Challenging AT&T Communication's virtual monopoly on international long-distance telephone service, MCI Communications Corp. yesterday said it had begun providing direct-dial long-distance service to several foreign countries.
MCI began long-distance service yesterday to Argentina, Belgium, Brazil, East Germany, Greece and the United Arab Emirates at rates 5 percent to 30 percent less than AT&T Communications, said Gary Tobin, a company spokesman. AT&T has held about 90 percent of the international market until now, he said.
Service to the United Kingdom is expected to begin in January, he said. Telephone service to Australia, Singapore and Spain is being tested now and MCI customers can expect to make calls to those locations before the end of the year.
The only foreign country MCI previously served was Canada.
The company also said it will begin MCI Mail service around the world in January. MCI would not estimate what new revenue these international services would bring.
"Competition is what has been missing in both the message delivery and long-distance telephone markets internationally," said MCI Chairman William G. McGowan. "MCI's participation in these industry segments internationally will spur competition, force new technologies to the forefront and increase the range of services available to users of telecommunications services."
"This had been expected," said Steven C. Chrust, an analyst with Sanford C. Bernstein, "but this is confirmation that they're getting the access overseas they need."
MCI reported earlier this week an 86 percent decline in earnings for its second quarter ended Sept. 30, to $7.1 million (3 cents a share), from $51.5 million (22 cents). Revenue rose 21 percent to $478 million from $396 million.
Tobin said the earnings drop was the result of increased fees the company pays to local telephone companies for interconnection into their networks. MCI recently increased domestic long-distance rates by about 6 percent, in part because of the charges.
The international agreements mean MCI is now competing for 40 percent of the $5 billion international long-distance market, Tobin said. MCI will be announcing agreements with other countries by the end of the year, enabling MCI to compete for 85 percent of the market, he said.
Tobin said MCI is discussing long-distance service to between 75 and 100 countries, Tobin said.
AT&T and other long-distance companies such as GTE Sprint are expected to respond to the MCI move into international markets. Sprint is expected to announce service to the United Kingdom, and possibly other countries, today, according to an industry source.
On Oct. 5, AT&T Communications "proposed to restructure international rates and are proposing cuts to the U.K., France, West Germany, Italy, Ireland and Australia," said Richard A. Brayall, an AT&T Communications spokesman.
"We haven't made it a habit to compete with MCI solely on the basis of price and that will be true in the international marketplace as well," Brayall said. "We have a lot more to offer than they do," Brayall said, referring to operator services that enable customers to make person-to-person or station-to-station calls. No other long-distance carrier yet provides operator services.
In the message-delivery market, MCI will be competing for $2 billion a year in revenue through its Western Union International subsidiary, against RCA Corp., ITT, and other international carriers, Tobin said.
Tobin said MCI Mail service, introduced last year, would go all over the world, in addition to MCI's other international communications services. MCI Mail allows a customer to send messages from virtually any personal computer, word processor or electronic device, he said.
"It will cost about 50 percent of what it would cost to use competitive services to use MCI Mail abroad," Tobin said. Services will range from $5 to $30 as opposed to competitive services ranging from $25 to $150, he said.