Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

July 11, 2002

"Long-Distance Phone Service Post-WorldCom"

Host: WorldCom...MCI...Personal finance expert Jordan Goodman tells you about their relationship -- and, what it means for you when you pick up the phone.

The collapse, and likely bankruptcy, of WorldCom has many consumers worried about what is going to happen to their long-distance phone service, and what they should do about it. About 30 percent of all consumers -- some 20 million in all -- and 50 percent of businesses use MCI WorldCom as their long-distance provider.

Here are a few observations about what might happen, and what consumers should do about it:
1. The MCI WorldCom network will most likely remain intact and working because it is a valuable asset that needs to be maintained for creditors and potential buyers. So, there is no need to switch because you think you are going to be cut off soon.

2. Chances are, that WorldCom customer service is going to get worse, since they just laid off 17,000 workers and probably will lay off more. You can also imagine that morale is not too high around WorldCom these days, either.

3. Competing long-distance carriers might try to raise rates because of weakened competition. Some major companies have already raised rates this year, and this might give them the room to raise them more. Right now, on average, MCI WorldCom and ATT are charging 7 cents a minute, and Sprint 5 cents a minute, though rates vary greatly.

4. Look into the new fixed-rate local-long-distance combinations. MCI offers "The Neighborhood" for about $50 a month for unlimited local and long-distance service, and ATT and Verizon offer similar, but higher-priced, plans that are becoming very popular.

5. You have to scrutinize your bill more than ever in addition to the per minute rate: Look for the Universal Service Fee (USF), which the FCC charges at 6.8 percent of your bill. Some carriers charge 6.9 percent, while ATT charges 11.5 percent and MCI and Sprint charge 9.9 percent. Also, look at the increments that calls are measured in: the lowest is 6 seconds and the most is 60 seconds -- the longer the increments, the more expensive your calls.

6. Shop around aggressively for a cheaper long-distance carrier. Go to an objective Web site, like www.saveonphone.com, which constantly analyzes 350 long-distance plans and tells you for free what the top 10 are, based on your calling pattern. They currently show plenty of companies with names you’ve never heard of, like ECG, Total Call International and Unitel, charging just 3.9 cents a minute in 6 second increments.

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