NEW YORK (CNN/Money) -
WorldCom is ready to make a big push into the local telephone market with a local-and-long-distance package of services for about $50 a month, according to several press reports Monday.
The move is seen as an effort to break through the fierce competition in the local telephone market posed by the traditional Baby Bell telephone companies at a time when long-distance revenues have been shrinking.
Worldcom's MCI, which is the second-largest long-distance phone company in the U.S. after AT&T, is expected to announce as early as Monday that it will launch the service in 32 large markets and plans to expand it to the 48 contiguous states by the end of the year, according to USA Today and the Wall Street Journal.
For $50, the service for residential customers would include unlimited local and domestic long-distance phone calls, voice mail, call waiting, caller ID, speed dialing and three-way calling, the papers said. The company also is planning a similar service that would be aimed at small businesses.
The move is an effort on WorldCom (WCOM: up $0.12 to $5.13, Research, Estimates)'s part to stabilize its MCI Group (MCIT: up $0.28 to $5.00, Research, Estimates) consumer business, which has a tracking stock that pays a 60-cent-a-share quarterly dividend but has suffered amid investor fears for the company itself and the telecommunications industry, according to the Journal.
Telecom companies have suffered an overall contraction in most of their businesses, and there's little optimism at present that it will turn around. The Securities and Exchange Commission is investigating some aspects of WorldCom's accounting, the article noted, and the stock of both WorldCom and MCI have tumbled dramatically on these troubles. Heavy competition among rival long-distance companies has driven down per-minute prices, and competition from e-mail and wireless phones also has cut into long-distance revenues, USA Today noted.
MCI believes the service could double monthly revenue from long-distance customers and help the company to retain them for about 30 percent longer, USA Today said.