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Will cellular be the death of old-fangled pay phones?

Qwest hangs on but isn't ringing up big profits

Jim Brandt has a picture in his mind of the direction pay phones are going in our society.

They are riding downhill on a skateboard.

"I remember seeing this 13-year-old skater whiz past me with a cell phone plastered to his ear," Brandt, Qwest operations staff manager for Public Access Solutions, said by phone from Seattle.

"That used to be our loyal customer. I remember telling myself, 'Uh-oh.' "

And with cell phone usage topping an estimated 100 million, that means those "public access solutions" are a problem for phone companies.

Bell South announced recently it is pulling the plug on approximately 140,000 pay phones in its region.

Qwest is not following suit — not yet, anyway.

It is keeping all 98,000 phones throughout its 14-state network, including Utah, where the 7,000 pay stations are down slightly in number but basically holding steady in recent years.

Qwest's decision could turn, literally, on a dime, or quarter or nickel, depending how many are dropped through the coin slots.

"I emphasize that this is today's strategy, and today's strategy is subject to change, sometimes rather swiftly. But for now, we're committed to keeping our phones and being aggressive in new penetrations for them," Brandt said.

That means Superman can breathe a sigh of relief — he'll still have a booth to whip off the horn rims and up-up-and-

away. Unless he opts for a mobile phone, in which case it had better be a hands-free unit so he can still nab bad guys.

Which he could do in a package deal, come to think of it. A significant number of cell phones are just that. Phones dialed from cells.

"Correctional facilities remain one of our largest — and growing — markets," Brandt said. "Malls and convenience stores are still big."

But as a staple of Americana — the place you used at the corner drug store to phone Susie and tremulously ask her out, the place from which you shouted to relatives, "It's a girl!" and the place to which you hoofed to call Dad and tell him you wrecked the Olds — this Norman Rockwell picture is fading at the edges.

"It's just definitely a tougher market any way you look at it," Brandt said.

Pay phones still ring up profits, so far, for Qwest.

"We have competitive (profit) margins, but we're looking hard at them all the time," Brandt said. "Cell phone use has gone up, up, up and prices, down, down, down."

Add to that what guys like Brandt call the "dial-around problem."

That comes from increased use of prepaid phone cards. Once upon a time, if you wanted to make a lengthy long distance call outside your home, you amassed copious piles of coins and banged them in.

"That was 100 percent profit," Brandt said. "The coin-sent message and the 0-plus (operator originated) messages were our bread and butter."

Now Qwest gets just a portion of the money from a "platform call" — for instance, 25 cents on a 35-cent local call using a prepaid card.

And then, Qwest may have trouble collecting its share from the platform provider.

"Around 70, 80 percent is considered a good collection rate," he said.

Despite the bumpier road to profits, Brandt still sees pay phones in America's future, in one way or another.

As he says, "Bell South didn't actually rip the pay phones off the walls."

Since deregulation, anyone willing to plunk down the cash can own a pay phone. Many today have been snapped up by members of Independent Payphone Providers and other free-lancers, Brandt said.

If you want to own one, just be prepared for some jangle with your jingle. "Even with the cell revolution, pay phones aren't going to totally disappear," Brandt said. "It'll just be harder for you to make them pay."


gib@desnews.com