Getting the message straight: changes in telecommunications laws have opened up the telephone service marketplace.

Changes in telecommunicattions laws have opened up the telephone service marketplace. But how do you know which service is best for you?

HAVE YOU BEEN BOMBARDED AT home by telephone calls from telemarketers trying to get you to switch your long-distance or regional phone company? Or, maybe your mailbox has been stuffed with offers from unknown companies who say they're now able to provide "low-cost" phone service--local, regional or long distance--to "select customers" in your area--and, of course, you just happen to be one of those customers?

AT&T True Reach Savings, MCI One and Sprint Sense are but three of the many calling plans offered by telephone companies whose aggressive sales pitches are aimed at getting consumers to switch their local, regional and long-distance phone service. This scramble for your telephone dollars is just the beginning. The Telecommunications Act of 1996, passed in February, allows just about any company--major as well as independent player--to provide phone service to businesses and consumers as long as they comply with Federal Communications Commission rules.

With the forced breakup of the AT&T monopoly in 1984, the eight regional Bells became the billing agents for most long-distance service within a local area. Since then, the Baby Bells have dominated this market, controlling more than 75% of the $101 billion industry. Recently, the FCC again saw fit to intervene and now requires the Raby Bells to offer equal access to all long-distance carriers who want to provide local and regional service. In turn, these regional Bell companies will be permitted to provide their own long-distance service. The hope is to create a competitive environment benefiting both phone companies and consumers.

Indeed, both large and small phone companies will benefit from deregulation, but will consumers? Not initially. According to Gail Lawyer, editor of the Local Competition Report, local charges will increase in the future for a number of reasons. She feels that prices will go up, at least initially, because there will be fewer regulations and price restrictions and more pricing structure changes placed upon local and regional companies in this new environment. There will be more competition in large metropolitan cities, soon resulting in better pricing structures, while residential customers in smaller cities will see rates increase. Businesses in major metropolitan centers that make a large volume of calls and use a variety of telecom services will reap the biggest benefits, however, "It may take up to 10 years for residential customers to experience the benefits of competition," says since deregulation leaves price setting each state, there's no accurate way to tell what the average cost for local service will be.

Deregulation may also have a potentially negative impact on African Americans, Asian and Latinos. "I think there will be growing areas of marginalization," says Ken McEldowney. executive director of Consumer Francisco-based consumer advocacy group. The reason? Smaller phone companies, which may offer inferior technical and customer service, will target lower-income groups, particularly in the inner cities, that are looking for the cheapest rates. They'll also target foreigners who may not understand exactly what they're paying for. There'll probably be mare calling plans featuring price breaks or incentives, especially for those making international calls. But at tire same time, McEldowney warns, there may also be increased marketing and sales fraud because of these language barriers.

Sifting through the marketing ploys and seemingly endless choices can be confusing and tedious. But there'll be price breaks, says McEldowney, for phone users who make an abundance of long-distance calls or who "bundle" services, combining their home phone, cellular phone, pager, fax machine and Internet access under one carrier. They'll see bigger price breaks because they'll generate greater revenue for the phone company and get higher discounts overall--leaving those who just want basic local or long-distance service with higher monthly bills.

But there are other issues you should consider, pointers to remember and tactics to employ to determine and choose the best deal for your phone dollars.

GET THE 411 FIRST

When long-distance service was divested in 1984, various new companies began competing for customers, both residential and business. To businesses, these companies offered contracts guaranteeing service at fixed rates for a specific length of time. For residential consumers, an all-out pricing war began with long-distance telephone companies offering everything from fixed and cheap rates to rebates--paying consumers to "switch" carriers. Many consumers began shuttling back and forth between carriers and plans gaining extra cash, while ideally lowering their telephone expenses.

About 2% of all consumer expenses are devoted to telephone service, according to an FCC report. Since virtually all African Americans with incomes between $60,000-$74,999 have telephones (about 2% more than whites and 5% more than Hispanics with the same incomes), it's critical that consumers do the dirty work of making sure they're getting their money's worth.

Even in the face of TV ads offering incredible savings and persistent telemarketers trying to get you to switch, most people choose to remain with their regional Bell (i.e., NYNEX or PacBell) or with one of the big three. They are familiar with the services offered and aren't aware of their other options. Until now, these companies have dominated residential and long distance service.

"I would tell people the quality of the products is essentially the same, therefore, the two main concerns of consumers should be price and attention to customer service," says David Gusky, executive director of the Wireless Resellers Association. Gusky feels that wireless resale will now increase in popularity, since it was unaffected by last year's Telecommunications Act. (Resellers buy time from the major telecommunications providers and sell it at a discount to consumers.) He adds that if wireless companies can provide the same volume of calls for as little as $40 a month, they could become legitimate competition for land line service, which is cable-based as opposed to cellular. They may even be able to replace about 20% of the service currently provided by nonwireless companies, he adds However, this won't be possible for a couple of years for two reasons. First, wireless service is currently too expensive due to the high cost of licenses the lack of competition.

However, more ten than not, you are paying far too much for local service, not because o because of lack of competition, adds Gusky. In the New York City area, for example, Bell Atlantic/NYNEX and AT&T Wireless are the only two licensed wireless providers.

Secondly, a number of technical problems face wireless service, such as developing a uniform transmission format so people who use different companies can communicate with each other.

DO YOUR HOMEWORK

With deregulation, smaller companies and resellers can provide you with local service, usually at lower prices. Long-distance companies will generally enter the local market as resellers.

But make sure you read the fine print; some companies charge a monthly fee to participate in such a program. The downside to using a reseller is that a customer service representative might not be as readily accessible if you have a problem with service or billing. Currently in the U.S., there are 400-500 small resellers and about 12 major resellers, including Excel and Telegroup.

Smaller phone companies, with their own network elements, will also be able to target certain niches such as rural areas, and residents here may get better deals. On the other hand, larger companies will go where the big money is, prospecting for business among the larger corporations. "The ultimate goal of the consumer should be to pick one company to provide local and long-distance service," says a representative of the Washington, D.C.-based U.S. Telephone Association, a lobbying group for local exchange carriers. In the near future, practically all phone companies will offer bundled services. Aside from using your regular carrier, you can also use another carrier by "dialing around." With the five-digit code of a particular company, usually a reseller, you can place a call using that company as your billing agent. Often, they offer prices as low as six cents a minute. However, you should never dial around to make a local call since you are already paying for those calls with your local service.

STUDY YOUR OPTIONS

Je-Ru Hall, senior account manager of Telegroup, suggests that you do the "700 test" to make sure you haven't been "slammed" or switched to a different carrier without your knowledge. By dialing 700-555-4141, a recording will state exactly whom your long-distance carrier is. Then, call your carrier and request a "pick-freeze" so that no one will be allowed to switch your service without your written or verbal OK. "You want to pick a company that's FCC-regulated because anyone can buy time," says Hall, whose company, located in Fairfield, Iowa, is one of the leading resellers and offers bundled services, including calling cards and an 800 service. "You should also look for a company that's been in business over five years," he says. Because of the Telecom Act, local rates will vary drastically from state to state, he explains. States that charge the highest local rates include Texas, Vermont, Maine, New Hampshire and Arizona, with per-minute rates totaling as much as 50 cents a minute for local calls.

Your basic local service bill should include monthly service and message unit charges, installation service and enhancements (i.e., tone dialing/dial tone and call waiting), taxes, subscriber line charges, and all other consumer expenditures associated with telephone services, except for long-distance charges. If your telephone bill seems like a foreign language, don't expect that to change. The bills have to be that explicit since phone companies are heavily regulated by the FCC. However, if you notice a charge that you're not familiar with or need help deciphering the bill, call your company's 801) number for assistance.

Most experts in the phone industry agree the best way to save money is to choose a calling plan. Only about one-third of phone customers are enrolled in a calling plan, says Aaron Golub, a representative of the Telecommunications and Action Center (TRAC) in Washington D.C. Almost every phone company offers some sort of plan that be tailored to your calling habits. The higher your phone bill, the more likely you'll need to examine whether your calling plan is right for you.

TRAC's newsletter, Tele-Tips, offers some helpful advice in choosing a calling plan:

* First, determine your calling patterns. When do you make the greatest number of calls and what is their average duration?

* Next, research and compare calling plans to f nd the least expensive one to suit your needs. You can get a list of all the long-distance providers in your area by requesting it from your local telephone service company. Ask if the company bills in six-second or one-minute increments. Off-peak hours, which offer The lowest rates, will vary from company to company, so make sure you're dear about when they are. Also, try to pick discount plans instead of standard rate plans, which are usually more costly.

For example, LCI's All America Plan offers flat rates that vary by time of day and in six-second increments. Billing in smaller time increments of six or 15 or 30 seconds means that a call will often cost less because you are only billed for that amount of time and not the calling time rounded up to the first minute. Under LCI's plan, customers pay no sign-up or monthly fees and have no minimum monthly requirements. Another plan, HomeSaver, offered by Frontier, is good if you work at home and make many calls. This plan offers customers only two calling periods, peak and off-peak, with flat rates offered for each. Calls are billed in six-second increments and there are no minimum spending requirements.

* Read each plan's description to make sure you meet the requirements to get the discount rates, and that the rates are still the same. Call a company's 800 numbers to check if rates are still the same and the features and services you want are still offered with the plan.

* Negotiate with a particular company for the rates you want by calling customer service. Be knowledgeable about what plans they offer, their competitor's plans and how much you're willing to spend. Aaron Golub of TRAC was offered a 50% discount on his long-distance bill from his phone company. But he was able to negotiate for a 40% total discount, including long-distance calls, directory assistance and calling card costs. "It comes down to haggling," Golub says.

The bottom line: Don't let all the sales hype confuse you. Learn more about your rights and what to look for in a telephone carrier by "letting your fingers do the walking." Here are a number of consumer services you can "reach out and touch" for more information:

* Telegroup's online Call Cost Comparison chart (http://www.callcost. com) can give you a broader picture of price ranges.

* The Federal Trade Commission offers an online consumer help line at gopher://consumer.ftc.gov:2416; or call their National Fraud Information Center at 800-876-7060.

* The Tele-Consumer Hotline (http://www.teleconsumer.org/hotline) is a nonprofit consumer help organization that provides online advice and information about long distance.

* For a free copy of the Consumer Action phone survey, send a self-addressed stamped envelope to: CA. Long Distance Rate Survey, 116 New Montgomery St., Suite 233, San Francisco, CA 94105.

* TRAC's newsletter, Tele-Tips, can be purchased for $5 by sending a self-addressed stamped envelope to: TRAC, P.O. Box 27279, Washington, DC 20005.