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IQ News: Phone Wars II – Coming to a Web Site Near You

The phone wars, which have been fought on television with billion-dollar advertising warchests, are brewing anew on a different battleground: the Internet.
Late last month, Sprint, Kansas City, quietly introduced a new long distance calling plan on www.sprint.com. The plan, Sprint Sense AnyTime, was launched without assistance from longtime celebrity spokeswoman Candice Bergen and will get scant marketing support other than a gradual rollout of direct mailings to Sprint’s heaviest spenders.
The stealthy product intro comes amid increasing competition by telcos and a new competitor, America Online, to recruit Net surfers into long distance phone customers.
Since AOL began promoting its branded long distance service (provided via long distance reseller, Tel-Save Holdings Inc., New Hope, Pa.) two months ago, the online behemoth has signed up 200,000 subscribers, according to Yankee Group, Boston. The long-term arrangement is worth more than $100 million to AOL.
Next will be AT&T, which plans to unveil later this year two Web-spawned telecommunications offerings: One Rate Online, a flat dime-a-minute calling plan billed directly over the Internet to customers’ credit cards, and WorldNet Voice. The latter is an Internet telephony plan, which routes AT&T WorldNet customers’ long-distance phone calls over AT&T’s Internet network.
Like the telecom skirmishes of the pre-Net era, price has been the initial marketing battle cry. But that will change, predicted Boyd Peterson, a Yankee Group telecom analyst. “Price is the lure leading you into the offer,” Boyd said, adding that recruiting customers via the Web is a pure technology play to woo the coveted heavy spending communicators into ordering more and more services. The key, of course, is to convince customers to pile up telecom and Internet services from the same company on one credit card and ultimately reduce telcos’ biggest headache: high customer churn rates.
To further cement loyalty among consumers, AT&T and MCI have announced expanded customer service and direct-billing via their sites; Sprint has similar plans. The goal of the long distance titans is to use their Web sites as a means to not only distribute product and grow their subscriber base, but also to communicate more cheaply with consumers and potential recruits.