Upstart seeks to break into phone market.

Walking through a room lined with telephone switching equipment on the third floor of a downtown office building, David Glickman boasts that the machinery is so well protected that it should be down for no more than an hour every 40 years.

There are reinforced steel frames surrounding the racks of equipment, tanks filled with chemicals that can quickly extinguish fires, and a 1,000-gallon fuel tank on the roof that can keep the equipment running for two weeks in case of a power failure. The set-up is designed to survive an earthquake with a magnitude of 8.0.

Why all the precautions? Glickman wants downtown L.A.-based U,S. TelePacific Corp. to gain the confidence of customers and investors as it goes head-to-head with Pacific Bell and GTE Corp, in the battle over the local business phone market.

In fact, by 2008, Glickman plans on U.S. TelePacific having 5.5 percent of the California market. That's more than a third the current market share of GTE, the state's No. 2 phone company.

That might seem like a bold prediction, but the 33-year-old Glickman has an impressive track record. He founded Culver City-based Justice Technology Corp., which topped Inc. magazine's 1998 list of the fastest-growing private companies.

Justice, which sells long-distance phone service, posted more than $55 million in revenues last year. The firm made its mark by developing a way for businesses in Argentina to make cheap phone calls to the United States. It then expanded to countries elsewhere and has made much of its money by undercutting the prices of long-distance giants.

That's what Glickman intends to do with local business service through TelePacific Communications, a division of U.S. TelePacific. Part of the strategy, in fact, is to package local business calling through TelePacific with long-distance service from Justice.

One of the main selling points, of course, must be price, and Glickman claims that TelePacific undercuts Pacific Bell in several areas.

He says a local toll call runs 3.9 cents a minute, compared with 7-10 cents a minute using Pacific Bell. Also, Pacific Bell charges 85 cents for a call to directory information, while TelePacific charges 50 cents.

In addition, U.S. TelePacific promises that each customer will have his or her own customer-service representative; that phone calls will be picked up by a live attendant within 60 seconds; and that repair people will arrive within four hours of a service call.

"We're offering 1950s service and 1990s technology," says Glickman, who plans to give up the title of president at Justice to Chief Operating Officer Leon Richter in order to run TelePacific full-time.

Analysts note that other competitive local exchange careers - also known as CLECs - have had a hard time breaking into the local phone market. In fact, Pacific Bell is still struggling to meet the California Public Utilities Commission's requirements that it fully open itself to competition - something that is not only required under the federal Telecommunications Act of 1996 but necessary before Pacific Bell can compete in the lucrative long-distance market.

Meanwhile, the telecommunications giant continues to own the L.A. phone lines, switching stations and other facilities that upstart firms need in order to offer service. "What the local competitors are seeking to do is buy the pieces from local carders (like Pacific Bell) in order to compete with them," said Jeannette Noyes, a research manager for International Data Corp, "There's a lot of paperwork that needs to go back and forth, and logistics that need to go back and forth. There are all kinds of issues that could appear like stall tactics."

TelePacific, which was founded last April, has its own switching device that allows it to connect lines and complete calls. Many other CLECs have continued to use Pacific Bell's switches, making service more expensive for the companies and their customers as well.

As for funding, Glickman himself invested $6 million, and his friends and family kicked in another $3.4 million. He says he is in negotiations with two institutional investment groups and expects to secure an additional $25 million by the end of the month.

Currently, the company has 890,000 phone lines being used by customers that include USC, the Orange County Register and the Doubletree Hotel in Costa Mesa. Most of those lines are being provided free to customers and are used for outbound toll-free calls - such as 800 numbers around the country. When those numbers are dialed, TelePacific collects a fee for routing the call, and passes on part of the profit to the customer - a perk the company hopes will convince businesses to switch more services to TelePacific.

"It gives us an opportunity to talk to them about additional services - the core business we do," said Patrick Copeland, TelePacific's director of major account sales.

Pacific Bell says it's meeting such competition from TelePacific and other CLECs by expanding its services and lowering its prices.

"We have had to become, over this period of time, very aggressive to keep up with the market as more and more of these entrants come along," said Bill Powers, vice president of priority accounts for Pacific Bell. "In some ways, we applaud their efforts."