MCI Communications Corp., which made its reputation by offering consumers low cost long distance telephone service, may soon be offering telephones as well.
The company is now exploring the idea of distributing multi-function telephones at a discount to its subscribers. "What we're trying to do is make our service more accessible to everybody," said Edward W. Carter, MCI's senior vice president of marketing. "Right now, we're testing to find out how vital the market might be."
The key reason for MCI's interest in the phone business isn't revenue, Carter insists, but customer convenience. "We want you to be able to push an MCI button on your phone that calls us up and tells us your code and then goes right into our system," he said.
Currently, an MCI subscriber has to dial a local phone number and then enter a five-digit code before placing a long distance call. MCI feels that puts them at a 12-digit disadvantage when competing against Bell Telephone's Long Lines, where those extra entries aren't necessary. The phones MCI wants to market are "smart" phones, with the ability to store and almost instantly dial any number placed into its memory.
"Any programmable speed-dialing phone would do," says Carter, but as a marketing ploy the company figures it is well positioned to distribute phones with both local number and code number already programmed in.
"We think we have a real advantage," says Carter. "We can just ask someone calling up to sign up for MCI whether they also would like to buy a phone for another $50 or $60. They can charge it on their credit card and plug it into the wall when they get it."
MCI, which now has roughly 2 million subscribers, has been in discussions for the last two months with "five or six manufacturers," said Carter, and "we're looking for the ability to sell us a million or more phones." AT&T's giant Western Electric subsidiary, however, is not among companies MCI is negotiating with.
With the breakup of the Bell System and various Federal Communications Commission rulings that allow consumers to own their own phones, the consumer telephone market is expected to grow from a $400 million business in 1982 to close to $1 billion by 1985, according to the electronics industry.
"This is a clever idea," says a Wall Street analyst who follows MCI, "but I hope that they would never have a product recall."
MCI's Carter says the company will decide whether to go ahead with its phone distribution program by fall.