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
fhe 12/4/2012 | 10:00:14 PM
re: MCI Runs Up the Tab I did it yesterday, I'm using my cell phone to make long-d calls, no need to join these stupid carriers...

If eveyone cancel their MCI account, they'll definitely go bankrupt, and don't have to linger on and on and on...
Scott Raynovich 12/4/2012 | 10:00:09 PM
re: MCI Runs Up the Tab they are already bankrupt!
wilecoyote 12/4/2012 | 10:00:08 PM
re: MCI Runs Up the Tab My God. This company really is pretty amazing. They really have won. Bravo Cisco.
bigdaddy 12/4/2012 | 10:00:02 PM
re: MCI Runs Up the Tab Did I wander into a Twilight Zone episode here?

MCI - I just got my latest bill $14+ in service charges and fees and now they want to throw another fee in there! Legit or not someone F'd up the timing.

Like every other fee it will just fade out of the mind of those that even notice it in the first place. Most people will just pay it like lemmings off a cliff.
point o' light 12/4/2012 | 9:59:07 PM
re: MCI Runs Up the Tab ...and who do you propose is out there offering better service than MCI? They all suck the vortexual wind of their ever efficient CRM software.

AT&T? I just returned from a trip to Europe to find they have stiffed me $1356 + $150 access fees to use their international access line for less than 400 minutes (do the math). After numerous calls and no response other than, "$7.51 is our business preferred rate, then it is only $2.50 a minute." (at this point they get a CRM prompt that the satisfied 'customer' is now grinning ear to ear. I could've called direct from the hotel phone and only paid $800.00 maximun! "Well sir, there are access fees and usage fees that we must pay..it adds up".

I now have a Globalphone card that charges $0.19 a minute - they will process $76.00 in revenue for what AT&T charged $1500! Their total is half of the USAGE fee AT&T put on top of the bill.

BTW, I tried to find out the charges several times while on my trip...the CRM takes you through a menu before eventually hanging up without informing you of the rate - a welcome and profitable glitch I'm sure...

The beauty of AT&Ts response is that after several hours of routing me from unconcerned "Sorry we can't do anything" 'customer service' person to another, a supervisor gave me this number to solve my problem...1-800-225-5288. That's right! 1-800-Call-ATT. And to think I thanked her for such a solution. I was soon overcome by my own special variation of Tourette's Syndrome as my fingers recognized the familiar keypad dance.

The alphabet soup of long distance providers are indistinguishable in their nadir of service and offerings. Any investment in service of any kind comes directly out of the bucket reserved for exec bonuses, golden parachutes and visits to the local topless bar.

An excellent startup idea? A non-profit telcom coop run for and by the people - where is Freddy Laker?!!
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