Ed, et.al.: Initial look at "The Neighborhood" numbers:
clarionledger.com
June 11, 2002
'Neighborhood' growing strong
Calling plan's success good news for WorldCom
By Robert Schoenberger
Clarion-Ledger Staff Writer
WorldCom's attempt to improve the performance of its struggling long distance telephone service has had a better start than expected, one of the Clinton-based telecommunications giant's partners reported Monday.
The Neighborhood, a calling plan WorldCom launched in April that offers unlimited local and long-distance calling, attracted more than 250,000 new subscribers in its first six weeks, WorldCom partner Z-Tel reported Monday.
The actual number of new subscribers could be significantly higher than that because Z-Tel's numbers do not include several large states such as Texas and New York, company officials said.
"We have found that this product has strong customer appeal," WorldCom spokeswoman Claire Hassett said. "Hits to our Web site have gone up more than 40 percent (since April), and we're getting lots of calls about it."
Hassett declined to offer specific subscriber numbers, but she said they have exceeded company expectations. John Sidgmore, the man who replaced Bernie Ebbers as WorldCom's president and chief executive officer in April, is expected to detail the performance of the Neighborhood Friday at WorldCom's annual meeting in Clinton.
Long distance sales have been dropping for WorldCom, Sprint and AT&T for more than two years as callers turn to wireless phones and e-mail for communications. Price wars from the long distance companies further hurt revenues.
Ranging between $50 and $60 per month, the Neighborhood was expected to help slow the decline at WorldCom by collecting a higher-than-average bill from plan subscribers.
Although it can cost more than separate calling plans for local and long-distance service, analysts said the Neighborhood is attractive because of the unlimited service levels and features such as call-waiting, caller ID and voice mail.
"Like everyone else in long distance, (WorldCom's) obviously lost some customers in that area, and they're making up for it by going after local customers," said David Burks, an analyst with Hilliard Lyons in Louisville, Ky.
Before the April launch of the Neighborhood calling plan, WorldCom offered local phone service in 11 states under the MCI brand name. When it launched the calling plan on April 15, it expanded to 32 states.
It gained those 21 new states by partnering with Z-Tel. Since 1999, Tampa, Fla.-based Z-Tel has offered competitive local and long distance service in the majority of U.S. states. Through its partnership, WorldCom is effectively buying service from Z-Tel in the states it did not serve and selling that service to its customers.
"It saved them the time and effort needed to set up connection agreements and get authorization in those states," said Sarah Bialk, director of investor relations for Z-Tel.
And it saved Z-Tel from an uncertain future. On Monday, Z-Tel announced that in April, it actually made a profit for the first time in its three-year history.
"That's been an elusive target for several companies in our industry," Bialk said the company's profitability. "We're really excited about it." |
