The "AT&T Unlimited Plan" will charge customers $19.95 per month to make domestic, direct-dialed long-distance calls from their homes to other AT&T residential long-distance customers. All other calls will be 7 cents per minute.
With the move, AT&T seems to be taking advantage of its girth while trying to distance itself from rivals such as Sprint and WorldCom's MCI unit. AT&T is the largest long-distance company in the United States, with about 50 million long-distance customers. But it has faced increased competition from other long-distance carriers and the Baby Bells, as well as from e-mail use and from, which more people are using as their only phones.
The company said earlier this year that it expected consumer revenue to drop as much as 20 percent this year. The company plans to spin off the consumer business as a separate tracking stock.
Ma Bell has tried to beef up its product line by bundling long-distance telephone service with broadband access and local service, for example. But those features are not available everywhere.
AT&T will launch an "aggressive" advertising campaign during the Olympics for the flat-rate service, the company said Wednesday. The service will begin Friday, according to AT&T's Web site.
Calling circles are not new either; other phone companies, including MCI, have offered programs that allowed people to get discounted rates when they call other program members. But AT&T says its large customer base creates "the largest telephone calling community in the nation."
"Consumers who make even a moderate number of long-distance calls each month will be hard pressed to find a better deal anywhere," AT&T Consumer President Betsy Bernard said in a statement.
Later this year, the company plans to offer a free feature that will inform customers when they have reached another AT&T customer.