Will Wireless Kill the Little Red Phone Booth?
By Heidi Kriz, Thu Mar 15 00:00:00 GMT 2001

Say farewell to the little red phone booth and welcome to interactive payphones.

Payphones have occupied the landscape of our cultural imagination for most of this century. The red payphone box is as much a symbol of twentieth century London as the Underground or Harrod's. Payphones are where villains make secretive calls from in movies. And a public phone booth also doubles as a dressing room for the beloved superhero in red and blue, Superman.

But the once familiar site of an urban view bristling with the telltale metallic glare of the payphone box is changing - and fast.

In 1998, in the US alone, there were 2.6 million payphones, according to Vince Sandusky, the president of the American Public Communications Council. By the year 2000, the number had been dialed down to 2.2 million. And it's the wireless industry that is said to be largely responsible for the downturn.

From landlines to no lines

"Landline displacement is a widespread phenomenon now," says BellSouth Corp. spokesman, David Blumenthal. That's when customer use of mobile phones at home and on the street bite into the profits of local and long-distance carriers. For example, consumers who have one-rate calling plans on their mobile phones, may choose to use their mobile phones exclusively for long-distance calls.

BellSouth, a so-called "Baby Bell" telecom in the Southwestern region of the US, recently rocked the payphone industry by announcing that it was "getting out" of the payphone business by the year 2002, so that it could concentrate on wireless, broadband, Internet, and it's concerns in Latin America.

"For us, the business thing is that we have been emphasizing those technologies and services in the recent past, and we want to concentrate more and more on them in the future," says Blumenthal.

Blumenthal says that BellSouth divesting itself of the payphone business also comes as a result of the significant declining usage in the 143,000 payphones they have in their service dotting the nine states in the southwest region.

Blumenthal stresses, however that the reason for the timing of the announcement to phase out payphones - two years ahead of schedule - is so to "allow our location providers to have the time to replace the service."

"There really are a large number of independent providers who will likely compete to pick up the slack," says Blumenthal.

An international trend

Recently, British Telecommunications announced that, for the first time since it has been making them, it will stop producing it's iconographic red telephone booths.

"It's obvious the effects of wireless on payphones is being felt around the world," says Sandusky of the APCC.

Nevertheless, back in the States, BellSouth is the only major telecom company so far that has announced it's intention to get out of the payphone business. But, according to industry insiders, a number of other companies have been quietly trying to slip out the back door too.

"Other Baby Bells like Ameritech and Southwestern Bell have been trying for some time," claims one industry observer, who declined to be named.

"Southwestern Bell tried to sell off its payphone business, but had two problems: One, they couldn't find a buyer. And two, they were met with great deal of resistance from customers in their region," he says.

A spokesman for Southwestern Bell, Jim Orso, denies that any of this is true. "The last time the company spoke on the issue, we decided that divesting from the payphone business is simply not an option," Orso says.

Sandusky says that in spite of the seeming trend, payphones are not about to disappear from United States vista anytime soon.

"Access to telephone use of some kind is a big public policy, a political issue," says Sandusky.

According to Amy Thompson, a spokesperson for the APCC, there are still over 5.4 million households that lack residential phone service in the United States. Thompson says that currently, that gap is largely filled by the payphone industry.

"We are concerned about lower income households being left stranded, without access to telephone services for emergencies, health and social services," says Thompson.

Thompson says that she believes independent payphone service providers will have incentive to fill the gap left over by the big telecom companies if certain economic obstacles facing the industry are removed.

"Because of the current, unclear language of the US Telecommunications Act, there are a lot of compensation issues in the business - in other words, which carrier shoulders the responsibility of a call being placed," she says.

Thompson says that about one third of all "dial-around," revenues generated from a payphone - calls placed with an 800 number that use more than one carrier to be placed - go unpaid, because it's unclear who should have to pay.

A spokesman for the US Federal Communications Commission, Michael Balmoris, says the issue is being reviewed within the agency right now, but would not say when it is likely to be resolved.

The new-fangled future

In the meantime, old and new technologies are already being mingled across the globe, in the form of hybrid interactive, wireless payphones and Internet kiosks.

For example, recently, StarHub, the Singapore telecommunications company, launched 800 interactive payphones across the country.

The StarHub Payphones Interactive Service (SPInS) uses the wireless application protocol (WAP ) to connect people with data such as financial services, hotel and shopping information, and sports results. Users will also be able to use the phones for normal telephony services.

"Payphones are not dead. They can evolve and take advantage of the new technologies as well, as long as they are able to encourage new business models and regulations that allow them to," says the APCC's Amy Thompson.

Heidi Kriz is a freelance writer based in San Francisco whose work has appeared in Wired News, Salon and Wired magazine.