The Chicago Tribune



Pay phones may go the way of dinosaurs


Companies phase out coin-activated long-distance call

By Jon Van Tribune staff reporter

June 13, 2002

If there were an endangered species list for technology, the pay phone
would be on it.

The wireless boom that has put mobile phones into the pockets and purses
of half the U.S. population has taken a terrible toll on pay phones,
which once populated virtually every busy street corner.

Now AT&T Corp. is phasing out coin-activated long-distance at thousands
of pay phones in Illinois and elsewhere because so few customers use the
service. If customers want to make a long-distance call from a pay phone,
they'll have to use plastic.

And that's if you can find a pay phone.

There are fewer pay phones in service now, and call volume per phone is
dropping fast. Nationally, the number of pay phones peaked five years ago
at about 2.6 million, said Vincent Sandusky, president of the American
Public Communications Council Inc., which represents independent
pay-phone firms. Today, Sandusky said, there are fewer than 1.9 million
pay phones nationwide.

While Ameritech declined to disclose how many pay phones it still
operates in Illinois, industry insiders put the number at around 50,000,
down from more than 70,000 a few years ago.

"People assume that since we've always had pay phones, we'll continue to
have them," said Michael Ward of the Illinois Public Telecommunications
Association, a group that represents independent pay-phone operators.
"But that's not necessarily true. A lot of independents have gone out of
the business, and the Bells would like to.

"The handwriting is more than on the wall."

In the late 1990s, Ameritech put its pay-phone business up for sale but
couldn't find a buyer. After SBC Communications Inc. took over Ameritech
three years ago, it also unsuccessfully tried to find a buyer for the
pay-phone business. And when Atlanta-based Bell South Corp. could not
find a buyer for its pay-phone business, it decided to abandon the
service.

AT&T has raised long-distance pay-phone coin rates to the point that it
takes a dozen or more quarters for the first minute--and still the firm
says it cannot make money on the business. The old technology requires
trunk lines dedicated solely to the pay phones, and call volume has
dropped so much that those trunk lines are mostly idle.

Drop in usage has hiked costs

"It's like running a 747 jet on a regular cross-country route with one or
two passengers," said Elroy Cartwright, an AT&T vice president. "You
couldn't charge enough to break even."

AT&T's coin cut-off is under way in Illinois and will spread to other
states this summer. By year's end, all of what the industry calls
dumb-terminal pay phones--phones that lack computer-processing
chips--will be affected.

The majority of these old-style pay phones are operated by Baby Bell
companies such as SBC and Verizon Communications. The phones' controls
are handled by a Bell company central office.

Independent pay-phone companies operate primarily with smart-terminal pay
phones that have self-contained controls in each unit. There are about
24,000 independent-owned pay phones in the state, Ward said.

Most pay-phone customers already use prepaid phone cards or other
non-cash methods that are cheaper than paying with coins, AT&T's
Cartwright said.

In Illinois, only about 7 percent of the long-distance calls made from
Ameritech-owned pay phones are paid for with coins, said Blair Klein, a
spokeswoman for SBC Ameritech.

"We're providing those customers with information on their alternatives,"
she said.

Pay phones still serve the poor

Still, there is a hard-core group of pay-phone users, including
immigrants and the poor, who can't afford a cell phone or an installed
home phone. For them, pay phones fill a vital communications need.

And while pay phones still can be found, even in declining numbers, few
will predict their future.

At least one Bell company hates to see the coin-based long-distance
service end. Verizon has applied to the Federal Communications Commission
for a waiver so it could provide its own service.

"We're concerned because this eliminates a capability our pay phones have
always had," said Paul Francischetti, a Verizon vice president.

He said it is unclear if the FCC will act quickly enough for Verizon to
launch its coin service before AT&T discontinues its coin service of
Verizon phones.

First established in the 1880s, pay phones were an important part of
telecommunications not long after the phone's invention. Over the years,
they've become a part of the cultural landscape as well, playing
prominent roles in movies, plays and songs.

Clark Kent could barely turn into Superman without a convenient phone
booth. And 40 years ago, a popular fad among young people was stuffing
themselves into a booth.

While such prominence may be gone forever, the pay-phone business could
be a profitable niche business--even given the popularity of cell
phones--if other problems hadn't put operators in a financial squeeze,
Ward said.

About one-third of the calls made from pay phones now are toll-free
calls. The FCC has mandated that pay phone operators collect 24 cents for
each call, but Ward said that amount is so small that it goes uncollected
as much as 40 percent of the time.

Another problem is the public's misperception associating pay phones with
crime, Ward said. For several years local governments regularly ordered
the removal of any pay phone that drew complaints from neighbors.

Net-linked phones in service

Some optimistic operators see a future in phone kiosks, where customers
can pay to go on the Internet as well as make phone calls, Sandusky said.
A few such units recently went into service in New York City.

"Some operators now think in terms of providing public communications in
a broader sense," said Sandusky. "Instead of the old black box pay phone,
they're looking for more appealing services.

"They want to find something so they can survive."


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