Long Distance Industry & Market

The telephone is a ubiquitous instrument found in nearly every American home and business. It has transformed the world, effectively making it a smaller place with instant communication available between continents. Local phone service is a given for telephone customers, and residential and business customers have access to longdistance service.

Longdistance service is provided on a pay-as-you-go system with customers paying for each call they make: the more calls (or the more minutes), the greater the charge. However, the various longdistance companies have expanded this concept to include complicated pricing schedules that take into account the time of day, day of week, duration of call, type of call (business or personal) and monthly call volume. Customers can therefore be confused as to which plan actually offers the greatest advantage to them.

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crease in market share of approximately one percent. The program itself was supported by an advertising campaign that cost more than $369 million during the first half of the year (Lefton, 1994a, p. 40). Nature of Competition Because AT&T dominated the long-distance market, new longdistance companies were designated Other Common Carriers (OCC) and AT&T was still subject to a large degree of regulation to which the OCCs were not. At the same time that AT&T faced considerable difficulty adjusting prices, its new competitors were able to significantly undercut the larger company's rate structure. Because AT&T's longdistance service was used to subsidize local phone service, its rates were artificially high. The new companies, which did not provide local service, were not burdened by this and so could charge significantly less than AT&T for longdistance. Longdistance service has seen a significant amount of change since the 1984 breakup of AT&T. Where once there was only one longdistance carrier, the market is now dominated by three (although AT&T continues to be the largest). MCI Communications, which brought about the opening of the longdistance market, and US Sprint have both entered the market and have taken 14.2 a
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Approximate Word count = 1429
Approximate Pages = 6 (250 words per page)

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