Ad War Could Backfire On Phone Companies Some Consumers Hang Up On Attack Ads Broadcast By At&T;, Mci

The multimillion-dollar mudslinging contest the phone companies are waging on TV is “really annoying … a turnoff,” complains Mark Jaffee, an AT&T customer in Meriden, Conn. And he’s hardly alone.

Though the long-distance companies say the ads work, TV viewers and experts suggest they do more to repel customers than attract them.

The ads are biting and direct:

In one MCI ad, former game show announcer Don Pardo is host of the “AT&T True-False Quiz.” Pardo asks whether “every AT&T customer gets true savings.” A buzzer goes off. “False,” he says. “Forty million save nothing.”

In another ad, AT&T attacks MCI’s discounted calling circles in which “MCI asks you for the names and numbers of your family and friends so they can solicit them to switch to MCI. … At AT&T, we don’t ask you for names and numbers. … Privacy, that’s your true choice, AT&T.”

“I don’t get anything out of them,” said Jaffee, the annoyed AT&T customer.

Jack Kramer, an MCI customer in Washington, agreed, calling the ads “phone soup.” To make a true rate comparison, he said, one has to look at a complex set of factors. To this end, the ads are of little help. “It’s too confusing to figure out. That’s why I tune out.”

AT&T and MCI blame each other for the use of negative ads, which, they say, account for less than 20 percent of all their advertising.

“We’re going to answer AT&T whenever it comes into the market and bashes MCI,” said MCI’s advertising director William Pate.

AT&T, MCI and Sprint combined spend $1.2 billion a year on advertising.

Nearly 19 million people switched long-distance companies last year. And both AT&T and MCI, the main users of negative ads, contend they are effective in acquiring and retaining customers. But the companies decline to quantify such gains.

In using the negative ads, AT&T and MCI run the risk of confusing and annoying people, losing credibility and smearing themselves as well as their rival, experts suggest.

In one MCI ad, an operator peeks out from behind a computer and asks: “Are you out there, AT&T? … You’re not going to like this.”

She then says that MCI, responding to an AT&T accusation that MCI doesn’t tell customers the truth about savings, will provide customers with a written statement. “I hate to say it, AT&T, but you asked for it,” she says.

With such ads, “studies have found that companies can damage their own reputations at the same time they are trying to diminish their rivals” said Esther Thorson, associate dean for graduate studies at the University of Missouri’s School of Journalism.

Another unintended consequence of the negative campaign between AT&T and MCI is that it may help Sprint.

Wally Meyer, a Sprint vice president, says that’s just what has happened.

Since the breakup of AT&T in 1984, industry revenue has nearly doubled to about $70 billion. While AT&T has steadily lost market share, its revenues have grown.

According to Federal Communications Commission figures, for the first quarter of 1995, AT&T accounted for 56.6 percent of the long-distance market, MCI 17.7 percent and Sprint 8.7 percent.