Competition in the telephone industry comes here in a big way today as MCI Communications Corp. launches a $250,000 advertising campaign to peddle the area's first alternative to 24-hour, residential long-distance telephone service offered by the Bell System.
For the last few years, companies such as MCI and Southern Pacific Communications have been selling cut-rate long-distance service to businesses here. The business world, billed in 1978 for $7.5 billion in long-distance calls, was the primary target for this marketing avalanche.
Today the situation is different. Now the public at large, which increasingly is using the telephone as an alternative to letter writing and even as a means to cut costly travel to visit relatives and friends, can choose from a variety of alternatives to the Bell System's one-time long-distance monopoly.
For most of the 1970s, one of the newest of new waves in the communications industry was the growth of AT&T competitors in long-distance telephone service for large institutions. After the Federal Communications Commission began opening the field to competition in 1969, firms making hundreds of long-distance calls for voice and facsimile transmission found they could cut their communications costs by using a variety of new discounters independent of the Bell System.
While new entrants in the long-distance telephone service field appear certain to attract more and more corporate clients, the 1980s will bring another major area of expansion. That expansion will be in a service that nearly everyone uses regularly from the home -- the long-distance telephone business.
By paying a fee of $10 a month to MCI -- which claims its rates range to less than half of Bell's -- a customer with a push-button phone is given the access number to MCI's computer. After calling that number, the customer then punches a personal billing number and the nine-digit number of the long-distance call. MCI's microwave system hooks up with Bell's local connections in more than 1000 cities.
For example, MCI says that between 7 p.m. and 7 a.m. a seven-minute call from here to Boston would cost 83 cents, compared to the 5 p.m. to 11 p.m. AT&T night rate to Boston of $1.63. AT&T would charge $10.40 for a 44-minute call to Denver, compared with MCI's rate of $6.13 during those hours, MCI says. The new MCI program includes all of the District as well as most of the Maryland and Virginia suburbs.
MCI is not alone in the what already is a hotly competitive challenge in the Washington area to AT&T's Chesapeake & Potomac Telephone Co. subsidiaries. Throw into the fray companies such as Southern Pacific Communications Co., Western Union Corp., International Telephone & Telegraph Co., TDX Systems Inc. and others primarily operating business systems and it becomes clear that competition in the local phone service industry is here to stay.
Bell System officials, who repeatedly complain that these competiting companies are "creamskimming" by offering service in the most profitable markets, leaving AT&T to provide such facilities to the rural, less profitable communities, will not specifically comment on the new MCI venture.
"We will continue to offer to all of our customers including MCI the best possible communication service that we can," said Pic Wagner, a spokesman for AT&T. "We have onviously recognized that competition is a fact of life in the communications business and we have already restructured the Bell System in order to more effectively meet our customer needs."
Western Union's new business service, called Metro I, is scheduled to go into operation on May 31. Metro I will link Washington with 28 other metropolitan areas throughout the country. The company says the service will cut long-distance costs by an average of 20 to 4 percent -- and by as much as 75 percent for some firms.
Southern Pacific, a 10-year-old subsidiary of the railroad now moving its corporate headquarters from Burlingame, Calif., to Bethesda, has been offering its Sprint service for home use here since June 1978. For the time being, however, the residential service is available to customers only between the hours of 5 and 8 p.m. Southern Pacific says its rates to 132 cities are 30 to 50 percent cheaper than the Bell System.
Several factors make Washington particularly attractive to the promoters of these systems. in the business field, Washington is obviously a growing market as more and more companies, law firms and associations open or expand their facilities in one of the nation's most prosperous communities.
"Washington is very important to us," said Michael Passaro, area vice president of Western Union. "With the business increasingly moving headquarters and other offices into the Washington area, such as Mobil Oil, and the presence of the federal government, this market appears to be a very solid one for us."
On the residential side, in a community where natives seem the exception rather than the rule, long-distance calling clearly can be big business. The volume of long-distance calls from Washington may be as high as from any place in the nation. For years and Washington has had more phones per 100 residents (about 150) than any other city in the world.
But the MCI thrust into the residential field represents a dramatic move for both the company and the industry. "Residential service will give us the revenues to be able to expand our system much quicker to cover the entire country," said William McGowan, MCI's chairman.
By the end of the year, the MCI system will be able to connect more than two-thirds of the nation's phones and the company, with only slight revenues from home service, hopes to increase the percentage of its revenues to about 55 percent of total revenues within a few years, McGowan said.