Finding a low-cost long-distance carrier

According to reviewers, call quality and service are uniformly good across all vendors, so you can be comfortable going with the least expensive plan that fits your needs. Lesser-known companies buy their long-distance access wholesale from the telecom giants, so the quality of service is generally the same.

Here's what the experts say to consider when choosing a long-distance carrier:

  • Check the fine print for a monthly fee or minimum-usage charge. For most callers, a monthly fee is a completely unnecessary expense. Since long-distance rates decrease as competition grows, some companies add a monthly fee to offset these lower charges. Most companies call this charge a recovery fee. The only federally mandated charge is federal tax.
  • The USF (Universal Service Fund) is a mandatory fee imposed by the FCC. It supplements phone service for low-income families, schools, roads, libraries and health care. In the past, companies used this as a license to charge pretty much whatever fees they liked, attributing them to USF and pocketing the difference. That has changed. The Federal Communications Commission (FCC) now mandates that all companies charge the same fixed amount, which is announced and changed quarterly, and pay the full amount to the FCC. The current USF fee can be found on the FCC website (http://www.fcc.gov).
  • Time increments can have a big impact on your bill. Some companies (such as AT&T and Pioneer) bill in one-minute increments. If your call lasts one minute and one second, you're charged for two minutes. This unused time can add up, especially if you make many short long-distance calls. Programs that bill at six-second increments more accurately reflect your actual calling time. Editors of PhoneDog.com say the savings are 12 percent to 14 percent when using a six-second billing increment versus a full-minute plan. Telna has established an industry first by billing in one-second increments, so you only pay for the actual length of your call.
  • Inbound toll-free service is a nice option. This can be a great way to avoid accepting charges for collect calls. Many long-distance providers now offer residential toll-free numbers, usually with the same rates as outbound long-distance calling. There's usually a monthly charge of about $3 for this service, though providers such as Telna or Pioneer offer it for $1, and ECG offers it for free.

Bear in mind that this report has no relevance to in-state calls. If a considerable portion of the charges on your monthly bill comes from long-distance calls made within your state (e.g. from Los Angeles to San Francisco), you'll have to do some additional research to find the best rates. Since in-state rates vary greatly from state to state and between carriers, it's impossible to make recommendations for the general consumer. SaveOnPhone.com's rate calculator is a good resource for checking the in-state rates of various long-distance providers. In addition, PhoneDog.com's rate-plan comparison charts have the option to list providers by the lowest in-state rate for any given state.

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