Slash Your Phone Bill

Entrepreneurs have stepped into the communications market, offering a service that can cut the cost of long-distance calls.


In speaking at several financial seminars on the West Coast last fall, I was surprised to learn how few business people knew about a private telecommunications network that could cut their long-distance telephone costs in half. Our own company has been using this system for over three years, and so far we've saved thousands of dollars over Bell Telephone's rates!

This money-saving long-distance telephone system is operated by two private companies, MCI and Southern Pacific Communications (SPC). If your business spends over $100 a month on long-distance calls and is located in a major metropolitan area, you can save money. And the same goes for residential customers under a new SPC program. (Check your local white pages to contact MCI or SPC.)

MCI's program is called Execunet, and SPC'S plan is called Sprint. Here's how the system works.

First, dial your local access telephone number provided by MCI or SPC. It's a local call you make through the Bell System.

Second, listen for the computer tone on the access line.

Third, dial your authorization code, a secret five-digit number provided by MCI or SPC.

Fourth, dial the regular area code and number.

The procedure takes very little time and works marvelously.

MCI and SPC have developed their networks across the country, so you can make long-distance calls privately and inexpensively to practically every major city in the United States. Although the two companies are already established in about 50 metropolitan areas, they still haven't reached the Pacific Northwest or Florida.

The long-distance network operates through microwave towers built between major cities. Execunet and Sprint are becoming available in new cities as fast as these companies can build towers.


Execunet and Sprint are much cheaper than Bell's long-distance rates, including WATS. In our own company's experience, we found that we would have saved only $1 a month using a WATS system, while Execunet and Sprint combined would save us about $200 a month over regular daytime Bell rates for long-distance calls. No wonder Bell bitterly fought MCI's Execunet program all the way to the Supreme Court—and finally lost in 1977. Once again, the entrepreneurial spirit of private telecommunications firms demonstrated that Bell's government-supported monopoly was too expensive. We welcome the competition.

In addition to lower rates, Execunet and Sprint systems offer greater flexibility than Bell's regular system:

• You can avoid expensive person-to-person calls. Using Execunet or Sprint, you pay only about three cents to find out if your party is in the office or at home! (Execunet and Sprint charge by six-second intervals, not by the minute.)

• Unlike the WATS system, individual calls on Execunet or Sprint are recorded and billed separately, so you can keep track of long-distance calls by your employees.

• In most cases, you can avoid the expenses of a telephone credit card and costly operator-assisted calls at hotels. You can hook up to Execunet or Sprint as long as you have access to a push-button telephone. MCI and SPC will provide you with a handy card listing the local access numbers in major cities. If you're on business in Los Angeles and need to call New York, all you do is call a local Los Angeles Execunet or Sprint access number and you can make the call on your company's account. This technique works practically anywhere—at a hotel, at a friend's office, or at a coin-operated phone booth. No more collect calls, person-to-person calls, or expensive operator-assisted credit card calls.

• Make business calls at home. If you have a push-button phone at home, you can link up to the Execunet or Sprint system easily. No need to be reimbursed by the company for long-distance calls made at home. You can even save money by making all your long-distance calls at home through your company's Execunet or Sprint plan.

And for those without a business connection, Sprint has recently extended its service to residential customers. For a minimum monthly service fee of only $10, you get unlimited access to the Sprint intercity network from 5:00 PM to 8:00 AM and all day on weekends and holidays. The residential call rates are a low 8 to 12 cents per minute, depending on distance. Compare that with phone company evening rates of about 35 cents for the first minute and 24 cents for each additional minute, and night rates of about 21 cents for the first minute and 16 cents for additional minutes.


There's one final advantage over Bell: MCI and SPC are private companies, and their long-distance telephone records are strictly confidential. Releasing these records to the government, AT&T, or private investigators would take a court order. On the other hand, when you make a long-distance call through the Bell System, your call could be monitored—legally! Under the federal wiretapping law of 1968, the telephone company has virtually carte blanche to eavesdrop on your conversations. Every year, Bell listens in on over 200,000 long-distance calls, ostensibly searching for illegal "black box" devices that some individuals use to make "free" long-distance calls. Rely on MCI or SPC if you want to keep your calls confidential and inexpensive.

Note: not all telephone books list MCI and SPC. If you can't find a local listing, you can contact either firm directly.

MCI Communications, Inc., 1150 17th St., NW, Washington, DC 20036. (202) 872-1600.

Southern Pacific Communications, Inc., Box 974, Burlingame, CA 94010. (415) 692-5600.

Mark Skousen holds a Ph.D. in banking and monetary economics from George Washington University. He is a consulting editor of Personal Finance newsletter, in which an earlier version of this article appeared.