In a move to counter competitive threats from other phone service providers, SBC Ameritech said Wednesday that it is putting a cap on the monthly price for unlimited local calling.
The unlimited calling plan will be capped at $13.50 a month. Additionally, Ameritech is cutting the price for two of its feature-laden service packages by $4 each, a reduction of about 10 percent.
The price cuts, Ameritech’s second major rate reduction this year, are a response to heated local calling competition from AT&T, MCI and others, who have been siphoning customers with flat-rate local calling packages.
Ameritech executives estimate the latest reduction will knock $24 million a year off customer bills.
Carrie Hightman, president of Ameritech Illinois, said she hopes the lower rates will help her firm retain existing customers and win back some defectors. Also, Ameritech wants to convince consumers who now use wireless phones to return to more traditional phone use.
“We have to work at building business on all fronts,” she said. “That’s what the competition does.”
In July, Ameritech eliminated its long-standing practice of charging by the minute for some local calls and dropped some other rates for an estimated reduction of $30 million a year.
“These are the first fruits of competition seen by consumers,” said Wayne E. Huyard, president of MCI, the unit of WorldCom Inc. that is one of Ameritech’s most vigorous competitors. “Some of the most vibrant competition in the country is in Michigan and Illinois, and customers are really benefiting.”
The new Ameritech cuts are especially consumer friendly because they don’t require customers to sign up for anything to get the benefits, said Martin Cohen, executive director of the Citizens Utility Board. “Even people who never shop around may see their bill go down if they use their phones a lot,” Cohen said.
Ameritech charges 3 cents to a nickel for each local call that travels less than 15 miles, Cohen noted, so people who make more than 350 to 400 calls a month will benefit because their total calling charge will stop when they hit $13.50. Ameritech already offers unlimited local calling for $12.50 a month, he said, but the new cap may be a better deal.
“If you’re on the $12.50 plan, you pay that much every month, even if you’re out of town three weeks and make very few local calls,” he said. “With the cap, you only pay for what you use up to $13.50.
“I don’t see any downside for anyone in this.”
