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Pay phones scarce as cellphone use climbs

  • The Wichita Eagle
  • Published Wednesday, April 3, 2013, at 9:59 p.m.
  • Updated Wednesday, April 3, 2013, at 10:01 p.m.

WHAT DO YOU THINK?

When is the last time you used a pay phone?


A decade of steep declines

The number of pay phones in the U.S. and Kansas has dropped precipitously in a decade, which industry officials attribute mostly to the increasing accessibility of cellphones.

2000

•  U.S.: 2.1 million

•  Kansas: 19,667

2010

•  U.S.: 555,000

•  Kansas: 2,508

Source: Federal Communications Commission “Statistical Trends in Telephony” 2000 and 2010 reports

More than a decade ago, finding a pay phone was no harder than looking for the nearest convenience store or busy street corner.

Nowadays, not even the nearest convenience store provides that assurance.

“The pay phone era has come and gone, at least at QuikTrip,” said Mike Thornbrugh, spokesman for the Tulsa-based convenience store operator that dominates the Wichita area.

Pay phones can still be found locally, in such places as Wichita Mid-Continent Airport and the Sedgwick County Jail, as well as a few small convenience stores.

But their numbers dwindled dramatically across the country and across Kansas between 2000 and 2010 — 74 percent and 87 percent, respectively — according to the most recent data from the Federal Communications Commission.

The primary driver of the decline in pay phones is the explosion of cellphones, as their availability has grown over the same time period.

But independent pay phone operators said there’s still a profit to be had.

“There’s still a need for pay phones,” said Teri Tharp, president of Chanute-based Tele-Connect, which operates approximately 200 pay phones in Kansas as well as in Missouri, Oklahoma and Texas. “There’s still a need for a person to have access to phone service.”

Willard Nichols, president of the American Public Communications Council, an Alexandria, Va.-based trade group representing the nation’s pay phone companies, said pay phones remain the only telecommunications source for 5 million Americans, most of whom have low incomes.

“Obviously a pay phone remains a lifeline for them,” Nichols said.

He said that about 700 million pay phone calls are made in the U.S. annually.

There are also instances in times of natural disasters when pay phones work but cellphones don’t. That was the case, Nichols said, for some when Hurricane Sandy left parts of the Northeast without cell service.

In Kansas, pay phone numbers probably saw their greatest decline when AT&T, the state’s largest phone company, decided in late 2008 to exit the business.

AT&T said at the time that its “Public Communications unit has continued to experience significant pressure from reduced pay phone usage, primarily as a result of the growth of alternative communications choices, such as wireless phones.”

California-based Pacific Telemanagement Services acquired many of AT&T’s pay phones in its 13-state region. The company operates 45,000 public pay phones in 48 states. PTS also acquired approximately 40,000 pay phones last May from Charlotte, N.C.-based FairPoint Communications, one of the last, big traditional telephone companies to get out of pay phones. FairPoint said in a May 2012 news release that pay phones accounted for about $1 million in annual revenue, “and due to the decrease in usage is becoming increasingly unprofitable.”

Nichols said the pay phone business for the companies that were once known as Baby Bells after the breakup of AT&T was first impacted by the Telecommunications Act of 1996, which gave smaller competitors the ability to resell the Baby Bells’ phone service.

“They had to stop cross-subsidizing,” he said. “There really wasn’t the business margins for pay phones.”

But there is margin for PTS, and that’s why it’s in the business of operating pay phones, said chief executive Thomas Keane.

Keane said most of PTS’s 45,000 phones were from acquisitions of pay phone business once owned by the Baby Bells. In each acquisition, PTS would look at the phones it acquired and pare the ones that weren’t making money.

For instance, when it acquired 56,000 pay phones from Verizon, it ended up keeping only 20,000 of them.

So why be in the pay phone business if all you are going to do is eliminate half of the assets you bought?

“Because 20,000 of those 56,000 were margin,” Keane said.

Pay phones’ future?

The number of pay phones continues to decline.

Nichols estimated that the FCC’s figure of more than 500,000 pay phones in 2010 — the FCC hasn’t produced a report since then — is probably high for today, and that the current number is likely fewer than 400,000.

Those pay phones, he said, are operated by 750 companies. He said he didn’t know exactly how many of the companies operate pay phones in Kansas.

What the industry needs to remain viable, he said, is for pay phone operators to receive a federal subsidy from a portion of the Universal Service Fund — which APCC is lobbying for — and better enforcement of existing regulations governing payment to pay phone operators when calling cards are used.

“Everybody uses the pay phones when they have to, in the hurricanes, in the 9/11s,” he said. “But they really … primarily allow the poor in America to stay connected. They remain an important part of the infrastructure.”

PTS’s Keane said he thinks that at some point the contraction in pay phones has to stop, though he’s not sure what the stopping point is.

“I don’t see that (an extinction of pay phones),” Keane said. “I have a belief that it just has to flatten.”

Reach Jerry Siebenmark at 316-268-6576 or jsiebenmark@wichitaeagle.com.

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