Officials of MCI Communications Corp. say the company's new venture into the residential telephone business has been so successful that by the end of next month the company will have more residential than business customers, even though the corporate side of the company's long-distance service has been in operation for most of the decade.
After trial runs in Kansas City, Denver and Cincinnati beginning last February, the company now has moved its media compaign for residential service into other markets. It has a San Franciso program this week, and next week will move the advertising blitz into Los Angeles, Dallas, Philadelphia and Tucson. The company also will expand its advertising efforts in New York City after a recent brief run there that MCI marketing director Gary Tobin calls a "teaser."
By the end of September, MCI expects to have signed up close to 60,000 residential customers, who -- for either $10 a month for all-day service or $5 a month for evening service -- use MCI's microwave network to most major cities to cut their long-distance telephone bills by as much as 40 percent to 50 percent over the rates charged by Bell System firms.
But despite the successful effort, which during some periods brings MCI as many as 1000 new residential customers a week, MCI Chairman William McGowan cautioned against reading too much into the development. McGowan points out that the ratio of the company's profits from business to profits from residential, like that of arch-rival American Telephone & Telegraph Co., is about 5 to 1.
In other words, MCI will need about 300,000 residential customers before the profits from that segment of its business match those garnered from MCI's 60,000 business customers.
The revenues coming in from new residential customers mainly are being used to expand the MCI microwave network, which MCI plans ultimately to have cover most of the country.
For instance, the company currently is constructing a system from Cincinnati to Florida. MCI customers now cannot hook up with Florida telephones, even though Florida, because of the large number of retirees there, would be vital MCI marketing COMMERCE, From D1> target. "We'll be there in time for next year's High Holidays," McGowan said in reference to the Jewish New Year, which falls in September or October.
Although Mci -- which probably has higher name reconition in its Washington home base than anywhere else in the country -- already has signed up more than 5,000 customers here, the District area is not the most successful market the company has entered. In highly affluent, mobile and transient Houston, MCI has brought in more than 6,000 customers.
Yet, despite the success of the MCI residential program, a notice he received in the mail recently appears to have brought McGowan even greater pleasure.
That document is an offer from AT&T to provide a letter of credit from a bank or a group of banks or other financial institutions as security for the $1.8 billion penalty awarded MCI in June in its anti-trust suit against the Bell System.
Although McGowan isn't certain whether he will ask for the letter of credit -- and AT&T, to one's surprise, said it plans to take the case to a federal appeals court in Chicago -- he did get a kick out of one reference in the AT&T document.
AT&T said it would provide notes for the 1.8 billion "plus 11 percent to cover interest and such damages for delay as may be awarded plus $250 to cover costs." From the tone of McGowan's chuckle, one almost -- but not quite -- is left with the feeling that getting that $250 might be as nice a gift as the $1.8 billion.