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Archive for Monday, September 3, 2001

Costly coin-calling service becoming thing of the past

September 3, 2001

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When was the last time you stood in a phone booth with a pile of quarters, ready to make a long-distance call?

Hardly anyone does that anymore. It's part of America's vanishing past. Most users choose credit cards, calling cards tied to their long-distance accounts or prepaid phone cards.

When people do reach into their pockets to pay for a long distance call, they're making an expensive choice. Coin calls cost $4.65 for three minutes within the United States (including a coin surcharge of $1.95).

With a prepaid phone card, you'd pay just a fraction of that.

Coin calls no longer are profitable for AT&T. So you're going to see the end of long-distance coin-calling service from the type of public pay phone, known as the "dumb phone."

About 840,000 dumb phones still populate the American landscape. When you dial a number, the call goes to a central network, which tells you how much money to deposit and keeps track of your call.

Almost all the dumb phones are owned by local telephone companies. But only AT&T provides this particular form of long-distance service.

Dumb-phone revenues are small and falling steadily. It doesn't pay for users to make those expensive calls, let alone for AT&T to handle them.

The service can't stop, however, without the approval of the Federal Communications Commission. Six consumer groups and two local phone companies (SBC and Verizon) filed objections to AT&T's move.

Most users of dumb long-distance calling live in poorer neighborhoods (city and country). So the question is what would take its place. The FCC asked AT&T for a transition plan, which the company recently filed.

AT&T dials up plan

AT&T proposes to phase out its dumb-phone service gradually, during the next nine months. Whenever a long-distance coin call was dialed, the caller would hear a taped message announcing the date when service would end from that particular phone. Some phones are delivering this message already but in English only not a big help in some areas.

All the dumb phones will stay where they are, even though they no longer handle long-distance calls for cash. They'll be usable for everything else local coin calls, 911 calls, collect calls, prepaid phone calls and credit- or calling-card calls.

There are other pay phones, known as "smart phones," which account for 58 percent of all public phones. They look exactly like dumb phones but have a different internal mechanism.

Smart phones can figure out, by themselves, how much cash a caller should deposit for a long-distance call. They don't need AT&T. So coin-operated smart phones (also owned by local phone companies) would stay around.

The only thing un-smart about smart phones is feeding them coins for long-distance calls. They, too, cost $4.65 for three minutes.

All of Bell South's pay phones fall into the "smart" category, so occasional users won't be affected by AT&T's move.

Verizon and SBC, by contrast, own a lot of dumb phones. "We're concerned that they won't upgrade to smart phones," in areas where long-distance coin calls are still made, said Dirck Hargraves, an attorney representing the Telecommunications Research & Action Center in Washington, a consumer group.

Prepaid cards pay off

In any area, however, prepaid cards are a better choice. They're widely available today at gas stations, chain stores, drug stores, vending machines, post offices and convenience stores.

Users buy, say, $5 or $10 worth of phone calls in advance. They enter the card's number into the telephone. As they talk, they gradually deplete the card's value.

Calls on name-brand phone cards, such as MCI and AT&T, can be made for 15 cents, 10 cents or even 5 cents a minute. Users also may pay a "connect fee" (higher on international calls) and a surcharge for calling from a pay phone. Check the wrapper for other costs.

Phone-card scams are a problem, said Mike McNamara of the California Office of Rate Payer Advocates in San Francisco. Cards may advertise "half a cent a minute," then hit consumers with so many extra fees that the call becomes more expensive than coin calls would be. Some cards don't work and their issuers go out of business. There may be hidden maintenance fees.

He'd like to see AT&T and other reliable cards advertise in the low-income markets, including immigrant markets (and not only in English).

Prepaid cards are a "dynamite option," he said, as long as people know about them and get good ones.

Those who object to AT&T's shutting down dumb-phone service aren't really trying to keep it going. They're trying to delay it while other services get in place. The faster word spreads about prepaid cards, the better.

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