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What your phone company won't tell you: New Web sites can ferret out the cheapest rates for long-distance and wireless service. IInc. Technology/I puts the players to the test.
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What your phone company won't tell you: these new Web sites promise to shrink your long-distance and wireless bills

Dr. JoAnne Duffy knows how to scout out a bargain. She finds 10-foot Christmas trees for $35, bargain-basement prices on designer suits, and two-for-one airfare deals to Ireland. This Baltimore-based clinical psychologist honed her shopping skills in the 1980s when she was a cash-strapped graduate student. But today, when it comes to buying cell-phone service, she's mystified. Duffy, who racks up monthly phone bills of about $150, says she'd like to investigate which cellular plan is best but that as a private practitioner she's pressed for time. Case in point: she recently spent 40 minutes on the phone with Bell Atlantic Mobile -- almost as much time as she spends with a client -- regarding a $25 charge on her bill that she didn't recognize. Needless to say, Duffy can't afford many more 40-minute bill problems.

"My Ph.D. didn't cover cellular science," says Duffy. When she shops for other items, Duffy knows what she's looking for and can determine if she's getting a good deal. With cell-phone service, though, she's not sure if she should be comparing monthly rates or price per minute.

It shouldn't take a Ph.D. to figure out a telephone bill. Yet Duffy and countless business owners find themselves lost in a maze of roaming charges, peak and off-peak rates, and activation fees. Long-distance plans are no better. The recent onslaught of long-distance price wars has left most people confused about whether to choose Sprint Nickel Nights or AT&T's One Rate 7¢ Plan -- or service from a less well known long-distance reseller.

A new breed of Web sites wants to help small-business owners ascertain how to get the best deals on everything from wireless to long distance to calling cards. Point.com, Decide.com, eSpoke.com, LetsTalk.com, Telezoo.com, Telstreet.com, Simplexity.com, and others that are popping up as fast as you can say "venture capital" provide free search engines into which customers enter information about their monthly calling habits. The sites then recommend wireless or long-distance plans that should suit a customer's specific needs. Customers can order many of the recommended plans right on the sites.

And they may well want to do so to cut down on one of the biggest expenses small businesses incur. The Yankee Group reports that businesses employing from 2 to 99 people spend an average of $220 a month for phone service; businesses with 100 to 499 employees spend about $2,800. Larger companies can spend less per employee, since they can negotiate better deals directly with carriers. Smaller businesses don't have that luxury. "By just being on the wrong plan, you could end up leaving literally hundreds of dollars on the table," says Roy Prasad, president and CEO of Decide.com.

When Carol Newton visited eSpoke.com, she discovered she was leaving more than $500 on the table every month. The CEO of Priority Search Partners, a $2-million Redondo Beach, Calif., company that matches IS professionals with contract and permanent work, Newton was spending about $700 a month on long-distance calls. For only $165 she could get the same service from UniDial, a carrier that eSpoke.com identified.

Newton had never heard of UniDial, but the eSpoke site informed her that the service provider, which has 230,000 customers and $215 million in revenues, resells service from MCI, Sprint, and others. "We figured, they're solid; they're not going to be disappearing tomorrow," Newton says. She estimates that by switching carriers, Priority Search Partners will save from $5,000 to $6,000 yearly. She'll use some of the savings to get a toll-free number.

We chose to test the best of the dozen-plus sites that purport to help customers make informed telecom choices. With assistance from Michael Lauricella, an analyst at the Yankee Group, we first compiled an extensive list of sites. We narrowed the list by choosing only those sites that were already up and running and through which customers can purchase some services. We eliminated all sites backed by telecom companies, because those sites typically sell plans from only one or two carriers. Finally, we eliminated any site through which we could not contact a human being, figuring that if the site didn't return our E-mail messages or phone calls, it probably wouldn't return yours either. To test the sites, we ran the phone bills from a variety of growing businesses through the sites' search engines and came up with recommendations for economical calling plans.

The wireless sites that made the cut are Point.com, Decide.com, LetsTalk.com, Simplexity.com, Telstreet.com, and Telezoo.com. Similarly, Decide.com, Simplexity.com, eSpoke.com, and Telezoo.com made the cut for long-distance service. Some of the sites also compare Internet services and calling cards. (See "The Players," below.)

To provide services free to Internet surfers, the sites charge some or all of the carriers listed in their search engines. When a customer signs up with a carrier at a particular site, the carrier pays the site a one-time referral fee or 5% to 20% of the customer's monthly bill.

Execs running these sites are quick to point out that even though the sites make money from service providers, they remain unbiased. (The execs make that claim despite the fact that some carriers pay higher commissions than others, making it tempting for a site to recommend one carrier's offerings over those of its competitors.) And some sites, in an effort to be completely neutral, list a huge gamut of offerings, regardless of whether the carriers are paying clients or not.

ESpoke.com, Simplexity.com, Telezoo.com, LetsTalk.com, and Telstreet.com carry only service providers with whom they've negotiated agreements. Decide.com and Point.com, on the other hand, carry plans from a wide range of service providers, whether or not they take commissions from them. "We have the largest database of all the available plans, whether we have a business relationship or not," says Decide.com's Prasad. (Decide.com's claims of neutrality were true: in our tests, both Decide.com and Point.com recommended some providers that don't pay any commissions to their sites.)

Another variation among the sites is ease of use. All the wireless sites examine how many minutes a customer requires and how much he or she wants to spend. Telstreet.com and Simplexity.com pull up plans based on those two factors and the customer's location, but it's up to customers to discern which plan best fits their needs. In addition to using minutes and price as criteria, Point.com also asks customers to choose between analog or digital service and to select features such as prepaid plans, no cancellation fees, or a one-year service contract. At LetsTalk.com, customers can sort by features such as voice mail, caller ID, text messaging, and E-mail services.

Decide.com was the easiest site to use. It poses a series of questions including what percentage of calls are long-distance and what percentage of calls the customer places outside the home-service area. Then it recommends up to 10 plans, listing its top recommendation first.

Decide.com and eSpoke.com allow for quick comparisons or detailed comparisons of individual calls on long-distance bills. The easiest and most accurate way to evaluate long-distance bills is to plug in the number of interstate, intrastate, off-peak, and peak minutes from a recent phone bill. Plugging in individual phone calls at both sites is time-consuming, however, and in our trials turned out to be a less accurate method of evaluating total cost. ESpoke.com seems to understand that this process can be cumbersome. To make the process easier, it offers a service through which customers can fax or mail in their most recent long-distance bill; eSpoke.com will analyze the bill within an hour of receiving it and send its results out by E-mail.

While most of the sites let customers figure out how much they can save on wireless or long-distance phone bills immediately, Telezoo.com and Simplexity.com offer "request a quote" services. To use those programs, submit your phone bill or your calling requirements to the site and request bids from a variety of carriers. Such a service can be ideal for companies with complex and costly telecom needs. Elias Shams, Telezoo.com's chief zookeeper (yep, that's what this company calls its CEO), says companies that spend more than $1,000 per month are most likely to benefit from requesting quotes.

Take Timothy Wierbinski, for example. When the communications engineer needed to order a T1 line from Hawaii to Alexandria, Va., he didn't know whom to call. Wierbinski, who works for Science Applications International Corp., in Tyson's Corner, Va., turned to Telezoo.com and entered his request. "Within an hour somebody from Telezoo had called me back to get more details," he says. The carriers, unfortunately, didn't respond as rapidly as the Web site had; it took a couple of weeks for Wierbinski to receive a few bids. In the interim, he found Hawaiian carriers listed on Telezoo.com and called them himself.

Regardless of which services they offer, all the sites provide easy-to-reach customer service. Telstreet.com, LetsTalk.com, Simplexity.com, Point.com, and Decide.com have toll-free numbers. The two sites we tested that don't have toll-free numbers offer cyberservice: Telezoo.com provides online support through LivePerson.com -- a real-time chat application. Customers click an on-screen button and choose a customer-service rep. It took less than a minute for the rep to join the online chat; he answered our question (about the request-a-quote service) immediately. ESpoke.com provides support only by E-mail but answered our question within an hour and a half. Both Telezoo.com and eSpoke.com list the phone numbers of corporate headquarters so customers can call (albeit for a fee) if need be.

To take these sites for a test-drive, Inc. Technology asked three growing companies -- MBA FreeAgents.com, WebCT, and eOriginal -- each to submit one month's long-distance phone bill. We plugged the information from those bills into eSpoke.com and Decide.com. (Simplexity.com's long-distance portion wasn't yet operating at press time, and we didn't use Telezoo.com since it doesn't offer any immediate price-comparison tools.) In addition, we entered information from one of eOriginal's cellular-service bills into Simplexity.com, Telstreet.com, Decide.com, Point.com, and LetsTalk.com. (See the charts below.)

MBA FreeAgents.com places experienced MBAs with start-up and other companies that need high-level employees. MBA FreeAgents.com is a fast-growing company with three full-time employees and seven part-timers. CEO Rob Steir works from his home in New York City and spends about $235 a month on long-distance calls with MCI WorldCom.

When Steir first signed up with MCI WorldCom, he snagged a 12-cent-per-minute rate. At the time, Steir recalls, the provider promised 10,000 airline miles along with a 20% rebate if he stuck with the plan for a year. Steir knew there were cheaper per-minute rates available, but he resisted the advances of other carriers because he figured he was getting a good deal with the rebate and the miles. At year-end, however, MCI gave him only the airline miles, saying that he had chosen that option over the rebate. Steir says he feels misled by MCI, especially since his 20% rebate would have amounted to about $250 -- more than a month's long-distance bill. As a result, Steir was more than ready to dump MCI for another provider -- if he could find a better deal. (An MCI spokesperson says that Steir's account is being credited to correct the error.)

And did he ever find a deal. ESpoke.com pulled up the lowest-priced plan -- $102.24 per month, through a carrier called RSL Communications. Decide.com came in slightly higher, with a total estimated monthly cost at TTI National Inc. of $114.01. Those sites take usage patterns into account and occasionally turn up surprisingly useful information. For example, Decide.com also lists MCI WorldCom's 5¢ Everyday plan -- which might seem like a bargain. But after analyzing Steir's calling pattern, Decide.com estimated that MBA FreeAgents.com would spend $283.13 per month with MCI WorldCom -- no bargain at all.

A larger company like WebCT, which builds systems that colleges use to create online classes, has more complex telecom needs. The company more than tripled in size, from 60 employees last fall (split between offices in Peabody, Mass., and Vancouver, British Columbia) to more than 200 today. The company counts millions of student users in 100,000 courses at 1,100-plus colleges and universities in more than 40 countries.

"From a sales perspective, we need to make a high volume of calls around the world, 24 hours a day," says Peter Segall, vice-president for sales and strategic partnerships at WebCT. "We need a plan that's flexible enough so that as we see patterns about time of day emerge, or we see patterns about regions emerge, we can minimize our expenses by getting discounts in those categories." In addition, because it's growing so quickly, WebCT doesn't want to get locked into any long-term contracts.

Currently, WebCT uses Bell Atlantic for its in-state toll calls and American Long Lines for its state-to-state and international calls. The company spends about $1,347 a month on in-state, state-to-state, and international calls for its headquarters in Peabody. ESpoke.com came up with the cheapest deal -- RSL's Alliance plan, which would cost WebCT $986.38.

Still, that may not be the best that WebCT can do. Bobby Martyna, president and CEO of eSpoke, says its site is optimized for companies with fewer than 20 employees. (Decide.com says it can handle phone bills from companies with up to 100 employees.) Since WebCT receives complicated 70-plus-page telephone bills each month, it might benefit from the customized bids that Telezoo.com and Simplexity.com offer.

EOriginal Inc. is a four-year-old company that has developed a patented process for creating what it calls "electronic source documents" -- digital versions of birth certificates, driver's licenses, and so on. At the end of last year, eOriginal had 25 employees. This year the company expects to grow to more than 60 employees and about $12 million in sales.

Doug Trotter, eOriginal's CEO, says his company looks for the cheapest long-distance service possible for its headquarters, in Baltimore. Last fall eOriginal spent about $133 a month on direct-dial long distance with AT&T and used its teleconference service once, for a cost of $90.

Again, eSpoke.com found the cheapest plan: RSL came in at $81.16 per month. Both eSpoke.com and Decide.com also pulled up TTI's Month-to-Month plan, but eSpoke.com estimated the monthly cost would be $83.76 while Decide.com estimated that same plan would cost eOriginal $96.13. Unfortunately, neither site compares teleconferencing services. Simplexity.com promises to do so later this year.

Ultimately, Trotter feels his cellular service is more important than his long-distance plan. He's looking for high-quality cellular service for his senior executives, general managers, and sales force. All senior staffers at eOriginal are converting to one-rate national plans.

"We're getting really large telecommunications bills from hotels when we're traveling," says Trotter, adding that, as more and more employees download E-mail on the road, the bills are mounting. "Normal direct dial on a computer without an 800 number can run you up to a couple hundred dollars an hour in a hotel room," he says.

EOriginal founder and executive VP Stephen Bisbee already uses AT&T One Rate service from AT&T Wireless Services and pays $149 for 1,400 minutes a month. But Bisbee, who used the phone for only 300 minutes in December 1999 (the bill we used), is obviously overpaying for a plan he doesn't need.

Simplexity.com, Telstreet.com, Decide.com, and Point.com all recommended AT&T's Digital One Rate plan, through which Bisbee could get 300 minutes for $59.99 a month. LetsTalk.com recommended Sprint PCS's Free & Clear 500 plan, which would give Bisbee 500 minutes for $50.

Even the pros admit that comparing wireless plans is no simple task. Without a Web site to help buyers navigate roaming charges and off-peak bundles, it's next to impossible. "My guess is that the majority of the people in the wireless area are on the wrong plan, just because it's hard to understand," says Decide. com's Roy Prasad.

But by investing about half an hour -- and a little patience -- in these sites, most consumers should be able to turn the odds in their favor. Even those customers with a Ph.D.

Rachael King is a freelance writer based in Hoboken, N.J.


Test-Drive: Long-Distance
Here are the plans currently in use by our three companies compared with the Web experts' recommendations:

COMPANY DECIDE.COM ESPOKE.COM
MBA FreeAgents.com
MCI WorldCom
MCI One for Small Business Extra

$235.35 per month
TTI National Term plan

$.069 per minute
$114.01
RSL, Alliance plan

$.069 per minute
$102.24
WebCT
Bell Atlantic/In-state
American Long Lines/Interstate, Intl.

$1,346.90 per month
TTI National MTM promo

$.069 per minute
$1,201.89
RSL, Alliance plan

$.069 per minute
$986.38
eOriginal
AT&T

$133.35 per month

TTI National MTM promo
$.069 per minute
$96.13

RSL, Alliance plan
$.069 per minute
$81.16

Test-Drive: Wireless
We put the wireless plan used by eOriginal's Stephen Bisbee to the test at five different Web sites. Here are their recommendations:

WIRELESS CUSTOMER WIRELESS PLANS
Stephen Bisbee
AT&T One Rate
plan is 1,400 mins./$149
currently uses 300 mins.
Simplexity.com
AT&T
Digital One Rate
300 mins./$59.99
Telstreet.com
AT&T
Digital One Rate
300/$59.99
Decide.com
AT&T
Digital One Rate
300/$59.99
Point.com
AT&T
Digital One Rate
300 /$59.99
LetsTalk.com
Sprint PCS
Free & Clear 500
500/$50

The Players

DECIDE.COM
What it compares: Wireless, long-distance, prepaid calling cards
Site launched: September 1999
Funding: $20.5 million in 1999 from Advanced Technology Ventures (ATV), Morgenthaler, Information Technology Ventures (ITV), and J.F. Shea & Co.
Customer service: 800-792-3890, M - F, 6 a.m. - 11 p.m. Pacific time; Weekends, 9 a.m. - 6 p.m. Pacific time

LETSTALK.COM
What it compares: Wireless
Site launched: December 1999
Funding: $20 million in 1999 from Brentwood Venture Capital, Accel Partners, HIG Capital Management, and Goldman Sachs
Customer service: 877-825-5460, M - F, 6 a.m. - 9 p.m. Pacific time

POINT.COM
What it compares: Wireless
Site launched: May 1998
Funding: $18 million to date from private angel investors, Oak Investment Partners, IDG Ventures, and Kirlan Venture Capital; and $3.5 million from Staples
Customer service: 888-764-6877, M - F, 6 a.m - 7 p.m. Pacific time; Saturdays, 8 a.m. - 4:30 p.m. Pacific time

SIMPLEXITY.COM
What it compares: Wireless, long-distance, calling cards, and 800 service
Site launched: January 2000
Funding: $28.5 million from ABS Capital, Best Buy, and Novak Biddle Venture Partners
Customer service: 24-hour service, 800-321-8552; 877-868-2652 (fax); customerservice@simplexity.com

ESPOKE.COM
What it compares: Long-distance. Internet service providers and digital subscriber line (DSL) to begin this month
Site launched: November 1999
Funding: At press time, the founders had bootstrapped $500,000 and were closing their first round of financing.
Customer service: customer-service@espoke.com

TELEZOO.COM
What it compares: Long-distance, wireless, local, teleconferencing, DSL, Internet service providers, ATM, frame relay, Web hosting, and more
Site launched: March 1999
Funding: $3 million from Lazard Technology Partners
Customer service: Online chat, M - F, 9 a.m. - 6 p.m. Eastern time

TELSTREET.COM
What it compares: Wireless
Site launched: September 1999
Funding: $17 million
Customer service: 877-947-3537, M - F, 8 a.m. - 11 p.m.; Saturdays, 9 a.m. - 5 p.m. Eastern time

Last updated: Mar 1, 2000




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