Digital Switch Corp., the heavily promoted high-technology firm that has yet to produce a single product, announced yesterday that it has received an order from Washington-based MCI Telecommunications Corp. valued at $17.2 million.
Digital Switch said MCI plans to use the equipment to expand its long-distance telecommunications.
The order is subject to further testing of the new system, Digital Switch officials said, but they expect that testing to be successful. The firm, once a Reston operation but now based in a Dallas suburb, said MCI should start receiving deliveries in the first half of next year.
Earlier this fall, Digital officials said that after five years of work, the firm was nearly ready to manufacture a high-speed, compact, electronic device for routing telephone calls. Company officials and supporters have claimed the switch will be several large leaps beyond anything currently on the market.
Last spring, Digital announced that it had an order for $21.7 million worth of the supposedly state-of-the-art switching equipment. A Securities and Exchange Commission filing showed the order was from U.S. Telephone Communications Inc. in Dallas, a privately owned firm, and that the contract was far from firm. In the SEC filing, Digital disclosed "uncertainties" about its ability to produce the switch.
Digital was started in 1976 by two Virginia engineers, John S. Edwards and Theron M. Randall, who set out to design and build a telephone switching system that would use sophisticated digital technology for handling and billing telephone calls.
The engineers quit after losing a proxy fight to stock brokers who had joined in the deal. Then after several changes of leadership, legal and financial scrapes, James L. Donald and a colleague, James M. Nolan, both engineers in Richardson, Tex., joined Digital, moved it to Texas and set out to produce the switch by early 1982.
MCI Chairman William McGowan said yesterday the principals in Digital Switch "have zero to do with the old company" and noted that MCI previously had purchased 60 switches from the Danray Corp. Donald and Nolan left Danray to take over Digital Switch.
Stock in Digital Switch, taken public last year by now-defunct John Muir & Co., soared to $10.50 at one time, then settled at about $6.50 on the over-the-counter market this fall. On Tuesday, Digital Switch was quoted at 8 3/4 bid, 8 7/8 ask.