MCI Communications Corp., striving for new ways to compete with American Telephone & Telegraph Co., is exploring how cable television could be used by consumers to bypass local telephone systems and plug directly into MCI's discount long-distance network.
The Washington-based company -- which is AT&T's largest long-distance competitor -- will begin tests next month with a major cable operator to see if such a cable-telephone system is technically feasible.
The test, to be announced today by MCI Chairman William G. McGowan in a speech before a California cable convention, will take place in Omaha with Cox Cable.
Under the experiment, one of MCI's major corporate clients--which MCI declines to name--will be able to hook into MCI's network without having to dial the 22 digits all MCI customers now have to dial.
The customer simply will dial the normal 10-digit long-distance number. An internal switch at the company's headquarters will route the call automatically to the cable network, which in turn will use part of its radio frequencies to route the call to MCI's local terminal. The call then will be switched into MCI's nationwide microwave network and relayed to its destination.
"No new technology needs to be invented" for this experiment, McGowan said. However, "substantial development work needs to be done" on the equipment, McGowan noted in his prepared speech, which was released here yesterday.
McGowan, who is eager to develop a new and cheaper way to get customers to hook into his long-distance network, stressed that it is in the cable industry's interests to participate with MCI in this experiment.
"There is a natural synergy between a cable company and a company like MCI," he said.
"By providing your customers direct access to MCI's long-distance network, you can quickly enjoy substantial revenues from an existing service with proven and enormously growing demand. This may let you achieve pay-back from your two-way plant investment more rapidly than by any other means."
What's more, McGowan said, "Many of the customers you approach will be able to save enough on long-distance calls by using MCI instead of AT&T , to pay for their monthly cable subscription. It's a salesman's dream."
The benefits are great for MCI, too, McGowan said. "We need a local distributor who can get us down the block and into the home at a good price. Our goal is to reach this mass market without the interference of the telephone companies."
Complaining that local telephone companies have made it difficult for consumers to use any long-distance network other than AT&T's, McGowan said "our customers are subjected to unnecessary expense and hassle," such as having to dial 22 digits to make an MCI call compared with only 10 digits needed to make a call over AT&T's lines.
MCI's plans could spell problems for local telephone companies and state regulators, however, because it could reduce sharply the revenues that local companies receive from MCI and other competitors for access to their customers.