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MCI Announces “Friends & Family” Discount Plan Graphic

March 18, 1991

NEW YORK (AP) _ MCI Communications Corp. announced a discount plan Monday that cuts customers’ telephone rates by 20 percent to the people they call the most, providing they also are MCI customers.

Called Friends & Family, the plan is aimed at increasing phone use and luring additional customers to the nation’s second-largest long distance phone company.

Under the plan, customers will call or mail in to MCI a list of up to 12 people they call frequently. If those people are not MCI customers, the customer has the option of notifying those people to switch to MCI or to let MCI do the notification.

The 20 percent savings is in addition to other MCI rate-reduction plans, the company said. The plan involves no monthly fee or minimum number of calls. The discount also applies to calls made away from home using an MCI calling card.

Industry analysts said the plan was innovative and should help MCI in its battle with an increasingly aggressive American Telephone & Telegraph Co., the largest long-distance carrier, and No. 3 U.S. Sprint.

″I don’t think either will be able to match it,″ said analyst Gregory Sawers of the New York research firm Sanford C. Bernstein & Co. He said he believed the computerized billing systems at AT&T and Sprint were not sophisticated enough to provide a similar discount plan.

AT&T offers several discount plans, including one for calls made to a certain area code, but not to specific phone numbers.

AT&T spokesman Mark Siegel said his company has found that residential customers make more than half of their long-distance calls to a single area code.

He also said MCI’s plan could raise privacy concerns because it involves ″sharing what is essentially private information with a private corporation.″ In addition, he said, MCI’s customers are ″acting as sales agents″ for the company by providing it with names of potential customers.

Sprint spokeswoman Robin Pence said her company allows customers to build their own discount plans based on what geographic region they call most often or what time of day they most often make calls.

″We provide discounts not limited to the calls you know you’re going to make,″ she said. ″It sounds like MCI’s plan is limiting.″

However, MCI Chairman William McGowan said at a news conference that ″not too many people call strangers on a regular basis.″

MCI officials would not say how many new customers the company must attract to compensate for the revenue reduction caused by the 20 percent rate cut, or how much additional business it hopes to generate.

But Timothy Price, an MCI senior vice president, told reporters that the program was extremely successful in test marketing.

″We expect to have a huge marketplace reaction,″ he said. ″It locks in brand loyalty for our customers for all the right reasons.″

MCI has been promoting its plan for several weeks with a teaser ad campaign featuring New York Giants coach Bill Parcells, model Elle MacPherson and other well-known people. However, the ads did not say exactly why these people were supposedly making lists of friends and family members. New commercials that started Monday will explain.

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