Long Distance Hook Up/Hang Up

Long Distance Hook Up/Hang Up

In an interview last year with Jim Berra, vice president of the Starwood Preferred Guest program, we asked him where the action was going to be in the future. His answer was as brief as it is turning out to be prophetic — “wireless.”

For the past several years, millions of members have enjoyed the opportunity to earn bonus miles with various long distance providers that have partnered with the frequent flyer programs. Recently, though, all the news out of the telecommunications industry has focused on the promotional aspects of the cellular industry and, in particular, free long distance options. Given the growth in this market segment, it was just a matter of time before cellular programs had an impact on the “long distance” partners of various frequent traveler programs.

Now, recent rule changes in the cellular communications industry make it possible for cell phone owners to retain their cellular number when switching providers, and even to move their home phone numbers to their cell phone. These two rule changes are significant in that they represent a serious threat to future demand for traditional long distance service — and that will almost certainly spell the end of long distance service bonuses.

With decreasing call volumes, ongoing bonus-mile options and multi-year guarantees in place, the long distance service provider business had already become an increasingly expensive proposition. In fact, when WorldCom got into financial trouble a few years ago, MCI more than likely viewed it as a godsend, as the WorldCom situation allowed them to get out of several high volume contracts with these programs. While both AT&T and Sprint were well placed to shift some bonus offers over to their wireless units and maintain traction within their partnerships, MCI was stuck. They were never able to purchase Nextel and thus fell behind in the race for how these partnerships were changing.

Over the course of the next year, frequent flyers should expect to see the slow death of large sign-up bonuses from long distance partners, as more of the true long distance is swallowed up by cellular phone use.

If you’ve been one of those who have taken advantage of the long distance bonus offers, we suggest you grab what you can now, because later you may not be able to get through.

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