TMC Communications Expands to New Santa Barbara, Calif., Location.

Byline: Mark van de Kamp

Nov. 9--Santa Barbara-based TMC Communications is expanding again, offering local companies a new choice for phone service.

It's another big move for the local firm that's used to taking on industry heavy hitters like SBC Communications and Verizon Communications.

TMC has been around for 20 years and provides various voice and data services to commercial and residential customers throughout the nation. These range from local and long-distance services offered as stand-alone products or bundled packages, dedicated long distance, dedicated Internet access, private lines, calling cards and audio and Web conferencing.

Now the profitable company led by John Marsch is growing again, with new products and expansion into a new downtown headquarters.

In competition with Verizon, TMC is seeking Santa Barbara businesses to sign up for local phone service. It's offering basic local service at a savings of 25 percent. Customers who sign up for TMC's local service can add long distance for 3{ cents per minute. TMC uses the same public switched network as the major telephone company.

More than 60 companies have made the switch to TMC since it began offering the service on Sept. 4, said Susan Davidson, account executive for TMC. It's advertising for a handful of positions to help handle this growth.

TMC is the second Santa Barbara firm to offer local phone service to compete with Verizon. Blue Casa launched earlier this year in Santa Barbara, serving residential customers between Oxnard and San Luis Obispo.

TMC has battled the incumbent phone companies for six years in the business phone market. TMC does plan to get into the residential phone service segment, but not this year. When it does, it will use the same public switched network as Verizon and Blue Casa.

"We want to do phone service the right way," said Mr. Marsch, TMC's founder, chairman and CEO. "We give live customer service. We have very accurate billing."

He said the company is large enough to meet complex telecommunications demands yet is small enough to offer personal service.

TMC said its year-to-date revenue is up 25 percent over last year, impressive given the economy and industry challenges. The privately held company expects 2003 revenues to reach $30 million.

TMC is licensed as able to sell its services to customers in 48 states. That required a separate approval process and tariff (or fee) arrangement with each jurisdiction.

Other companies that have a national footprint include Sprint, AT&T and MCI. TMC has approximately 18,000 commercial customers.

TMC and Blue Casa are among a wave of companies challenging the big boys, acknowledged Jon Davies, a Verizon spokesman.

"These companies are coming in and taking advantage of the unbundled network pricing that basically allows competitors to use the network at a cheaper rate than it costs us," Mr. Davies said, explaining that the Public Utilities Commission sets the rates. "At the moment, the rates are quite a bit below the rates we can charge. We're operating on interim rates now."

Verizon believes its size and experience set it apart, Mr. Davies said. "People can see that the competitors don't offer the same level of service as the more established businesses."

He noted that Verizon and SBC are delivering "very good" and "generally good" phone service, respectively, to Californians, according to an Oct. 30 report by state regulators.

TMC is among the most established companies in the telecommunications sector based in Southern California. It launched in 1982 to compete against AT&T for long distance and grew into one of the largest telecommunications companies in California. Mr. Marsch sold that company in 1990 to a Swiss holding company. While under a U.S. noncompete agreement, he worked on a few international telecom ventures. Then in 1997, after his noncompete agreement expired, he relaunched the current TMC.

In fall 2001, the company received approval to provide local and long-distance services to all California business and residential customers within the SBC Pacific Bell service territory. For many customers, TMC said, this provided the first opportunity to receive local phone service, long distance and data services all on one bill from one telecom company.

With that change, TMC quickly outgrew its Santa Barbara headquarters and expanded, opening a satellite office in Bakersfield and a 10,000-square-foot customer care and provisioning center in Folsom. The new local service is primarily sold by Ms. Davidson, and other TMC services are sold through its network of more than 250 independent agents across the nation.

TMC is on the verge of signing a lease to expand its headquarters from 5,000 square feet to 8,500 square feet in downtown. The company employs 22 people in Santa Barbara and 45 overall.

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(c) 2003, Santa Barbara News-Press, Calif. Distributed by Knight Ridder/Tribune Business News.

TICKER SYMBOL(S): SBC, VZ, FON, T, MCWEQ