- The Washington Times - Monday, September 27, 2004

Pay phones don’t get a ringing endorsement from consumers.

The popularity of cell phones has made them a lonely alternative in an increasingly wireless world, but companies that own pay phones don’t expect them to face extinction.

“There is going to be a base of users who will always be users of pay phones, either because they don’t want a cell phone or they can’t afford one,” said Rich Fouke, manager of business development at Verizon Public Communications, the Verizon subsidiary that operates 320,000 pay phones in 38 states.

Even while pay phones disappear, an increase in a fee paid to companies operating the phones is likely to boost revenue when it takes effect today.

The number of pay phones has plunged from 2.6 million in 1998 to 1.4 million, according to the Federal Communications Commission, while cell phone subscribers have increased to 169 million.

The first public, coin-operated phone was installed in Hartford, Conn., in 1889. The first outdoor pay phone didn’t appear until 1905. Then they became present seemingly at every busy intersection.

With the growth of the wireless industry, companies that operate pay phones have engaged in a strategy to remove underused phones or move them to where they will generate revenue, said Jonathan Krasner, general manager of Robin Technologies Inc., a Rockville company that owns 1,000 pay phones in metropolitan Washington.

Verizon had 425,000 pay phones two years ago, before scaling back. Two regional Bell operating companies are getting out of the business. Qwest Communications International Inc. said this year it will sell its 85,000 pay phones, and BellSouth Corp. sold off its 143,000 pay phones and got out of the business last year to focus on wireless telecommunication.

“There used to be a phone on every corner. Pay phone owners are being much more selective about where they put the phones. They are still used, and one reason the FCC wants them to stick around is because they work, especially in an emergency,” Mr. Krasner said.

There still is money to be made by operating pay phones, he said.

Beginning today, those companies likely will see revenue from pay phones increase because the FCC has given owners of the devices approval to double a fee they charge calling-card companies and so-called dial-around companies from 24 cents to 49 cents.

The fee hasn’t increased in five years.

Dial-around calling — which includes phone numbers that begin with 10-10 — to make long-distance calls lets consumers find an alternative carrier to the pay phone’s designated carrier. But pay phone owners have deals with long-distance carriers to provide service at the phones. Because dial-around services direct calls away from the pay phone’s designated carrier, another carrier collects the fees generated by a call.

The dial-around fee that pay phone owners charge calling card companies and dial-around services makes up for the lost revenue.

The increase will prevent public phones from vanishing, said Willard R. Nichols, president of the American Public Communications Council, a trade group in Alexandria representing independent owners of pay phones.

The FCC said the increase also is intended to ensure widespread deployment of public phones.

But the increase may be passed on to consumers and boost the cost of calling-card calls and dial-around calls from public phones.

“It is more likely than not that it will be passed on,” Mr. Nichols said.

People who use calling cards or dial-around services from pay phones are unlikely to notice a big increase in fees, said Jon Stover, senior counsel of the pricing policy division at the FCC’s wireline competition bureau.

“In many instances [the dial-around rate] is just a small percentage of the ultimate cost to consumers,” he said. “So it’s not necessarily a deal breaker.”

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