Your Money: Cost? now you're talking

Freeing the telecoms market has led to a bewildering choice. Andrew Geldard connects with the best
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The Independent Online
Hardly a week goes by without our attention being drawn by a major telephone network company telling us, through the TV, the radio, newspapers and the letterbox, of another bewildering way in which we can cut the cost of our telephone bills.

Telephone discount schemes form the cutting edge of a battle currently being waged between the major national operators for customer loyalty.

This is made all the more urgent following aggressive marketing by cable companies and government plans to open up the market by 1 January 1997.

Years ago, all calls had a flat tariff structure. It was a lot more expensive, and choice was limited, but the charges were straightforward and easy to understand. As the market opened up, competition has intensified. Consumers now find the choice can be confusing and there is a danger that after making the effort of finding out the right deal for your home, the overall benefit is marginal, or even more expensive on balance.

BT currently offers several schemes. These include the Light User Scheme, a rebate of up to 60 per cent off the bill (maximum of pounds 14.98) for people who spend less than pounds 12.69 on call charges each quarter - ideal for those who make only very few outgoing calls.

For an annual membership charge of pounds 24, the BT Premier Line gives 15 per cent off local, national and international calls. This sounds ideal, but for tangible savings, customers must spend at least pounds 60 on calls each quarter.

With BT's schemes so diverse, how are genuinely interested people guided into choosing the right one? A BT spokesperson (not Bob Hosking) says: "We realise that different schemes will suit different customers and many could be put off by the thought of subscribing to the wrong one. When a customer phones up enquiring about what scheme would be relevant, we will look at their past bills and determine the appropriate plan that fits in with their spending patterns."

But if the overall price of BT calls is being reduced, what purpose do these saving schemes serve? "They are a response to the competition we are now facing," the spokesperson concludes. Part of that competition comes from Mercury and AT&T, which offer discount schemes that are compatible with an existing BT line.

Mercury's most prominent residential scheme is SmartCall, which costs pounds 5.75 each quarter. The service offers savings of up to 20 per cent on basic rate BT charges for people making long-distance and international calls in the evenings and at weekends. SmartCall also comes with a service called YourCall Plus, offering an additional 5 per cent discount off the five most expensive numbers dialled.

AT&T has just announced a scheme of its own - the first of a "bundle" of services planned for the residential market. Known as Calling Service, it is accessible on an existing telephone line and also provides reductions on calls made during weekday evenings and weekends.

Calling Service is a number of tailored international savings schemes to specific regions of the world, which each cost pounds 3.99 per quarter. For example, someone subscribing to CallAmerica will pay only pounds l.64 for a 10-minute call to New York during the evening or weekend, compared with BT's standard charge of pounds 2.81 and pounds 2.61 respectively. Signing up for reduced call charges for all international countries costs pounds 5.99 per quarter.

How do the cable companies view the rise of the discount scheme? Nick Caunter, director of marketing at the London cable company Videotron, says: "BT is currently losing customers to the cable industry at a rate of 60,000 every month. These discount schemes represent a breakthrough for customer choice."

Saga, the over-fifties group, has launched a Visa card which enables its customers to make calls through the American telephone operator Worldcom.

The Saga Visa card service allows card holders to enjoy discounts on standard BT call charges of up to 23 per cent for domestic (but not local) calls and 41 per cent for international calls, by using a three-digit number.

Telephone discount schemes are worth investigating. Leave the complex calculations for the operator to sort out, but there may be little point in joining a scheme if the savings achieved are likely to amount to only pounds 2 to pounds 3 a month.

It is also important to know when not to use the discount service. For example, Mercury still advises its SmartCall customers who have a BT line to use BT for local calls

Andrew Geldard works in the financial services unit at Infopress Public Relations.

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