The International Telephone and Telegraph Corp. has asked the Federal Communications Commission to allow it to expand its private long distance telephone service to 100 cities, a move that would make it the nation's second largest interstate telephone network, behind only the American Telephone & Telegraph Co.

If approved, the ITT system would enable its users to reach more than 90 percent of all business telephones in the United States, at cost reductions of up to 85 percent from AT&T charges, the company claimed.

"ITT's long distance service, known as City-Call and offered through its subsidiary, U.S. Transmission Systems, Inc., was first introduced last April. At that time, it was offered in only 11 cities, and was significantly smaller than similar services offered by firms such as MCI, Inc. (about 60 cities) and Southern Pacific Communications (about 70 cities.)

But the entrance of ITT into the $16 billion (annually) interstate telephone market was seen as highly significant because of the sheer size of the company, and its ability to finance large-scale future competition with the Bell system.

In fact, "ITT's efforts in the area appear to be moving at breakneck speed. By May, the company announced an increase to 28 cities. And its 100-city system could be in place within 90 days, if FCC approval is forthcoming quickly, said ITT official Patrick Ryan, who is general manager of the subsidiary, USTS.

"We looked at the marketplace and asked what we would have to do to compete," Ryan said in a telephone interview from New York. "when we were out trying to sell our system, people asked how soon we would be going into more cities."

He said ITT will be using both microwave ground transmission and satellite relay systems to send phone signals across the country. Once the signal reaches the local area, ITT, like all of its competitors, interfaces with the local Bell system telephone company for the last leg of the phone call. For that portion of the call, the Bell system is paid a fee determined by the FCC.

Although the present ITT system allows only for toll billing -- payment based on the number and length of each telephone call -- Ryan said it is only a matter of weeks before ITT will introduce a system similiar to AT&T's Wide Area Telephone Service. Such a system would charge a user a set fee for unlimited telephone calls.

AT&T spokesman Pic Wagner said, ITT is following the same course as other companies in trying to increase long distance business. They are now increasing competition with other speciality companies as well as the Bell System."

Wagner said the ITT proposal leaves "still unanswered policy questions as to whether such an action is in the public interest,

The Federal Communications Commission has only recently begun to allow competition in the telephone business, which has long been dominated by AT&T under a government sanctioned monopoly."