A war of words Name calling increases as federal rulemaking nears >BY CAROLYN HIRSCHMAN, Special Correspondent

The telecom industry's finger pointing is escalating with the launch of two new, multimillion-dollar advertising campaigns-one by MCI Communications Corp. and another by the United States Telephone Association.

Both MCI and the USTA purport to educate consumers about their industries while viciously attacking each other. But their messages, carried in television and print advertisements nationwide, appear to be aimed at regulators and politicians, too.

The increasingly nasty rhetoric comes as the Federal Communications Commission completes rules on universal service and access charge reform. The FCC, which has been deluged with industry comments on both issues, is expected to issue orders in early May.

The ads could influence the FCC, at least in a remote way, said one observer. "The FCC alone isn't going to roll over for an MCI ad, but it's one more thing in a campaign to lobby the regulators," said Melodie Reagan, director of local and long-distance services at TeleChoice Inc, Verona, N.J.

Targeting consumers makes sense because the FCC represents consumers and governs how telcos behave toward them, she said.

MCI started the verbal jabbing with a campaign to "expose local monopolies' $14 billion access charge rip-off." The IXC charges the Bell companies with gouging consumers as a result of inflated access charges, which IXCs pay LECs to start and end telephone calls.

MCI says its studies show that about 40¢ of every long-distance dollar that consumers spend goes toward access charges, but the real cost is about 5¢.

The FCC is considering two ways to reduce the $23 billion in access charges that LECs collect each year. The IXCs want the agency to direct cuts on a set schedule. The LECs favor letting market competition guide the reduction.

MCI spent a substantial amount of money on the campaign, said a spokesman, and the ads will run indefinitely. MCI's print ads are running in national newspapers such as the New York Times and the Washington Post. Television spots are airing in state capitals, including Sacramento; Austin, Texas; and Albany, N.Y.

One TV ad shows a rapid succession of people saying "moo." An announcer calls them "big cash cows" who are being milked by the Bell companies and demands, "stop the ripoff.

It didn't take long for the LECs to fire back. One week after MCI launched its media blitz, the USTA, which earlier this year started a separate $7 million ad campaign to fight the IXCs, decided to kick in an additional $20 million for a campaign titled "Call Them On It.

"MCI's most recent vulgar, irresponsible advertising is a good example of why consumers must beware of false promises and outrageous marketing schemes," said USTA President Roy Neel. "We believe American consumers are much smarter than the cows MCI has likened them to.

The USTA says its wants to educate consumers about local telcos and to help them distinguish between their current local service provider and new entrants-such as MCI-"that may not have the same commitment to universal service and network investment.

Bell Atlantic also jumped into the fray, calling on MCI to stop what the Bell company called its wrong and misleading statements. It claims that MCI's bottom line, not consumers' pockets, have benefited from local telcos' cuts in access charges. MCI has countered that long-distance prices dropped twice as fast as access charges from 1992 to 1995.