Where are all the payphones? - Page 4

Deregulation and industry greed are wiping out a form of old technology that's a critical lifeline

In fact, quite the reverse. It was in their interest to close or leave trashed any boxes that weren't profitable and in general to force laggards to mobile phones."

It didn't happen immediately, attorney Mattes, who has represented the California Payphone Association, a trade group, told us.

"Because the pay phone business was still pretty good in the late 1990s, the telephone utilities stayed in the business during those years, competing with the independents," Mattes said. Pay phone rates also rose.

But the economics of the pay phone business started to change around 2000, Mattes said, mostly due to wireless competition, and companies had difficulty collecting for toll-free calls and calls made through other long-distance providers. So telephone utilities started giving up their less-profitable pay phone locations.

"Bell South abandoned the pay phone market entirely about five or six years ago," Mattes said. "AT&T and Verizon have been gradually leaving the market, giving up their less-profitable pay phones at a steady pace."

From January 2005 to June 2007, AT&T reduced its pay phone lines in California by more than half — from 77,467 to 36,870 — according to PUC counts. And in the same period, Verizon went from 28,743 to 16,421 pay phones.

While the pay phone business was "modestly profitable," according to Mattes, it was mainly important to the utilities "as a platform for customers to make highly profitable long-distance calls." But, he said, with competition in long-distance and wireless services, the profits have been squeezed out of long-distance calls. Pay phone use also dropped dramatically, he said, due to wireless competition.

TURN's Costa suggested that the old AT&T overpaid in its postdivestiture bid to acquire cable and bypass local exchange carriers for direct connections with its former customer base. Later, it abandoned the poor voice-quality network and may have needed to recoup losses.

"The Bells have a separate incentive to pull out copper," the older coaxial wire that connects almost all landline phones, Feld said. "The FCC says they don't have to share [fiber-optic cable wire with competitors] as they do copper, and copper needs to be maintained. It was laid because regulators made them. It's more costly to maintain than they can charge."

"Without regulation," Feld noted, "big companies can leave the [pay phone] market, but they can also increase line charges" — monthly fees for phone connection to the local exchange — "and interconnection fees" for long-distance connection, paid by callers and local exchanges to the nonlocal carrier for allowing calls to go through.

The loss of pay phone service is one more result of faith-based deregulation, the belief that the market will provide for everyone's needs. "The demise of pay phones was utterly predictable," Boal told us. "It's a disgrace."

And the impact of the disappearance of pay phones ripples beyond service needs.


A sprawling '70s low-rise cement building at West Portal and Sloat, once hidden by shrubs from view of the adjacent Muni tracks, is now vacant and slated to become the new Waldorf High School. It used to be the Pac Bell operators' building, housing 35 workers, mostly women with more than 30 years of service, "the forefront of the [union] movement," said Kingsley Chew, president of Communications Workers of America Local 9410 in San Francisco.

Those operators answered 411 information queries and routed 911 emergency calls. Two years after winning a strike by shutting down the phone company, the operators saw their jobs outsourced in 2006 to Dublin and Pleasanton.

The majority of the local's members are women, Chew said.

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