Calling Overseas: Which Plan Is For You

New York advertising executive Tammo Stubbe calls his parents and friends in Germany every week. To save money, he used to switch phone companies every few months to get the $50-off introductory rate. These days, though, he's sticking with Sprint, since rates to Germany, at 39 cents a minute, are pretty cheap across the board. That's because the big three phone companies have widened their rivalry from the U.S. to the international arena with a host of perks and promotions. The reason: fatter profits. "The international calling market is growing at four to five times the domestic market," says Gregory C. Staple, a Washington communications lawyer.

Each phone giant is offering a different deep-discount international plan. Sprint rolled out The Most Worldwide (800 THE-MOST), MCI Communications launched Friends Around the World (800 777-5000), and American Telephone & Telegraph (800 521-WORLD) started its True World program last year. Since all major carriers use fiber-optic international lines, sound quality doesn't vary. So it will be price and convenience you'll want to compare. Which plan you choose will depend on when, where, and how often you call overseas.

Consider AT&T's True World. You get up to 27% off basic residential rates to 250 countries. For example, AT&T normally charges $2.14 a minute for a 10-minute weekend call to India. The plan rate is only $1.56. AT&T also cuts the price of all calls to one country of your choice by an extra 15%. That would bring the India call to only $1.33. And if you sign up in the next few months, AT&T will cut all weekend overseas calls by 50% more for a limited time, slicing the tab on your call to India to 78 cents per minute.

But to qualify for the discounts, you must pay a flat fee of $3 a month. So this plan may not make sense unless you call overseas often. AT&T also offers a similar plan, True Country, which has no monthly fee but smaller discounts--15% off normal rates to a preselected country. A catch with AT&T--and Sprint--is that the deepest discounts are available only at specific times, which vary from country to country.

TRIPLE ALLIANCE? MCI's Friends Around The World program has no time restrictions but does have other drawbacks. It limits how many phone numbers you can call to get the deepest discount. You have to set up a "calling circle" of up to three international numbers. When you call any one of those three people, or they call you, 20% is cut off the per-minute rate. But you get no discount calling abroad to someone outside your circle.

This is a good deal for most people, since 90% of households call only three overseas numbers anyway, according to MCI's research. But if you have lots of friends and family scattered around one country or are doing a limited amount of business with many merchants in a country, AT&T's plan may be the best deal. It only requires you to designate one country, not specific numbers.

SIMPLER RATES. Sprint's plan is the most flexible, since you don't have to choose any numbers or countries in advance. It automatically knocks 20% off the charges for the two international numbers you call most each month. For example, Sprint normally charges $1.39 a minute to China. For those two numbers, the charge would be $1.16 each. If you sign up before May, Sprint will halve that rate on weekends, to 58 cents a minute, for the first four months of service.

To be more customer-friendly, all three carriers are simplifying their Byzantine rate structures. Previously, there was one rate for the first few minutes of a call, then another for subsequent minutes. Worse, rates would vary among a half-dozen different time periods. "It was very hard for customers to predict what a call would cost," says Mark Schweitzer, director of international marketing for MCI. The new plans make this easier because they use fixed per-minute rates and only one or two calling periods.

The big three are also catering to callers dialing to America from abroad. AT&T's USADirect, MCI's Call USA, and Sprint's Express each provide a local-access number to connect callers to one of that carrier's U.S. operators. Customers pay the regular international rate plus a total surcharge of about $2, which is still usually cheaper than rates charged by foreign phone concerns.

The surcharge covers several benefits: You don't have to learn the quirks in local calling procedures around the world. You deal with an operator whose primary language is English. Third, you get access to 24-hour 800 numbers, which are a rarity abroad. If you want to change an airline reservation in London after hours, you're likely to find the local airline office closed, but with these plans, you can dial the airline's toll-free hotline in the U.S. via the carrier's local-access number. Unfortunately, the call isn't toll-free to you, but at least you can get the task done.

Other new services benefit travelers who want to call from one non-U.S. country to another. AT&T's World Connect program lets you call between any two of more than 73 countries. Sprint's WorldTraveler service lets you call from 79 countries to 43, and MCI's World Reach plan is available from 41 countries to more than 61.

Interestingly, though, it's far cheaper to call from, say, London to Tokyo for 10 minutes by routing the call through a U.S. switching center than by dialing direct. Such a call using MCI's World Reach program would cost roughly $33, compared with more than $90 to dial direct through a hotel switchboard. Hotels and foreign phone companies often charge exorbitant rates. While the route is roundabout, there's no connect-time delay or lapse in sound quality.

So if your bonny lies over the ocean or you've let foreign friendships lapse, it's cheaper now to stay in touch. And if the domestic arena is any indication, the marketing wars will only get more intense.

TABLE: DIALING FOR (FEWER) DOLLARS
      COUNTRY             AT&T                MCI             SPRINT
                  Reg     Min   Max   Reg     Min   Max   Reg   Min   Max
                 rate    disc   disc  rate   disc   disc  rate   disc   disc
      ITALY     $1.31     .73   .37   1.16    .58   .29   1.13    .90   .34
      INDIA     $2.14    1.51   .78   2.12   1.16   .58   2.12   1.70   .78
      JAPAN     $1.42     .78   .39   1.41    .62   .31   1.41   1.13   .39
      *All charges are per minute and may be subject to other variables
      DATA: BUSINESS WEEK