in using costly calling-card rates. Bill O'Bryan, the owner of a swimming-pool business in Louisville, switched to UniDial Communications, a reseller (using WorldCom Inc.'s WilTel network) because of its personalized service. Once a customer of AT&T, MCI, and Sprint, O'Bryan is charged about 12 cents per minute by UniDial, down 25% to 30%, he says, from what the Big Three charged.

UniDial's plans are fairly representative. The company's 1 Plus service is designed for businesses that spend more than $250 a month on long distance. It features 24-hour customer service, flat rate billing, and no startup fee. Customers are billed in six-second increments--after an initial 18-second period on domestic calls. Steer clear of companies that bill businesses in anything greater than six-second increments. By contrast, residences usually are billed in one-minute intervals.

In choosing any carrier, Robert Self, president of Market Dynamics in Bethesda, Md., publisher of Dr. Bob's Long Distance For Less rate guides, advises owners to dissect their most recent phone bills. How many calls per minute do you make to a satellite office or area of the country? Do you phone overseas? Then, let carriers slug it out over a pricing plan that best suits your business' calling patterns.

One warning: If you make a lot of international calls, you might want to consider one of the Big Three or a large second-tier international carrier, advises Robert Mirani, senior telecommunications analyst at Yankee Group Inc. in Boston. Smaller resellers, he says, may not provide much of a break on overseas calls.

Resellers should also provide detailed billing reports, such as a list of the 10 longest calls made during a month and the most frequently dialed area codes and numbers. Who knows? If you identify an employee who abuses your good graces by calling out-of-state cronies, you might save even more money than you were banking on.


If you're considering a reseller, homework is in order:

SCRUTINIZE your previous bills to determine your long-distance and overseas calling patterns.

CHECK to make sure that you are billed in six-second increments, and compare minimum fees for short calls.

DETERMINE whether a reseller offers enhanced billing reports, from detailed accounting codes to frequently called numbers.

FIND OUT its customer-service hours and whether you can deal with a specific customer-service representative.

DATA: BUSINESS WEEKBy Edward C. Baig in New York

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