Phone Companies Fight for Burgeoning Latino Market

LONG-distance phone companies are engaging in an all-out war for the hearts and minds of the Hispanic community.

AT&T, MCI, and Sprint are battling for market share among Latinos, whose phone usage is growing at seven times that of non-Hispanics, according to industry sources. Many of these Hispanics are new immigrants. Phone company weapons include Spanish-language operators, special discounts on calls to Latin America, and media ads portraying the companies as Latino-friendly.

Companies vary little

Each company offers a staggering array of special discounts, monthly plans, and monetary inducements to lure customers. But the basic cost of a phone call to Latin America does not vary much among the companies, and service quality is about equal.

For instance, the cost for a five-minute residential call made weekdays during business hours to the following cities without special discounts compares as follows:

* San Francisco-San Salvador: AT&T $6.24; MCI $6.23; La Conexion $5.62.

* Chicago-Mexico City: AT&T $7.60; MCI $7.55; La Conexion $6.85.

* New York City-Santo Domingo: AT&T $5.60; MCI $6.59; La Conexion $5.04.

With such similar prices, the companies compete based on their special discount plans and on image. To date, AT&T is winning the war hands down. AT&T benefits both from being the oldest long-distance carrier in the United States, and because its name is known in many Latin American countries.

Companies closely guard market-share information, but industry sources indicate that AT&T accounts for about 75 percent of the calls to Spanish-speaking countries, MCI 15 percent, and Sprint 10 percent.

But AT&T faces a sharp challenge from small companies that claim to provide better service to Spanish-speaking customers. La Conexion Familiar began in the San Francisco Bay area in 1990 and today boasts more than 100,000 customers. La Conexion promotes itself as a community-based, Latino-controlled company providing unique services. Sprint completed a buyout of La Conexion last month.

When La Conexion customers dial ``00'' for a long-distance operator, a Spanish-speaking person automatically answers - a service not available with other companies. ``If people come from South America or Mexico,'' says Beatriz Molina, acting general manager for La Conexion, ``they may never have owned a phone or may have had negative experiences'' with phone companies. She says many Latinos become frustrated when talking to English-speaking operators.

The company ran a television ad last year poking fun at just that problem. An older woman asks plaintively in Spanish to call Vera Cruz, Mexico. A frizzy haired American operator, busy filing her nails, says, ``Vera who? No comprendo Espanol.'' The ad urged customers to switch from AT&T to La Conexion.

The other phone companies call that portrayal unfair. MCI can immediately transfer customers to Spanish-language operators, says Melina Formisano, MCI manager of international marketing. Her company provides calling [credit] card instructions in six languages, including Spanish, and is now testing a program to send bilingual bills to Spanish-speaking customers.

AT&T introduces new pre-pay phone cards

AT&T also offers a wide variety of services, including operators and billing personnel who speak Spanish. ``The Hispanic market is very important,'' says Priscilla Dominguez, AT&T's national Hispanic market manager. ``We are very focused on winning.''

AT&T recently introduced a plastic card that functions like a phone credit card but allows customers to prepay. Such cards will help ``recent arrivals who haven't established credit,'' or customers who want to provide family members with a way to make calls from phone booths, Ms. Dominguez says.

Customers dial an 800 number, punch in the account number, and the cost of the call is subtracted from the prepayment.

But AT&T charges higher rates to prepaid card users than to its credit-card holders. AT&T and other companies that plan to introduce similar cards argue that customers must pay a premium for the convenience of having a prepaid card.

But all these company efforts may not be doing much to change consumer loyalties. The Yankelovich Hispanic Monitor conducts a biennial survey of the Latino population, which includes questions about phone use. ``The average consumer doesn't really care which long-distance company they use,'' says spokeswoman Susan Hayward. ``They all have multilingual operators. They all have direct-dial. People just want to pick up the phone and see it work.''