Saving money on local calls by changing class of service

Reviewing the class of service for your local lines is an integral part of a telecom audit. Businesses can change from flat-rate service to measuredor message-rate service. Certain types of business are key candidates to change their service.

For example, a telemarketing company whose calls are all long distance should switch from flat-rate service to measured-rate service. Its line charges will be lower with measured-rate service and, because the telemarketing company makes minimal local calls, the charge for usage will be lower. Flat-rate service is better for a business with a lot of local calling.

Table below shows the cost comparison of a telemarketing company that switched from flat-rate to measured-rate local service. The telemarketing company has 50 lines, and each line averages only 60 minutes of local calling each month. In this example, the customer can save more than $5,000 per year by making this change.



This strategy does have a caveat. The phone bill for flat-rate local service does not give a summary of the local calls. Therefore, the customer does not know exactly how much local calling it has done. I have seen one business switch from flat-rate to measured-rate service only to find its costs increase by $800 per month. The company was unaware that its local calling was so high. Unless you are sure your local call volume is low, you should first find out exactly how much local calling you have. This can be accomplished by having your local carrier perform a traffic study. Your telephone equipment may also be capable of tracking the volume.

When considering changing the class of service for your local lines to reduce the cost of your local calls, the following items must be included in your cost comparison: number of local calls, duration of local calls, and the difference in the cost of the lines.

Off-peak calling
A low-tech way to cut the cost of your local calling is to use lower off-peak calling rates. This works especially well if you have a great deal of computer modem traffic. If you do not use dedicated data lines, then your computer modem calls are billed as regular voice calls. If you have a significant amount of modem traffic, consider changing the time that you transmit the data to be evening off-peak calling. Phone companies offer reduced rates at night to encourage callers not to flood the network during peak hours.

Local calling packages
As in the case with Bell Atlantic’s ValuePak calling plans, some local carriers offer discount local calling plans. A good rule to follow when auditing local bills is that anytime you see calls billed according to measured usage, there may be a less expensive way to have the calls billed. A quick phone call to the carrier is all you need to find out what options you have. If the carrier has no discount plans for local calls, consider eliminating the calls altogether by switching to flat-rate service.

Some local calling plans offer a discount each month, such as 10% off, while other plans simply offer lower per-minute calling rates. The impact of the plan is usually fairly simple, but the plan’s design may be puzzling. Consider Bell Atlantic’s ValuePak plan that has been offered for years in Pennsylvania. The plan allows you to purchase “Paks” of local calling at a reduced rate each month. For $13.80, you get a calling allowance of $18. If you use more than your allowance, the rest is billed without a discount. If you use less than your allowance, you are still billed $13.80 per month. Higher volume users usually add multiple ValuePaks but are limited to one Pak per line on the account. Table 6.3 compares a customer’s $100 cost with and without ValuePaks.



As illustrated on top, the customer can save $21 per month by adding five ValuePaks. I have also encountered numerous customers that pay for ValuePaks but have no local calling. Either their calling habits changed or they moved their local calling traffic to another carrier. If they do not cancel the ValuePaks, they will continue to make a donation to Bell Atlantic every month.

Using local call volume to secure discounts
Some discount plans offered by LECs do not offer lower rates for local calls, but they do allow the local calling volume to contribute to the overall volume. As with most telecommunications pricing, the greater your volume, the greater your discounts.

For example, a customer who signs up for Ameritech’s Complete Link plan with a 12-month term and a $500 monthly volume commitment receives lower rates for intralata calling and a discount of 4% to 5%. The discount is applied to monthly service, local calls, and intralata calls. While the local calls do not directly receive a reduced rate, the local calling volume may be significant enough to allow the customer to qualify for the next discount tier. Table below shows an example of the Complete Link plan.