Telecom Consumers Pay More for Local than Long Distance

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BOONTON, NJ. December 2, 1998:

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Long distance telephone ads shouting about lower rates makes it seem like the service is too expensive, but in reality, consumers are paying more per month on their local phone bills than their long distance phone bills, says a new Consumer Telecom Report by Insight Research.

According to Insight's report Consumers' Reactions to Telecom Competition, 71 percent of respondents surveyed said their average monthly local bill was $50 or under. Only 29 percent paid under $25 monthly for local service. For long distance bills, 47 percent were in the under $25 category.

Local service competition lingers on the horizon, and with it will come greater choice and lower local rates. However, local bills may still be higher than long distance because various taxes will be levied on dial tone service. Long distance bills do not have these extra charges. Insight believes local telcos must start paying attention to the potential harm they face as consumers rebel against high local phone bills. Consumers may not view these fixed line charges as valid, instead assuming they are included in their local toll charges.

"If it's a surprise that people are paying more for local service, it's even more amazing to find out that 10 percent don't even know what they pay each month," says Robert Rosenberg, president of Insight. "As local competition intensifies, it will be interesting to see if people pay more attention to their bills. The decline in rates may actually increase calling frequency and volume," Rosenberg said.

Further consumer forecasts of telecommunication services are published in Consumers' Reactions to Telecom Competition, a 102-page market research study. Primary research consisted of interviews with regulators, industry players, academicians, as well as Insight's proprietary survey of 1,018 consumers. For this sample, the survey data was weighed to account for probabilities of random selection and balanced by age, gender, race, and education to match U.S. Census demographic variables.

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Donna Savino

at Insight Research

973-541-9600