MCI/WorldCom will start charging customers in 11 states additional access fees starting September 1

August 6, 2002

3 Min Read
MCI Runs Up the Tab

Long-distance carrier MCI (Nasdaq: MCIT), a unit of bankrupt WorldCom Inc. (OTC: WCOEQ), has a new plan to raise some quick cash: It's adding some new fees onto consumer bills in 11 states.

According to Bye Bye MCI, a Website that answers consumer questions about WorldCom and MCI, residential MCI customers in Arkansas, Colorado, Florida, Kentucky, Massachusetts, Minnesota, Missouri, New Jersey, New York, Oregon, and Texas received a note on their July invoices notifying them that starting on September 1 they will have to pay an additional “Instate access recovery fee.” The fee ranges from 50 cents to $1.95 a month, or as much as $23.40 extra a year.

Following WorldCom’s record-breaking bankruptcy filing last month, the company has been trying to convince its customers not to wander to the security of other service providers (see WorldCom Files for Bankruptcy and AT&T's Dorman Weighs In on WorldCom). Customers who will soon be slammed with additional charges on their bills may, however, feel less than enticed to stay.

Even before WorldCom's chapter 11 filing, the company was struggling with a bad customer service reputation, after numerous revelations that it had billed customers for services they had unsubscribed from or never even asked for, and that it was less than courteous when the customers called to complain (see WorldCom's Woes Mount and WorldCom's Customer Service: Fictional?).

While the new charge probably won’t be popular, it is technically legitimate. It will cover the fee MCI has to pay for accessing the lines of the local phone companies in the areas it serves. This fee, paid by all long-distance providers, has traditionally been paid out of other rates and fees, according to Bye Bye MCI editor Rich Sayers. MCI is simply asking its customers to pick up the tab.

Lauren Kallens, a spokeswoman for WorldCom says the fee will not be applied to the company’s “Neighborhood” customers, and that any customers with bills amounting to less than $1 a month won't be charged the fee (see 'Welcome to the Neighborhood': a New MCI Is Born?).

Sayers, however, questions the wisdom of applying the fee at all -- especially now. “I can’t believe it’s wise for MCI to even try to do this so soon after its bankruptcy filing…” he says. “Some percentage of people will see this as an incentive" to find a new carrier.

But more than bad judgment, this could simply be a case of bad timing. Kallens insists that adding the additional fee to customer bills has been in development for several months and has nothing to do with the company’s current situation.

Also, MCI isn't the only phone company to have employed this tactic. AT&T Corp. (NYSE: T) hit customers in the same states with such fees between May 15, 2001, and May 15, 2002. This indicates that charging customers for access fees is a growing trend in the long-distance business.

But try explaining that to customers who already have the jitters about sticking with the company. “It gives them an additional reason to shop around,” Sayers says.

Of course, not all customers may notice the extra fee they’ll be hit with next month, since not all of the states in question require companies to notify their customers of added fees and charges.

According to Kallens, customers in all the affected states have been notified: “We abide by all federal and state regulations for notification."

An MCI internal memo, read to Sayers by two MCI employees over the phone, however, shows that not all the customers were notified in the same diligent manner. Six states require customer notification of rate increases, and MCI bills in those states mention the new fee under the heading "Important news about your bill" in bold on the second page. But customers in the five “non-notifications” states have to turn to the “For your information” section on the last page of their bill to find any mention of the fee.

“Phone companies typically don’t disclose anything they don’t have to,” Sayers says.

— Eugénie Larson, Reporter, Light Reading

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