For the past several years, a hotly competitive war has developed for the long-distance telephone market between newly emerging companies like MCI Communications Corp. and Southern Pacific Communications and American Telephone & Telegraph Co.
The new Bell System competitors have been offered cut-rate calling services over their own microwave lines and have captured roughly 10 percent of the long distance market, which still is dominated by AT&T.
But emerging as a challenger to the challengers, so to speak, is a Vienna, Va. firm, TDX Systems Inc., which not only is taking relatively tiny -- but potentially significant -- numbers of customers from AT&T, but is doing so by using the transmission facilities of AT&T and the competitors.
TDX does not have to file tariffs with the Federal Communications Commission or with any other regulatory body. What the company does is to lease its own private lines and subscribe to all the available services -- MCI, Southern Pacific, International Telephone & Telegraph Co. and Western Union Co. -- and offer business customers access to the cheapest of the lines.
And although none of the companies that compete with the Bell System's long-distance service covers the entire country, the computerized selection process of the TDX system gives customers access to virtually every major metropolitan area in the country. "We can service the whole market," says TDX Chief Operating Officer Alan Peyser. "The other guys can't say that."
The company claims its "econo-call" service will save business customers between 30 percent and 60 percent over the long-distance rates of AT&T and as much as 15 percent over the services offered by carriers like MCI.
TDX has never turned a profit, but the company is owned by Cable and Wireless, a mammoth British telecommunications concern that has slowly begun investing millions of dollars in the American telephone equipment and service market. "But, we will make money in 1981 for the first time," says Peyser.
Started by Peyser and William Von Meister, the company began its operations in 1975, with Cable and Wireless a major investor. But as the private British company began running up its support, at a time when TDX business was moving slowly, it became clear, Peyser recounts, that a takeover of TDX operations made sense.
"When we started out, we decided to go national," Peyser says. "We were everywhere, and there was a lot of overhead with that plan."
When Peyser became the TDX chief operating officer in late 1977, he laid off half the sales force and decided to reshape the company's marketing operation. In addition to focusing on large markets, particularly Washington, New York and Los Angeles, TDX decided that the company's future was in smaller companies that could not afford their own large, expensive switching devices to select which long-distance services to utilize.
In Washington, the company's customer list includes the Marriott Corp., Woodward & Lothrop and several major trade associations. In New York, Manufacturers Hanover Corp. uses TDX.
TDX offers the use of the computerized equipment from central sites and lets smaller companies have, in effect, access to the same sophisticated long-distance service that large institutions could afford to install at their own sites that provide the same sorting process.
Not only will TDX make a profit this year, for the first time Peyser said in a recent interview that the company also plans to expand its work force from about 130 people to over 215 by the end of this year. Peyser expects the 1980 sales figure of about $8 million to double.
TDX customers sign a 30-day contract with the company, agreeing to a minimum of $70 per month. Like the other non-Bell long-distance services, customers dial into a computer and then enter a five-digit authorization call. The call is then processed by a computer over the cheapest route.
The only drawback to the system, Peyser says, is the quality of the voice transmission. "Nobody other than Bell can offer than kind of sound," he notes.
What do the phone companies that provide the TDX transmissions facilities say about the firm? "They don't love us, but on the other hand, they know we're going to pay," Peyser says with a chuckle.