Where are all the payphones?

Pub date August 14, 2007
WriterDiana Scott

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Click here to read more about payphone deregulation

When the big earthquake, terrorist attack, or other civic disaster finally hits San Francisco, a lot of people are going to be in for a major shock: their high-tech cell phones and computer-based office telephone systems might not work.

But after the 1989 Loma Prieta quake and after the Sept. 11, 2001, terrorist attacks in New York City, residents found there was still a way to reach their loved ones and let the world know they were OK; they used an old-fashioned communications tool that’s low tech, securely grounded, publicly accessible, and reliable.

It’s called a pay phone.

Next time there’s a disaster, we may not be so lucky: pay phones, fixtures of the public landscape for more than a century, have been quietly disappearing. And many of those that remain don’t work. These essential communication tools — good for emergencies, privacy, and the poor — are falling victim to deregulation laws, the greed of telecommunications companies, and the public’s obsession with high technology.

In San Francisco they’ve departed in droves from sidewalk carrels; corner stores; bus shelters; subway platforms; office, museum, and movie theater lobbies; supermarkets; shopping malls; city swimming pools and YMCAs; diners; parks; and gas stations. They’ve been disappearing at a rate of about 10 percent annually for the past four years, down from roughly 400,000 at the height of the dot-com boom to 150,000 today, trade group attorney Martin Mattes told state regulators last year. The decline in San Francisco mirrors those in California and the nation.

And while pay phones may seem like quaint relics of another era, they remain an important part of the nation’s communications system, serving millions of people who for one reason or another don’t have or can’t use cell phones. And consumer advocates say the loss of the pay phone system is a serious problem.

Although cell phones are pretty ubiquitous, not everyone can afford one — and not everyone can use one. For socially marginalized people, pay phones are still a lifeline. For people who can’t use wireless technology — and can’t afford a home phone line — they’re essential.

Why are pay phones vanishing? The ready answer — cell phones — identifies the technology that’s replacing them and cutting into their profits. But it doesn’t completely explain why a society that once valued pay phones — and may ultimately remember that it still does — has let them disappear. That story has more to do with the politics of deregulation and the profits of telecom companies.


In the 2004 climate-change disaster film The Day after Tomorrow, Dennis Quaid plays a climatologist who anticipates dire consequences from a sudden oceanic temperature drop, which is triggered by global warming and leaves New York City frozen solid. From the beaux arts NYC Public Library where he’s taken shelter, the Quaid character’s son (played by Jake Gyllenhaal) needs to call Dad in Washington, D.C., but the cells don’t work. So he finds a half-submerged mezzanine pay phone with a dial tone ("It’s connected to the telephone lines," he notes brightly), drops in a couple of coins, and bingo — he gets Dad’s insider travel advisory.

Such a scenario — at least the pay phone part — isn’t science fiction. In fact, it has played out like that in NYC a few times and also did so in New Orleans after Hurricane Katrina hit in 2005. When the Twin Towers went down Sept. 11, cell phone masts went down with them. Lines were endless as outgoing calls from lower Manhattan funneled through two nearby landline pay phones, as reported on NBC’s Today. Ditto in the summer heat wave of 1999, when New York air conditioners on overdrive toppled wireless transmitters like dominoes, silencing cell phones from NYC to the Great Lakes. Landline telephones — including pay phones — continued to ring. And when the waters rose in New Orleans, residents flocked to pay phones made available for free use to contact loved ones and let the world know they were stranded.

Landline pay phones — like wired home and office phones — are simply more durable and reliable. "I love my cell phone," said Natalie Billingsley, who heads the California Public Utilities Commission’s Division of Ratepayer Advocates. "But I wouldn’t give up my landline. There’s not enough [wireless] network redundancy."

When the Loma Prieta earthquake hit the Bay Area in 1989, electricity and cell phone service were out for hours, but, Billingsley said, "landline phones were back up in 10 minutes."

Regina Costa of San Francisco’s the Utility Reform Network recalled that when the quake trashed Pacific Street in Santa Cruz, the public switch connecting local phones to the larger network worked despite a local power outage.

The reason, Costa says, is that the traditional wired phone network has a robust, independent electrical backup. Not so wireless transmitters and cable fiber-optic systems, both powered by the public grid.

"Wire lines are a really big public safety feature," Billingsley told us. Backup generators at switching points, where regional and long-distance lines converge, create "all kinds of redundancies" for rerouting calls if parts of the network go down.

That’s not just a technological issue. The new tech networks lack robustness and redundancy, Billingsley said, in part because such standards are no longer mandated. Before telecommunications were deregulated, companies were required to pay for reliability. Now reliability is no longer a public service. Under deregulation, reliability is more spotty. Last year state legislators addressed the need for adequate backup power-pack standards for Internet phones — but in the end, consumers will need to buy the backup systems.

In Japan, where the old but vital wired pay phone network has been reduced by more than half (from 910,000 to 390,000) since the public phone company was privatized in 1985, a public safety official recently warned against such shortsightedness. "To remove public telephones amounts to decreasing the means of communication during emergencies," disaster prevention program director Hitoshi Omachi of Yokohama’s Chiiki Bosai Laboratory observed in a May 8 Asahi Weekly article about cell phones overtaking pay phones. "People should think about measures to maintain public phones, including financial assistance from the central or local governments."

Then there are the social issues. Beth Abrams, director of Grupo de la Comida, which feeds 2,000 immigrants and refugees in the Mission each week, said many are dependent on pay phones. "The thing to remember," Abrams told us, "is that a pay phone could mean somebody’s life in an emergency, when time is of the essence." A child suffering an asthma attack or an adult with heart disease or diabetes (the occurrence of which is high in the immigrant community) "often needs immediate response and has difficulty walking far," Abrams said. Many people whom her group serves don’t have cell phones and rely on pay phones when caring for children outside the home or answering job ads.

Howard Levy, attorney and executive director of Legal Assistance to the Elderly, which serves about 1,000 clients a month, told us many seniors in the Tenderloin and in SoMa hotels don’t have home phones or cell phones. Besides the disincentive of cell phone cost, "folks beyond a certain age don’t feel comfortable with the technology," which is not designed for people "whose vision isn’t so great," Levy said.

Jennifer Friedenbach of the Coalition on Homelessness told us that "a lot of folks do have cell phones nowadays, on a prepaid card," but have only intermittent access, and none when the card runs out. "Poor people in general — people who have extremely low incomes — even if they have a phone at home, [it] can be shut off at times," she said. "Pay phones are really important for emergency situations for folks living outside," or when homeless people are first on the scene, to report an emergency.

In an impromptu survey of eight clients at the Independent Living Resource Center, a San Francisco disability-rights advocacy and support group, services coordinator Diane Rovai found three who had been seriously inconvenienced by lack of pay phone access. One needed a ride home from the airport and was stranded after an entire bank of pay phones was removed; another "missed a really important meeting" after getting wrong directions (the phone she finally found "was dirty and not in good repair"); and the third, who has no cell phone, has problems when she goes out to meet people.

"There are still people who depend on pay phones," particularly in rural communities, Anna Montes said. She belongs to San Francisco’s Latino Issues Forum and is a member of the PUC advisory committee on Universal Lifeline Telephone Service, which subsidizes phone service for low-income households.

Four percent of state households don’t have basic phone service, she said, and many of those are poor and Latino and rely on pay phones.

"Pay phones should be supported because there are individuals who can’t afford [cell phones] and places where wireless doesn’t work," said Bill Nussbaum, a telecommunications lawyer at TURN. "Public policy is a reason to wrap [pay phones] into the goal of universal service, the concept of maximum penetration with reliable and affordable phone service for all."


One reason the government has allowed pay phones to disappear is that most people don’t think about them. Cell phones often seem like all one needs to stay in touch, at least to those who own them.

"There’s an unfortunate assumption that everyone has a cell phone. It’s not true," said Harold Feld, senior vice president of the Media Access Project, a Washington, D.C., nonprofit public interest media and telecommunications law firm.

Regulators used to feel it was important for people to have access to public phones, but "they don’t think it’s important anymore," he told us.

Feld pointed out that pay phones used to be owned by AT&T, which created and maintained the pay phone network as part of a widely accessible phone system. Government-guaranteed profit on the company’s investment essentially subsidized even those pay phones that weren’t profitable, an arrangement institutionalized by the 1934 Telecommunications Act. Moreover, as a regulated public utility, the phone company needed permission to get out of the pay phone business.

With the monopoly’s breakup in 1984, competitors could enter the pay phone market, and by 1996 AT&T could get out of it.

"The old Bell monopoly came with a historical sense of public service that did not survive the [company’s] breakup and the new cost-benefit accountants and the MBA bottom-line artists," technology historian Iain Boal, coauthor of Afflicted Powers: Capital and Spectacle in a New Age of War (Verso, 2005) told us. "Under neoliberal economic doctrine, all public goods are suspect."

Boal noted, "The new telecom companies had little or zero interest in the public phones they inherited. 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. Their male counterparts, mostly collectors in the coin department, are now gone, accounting for the loss of 25 to 30 union jobs in the past five years. Besides gathering coins from pay phones, the collectors maintained the phones and removed graffiti (which is more prevalent these days).

Pay phones once meant union jobs, and as their numbers have declined, so has the union. Local 9410 membership is down from 3,000 when Chew took office in 2003 to 750 today, with those still around mainly technicians who install and repair phones.

Chew calculated that one job here is financially equivalent to six jobs in India or the Philippines, where 1-800 calls are processed and workers are paid $400 a month. The city and the state lose local business tax revenues when jobs go overseas, he said, and the costs of vanishing pensions as workers are laid off are eventually externalized and borne by local residents when demand for public services rises.

There may be greater demand for pay phones soon: the major phone companies are expected to raise home-phone rates. Basic service rates have generally been averaged geographically, within a major company’s service "footprint," Lehman said, but deaveraging can soon occur, which will drive up the price of basic rural and high-cost urban services.

Meanwhile, two state programs supporting pay phones are being axed.


Two pay phone regulatory programs remain on the books, one frozen and one barely operating. The PUC created both programs in 1990 as part of a legal ruling, when new pay phone providers were struggling to gain a foothold in former Pac Bell (now AT&T) and GTE (now Verizon) monopoly territory and consumers were encountering new system abuses.

One program, the Public Policy Payphone Program (PPPP, or Quad-P), was designed to subsidize phones located "in unprofitable locations to serve the health and safety needs of the public," while the other, the Payphone Enforcement Program (now known as Payphone Service Providers Enforcement), was established "to ensure that pay phone consumer safeguards are being followed." Both programs, which were expanded statewide, were funded by a monthly per-line surcharge on the industry, unlike other telecom public policy programs, which are supported by a percentage surcharge on consumers’ monthly phone bills.

But the list of potential state locations for subsidized pay phones was reduced from 67,000 in 1988 to 22,000 in 1989, just before the state programs were initiated, and to 1,975 in 1993. By 1998, when deregulation was complete and pricing went to market rates, Pac Bell had only 300 subsidized business phones out of 140,000, attributing the change to the increased number of independent providers and to multiphone contracts, which enabled revenues and costs to be averaged out.

Applications to designate or install Quad-P phones have to pass through the PSPE advisory committee, which hasn’t aggressively solicited them or approved more than two or three (with just one installed) of the 33 received since 2001, according to the Division of Ratepayer Advocates.

Almost nobody knows that Quad-P exists — or that anyone can file an application if a proposed site meets certain criteria. Currently, there are only 14 Quad-P phones statewide, mainly in parks, down from 40 in March, with 13 supported by AT&T and one by Verizon.

The PSPE was set up "to enforce, through random inspections, consumer safeguards for all public payphones … such as signage requirements, and rate caps for local, long distance and directory assistance calls within California."

Until recently, inspectors made the rounds of for-profit as well as subsidized pay phones, numbering more than 400,000 in the ’90s, on a rotation schedule that took a decade to complete. Between December 2001, when the project came under PSPE administration (it was formerly run by the industry), and June 2007, civil-service inspectors logged 133,893 violations on 39,444 phones, a rate that has slowed with staff downsizing. The DRA estimates its activities reduced the average rate of violations significantly. The inspection staff was cut in half last fall, to three, and other program staffers were transferred to other divisions to cut expenses.

The number of pay phones to monitor has declined, but with reduced inspections, violations have begun to rise. Numbering too few to be proactive, inspectors now respond only to consumer complaints registered on the PUC’s consumer fraud hotline. This number, not posted on pay phones, is 1-800-649-7570; it accepts calls between 9 a.m. and 3 p.m. Monday through Friday. There’s no after-hours message machine, but if you’ve got a computer and are still primed when you get home, you can log on to the PUC Web site, at www.cpuc.ca.gov, to report a complaint. Patterns of systemic abuse — and dead phones — are less likely to be detected from reactive, hotline-triggered complaints.

Last summer the industry’s PSPE advisory committee formally requested that both programs and the committee itself be eliminated and program surcharges ended, citing reduced activity and need. "All that Quad-P has done is subsidize its own costs," said Mattes, the attorney for the California Payphone Association. "It deserves a quiet burial."

The DRA argues that the reduction of these state programs is premature: even if dramatic market changes have made pay phones a distant second choice over wireless for many, the old technology is still important.

For one thing, predictions of the death of pay phones may be exaggerated. "It is likely that some core base of payphones will continue to be used regularly and earn a profit," the division observed in a July 2006 report, responding to gloomy industry forecasts.

For another, the actual basis for the pay phone network’s decline is far from clear. The division noted "a distinct lack of quantitative analysis regarding both the reduction … and demographic information about the location and need for payphones" in its program review comments, part of the PUC’s formal rule-making process (to be concluded in coming months, following administrative law judge Maribeth Bushey’s findings).

Acknowledging that "concerns about migration to wireless phone plans and cost recovery issues (including interconnection costs, phone card fraud, and 911 services)" need to be addressed, the division restated the universal service goals of both the ’96 act and the original 1934 Telecom Act, quoting a commission ruling from a decade ago, now more urgent: "Parties have not substantiated that telephone service will continue to be available at unprofitable locations to satisfy public health, safety, and welfare needs. Nor have they convinced us that the marketplace will replace the existing public policy payphones or fulfill the public policy objective in public health, safety, and welfare."

The DRA recommends a two-pronged strategy for stabilizing the for-profit market and assessing the need for subsidized pay phones — one that could potentially restore proactive inspections.

Instead of eliminating Quad-P oversight, it said, "the task, rather, is to address these problems by reforming and strengthening the program, as well as by assessing [systematically] the continuing public need for payphones" and finding ways to meet it. The division proposed a formal workshop or survey to compile data about profits and costs, locations, and demographics — hard data on where pay phones exist and where they don’t but are needed.

The DRA also suggests that regulatory oversight be overhauled; that the PUC exert closer control over pay phone service providers by imposing fines or through disconnection; that pay phones be registered or certified, as they are in numerous other states; and that new procedures be adopted for installing and removing pay phones.

Oversight is needed, the division says, even if the industry can’t pay for it; it recommends a surcharge on monthly phone bills, as there are for other public policy telecom programs. It also says an overdue audit of both programs is needed and that the hotline-triggered inspection regimen needs to be reassessed within 12 to 18 months of its inauguration last fall.


On the ground floor of San Francisco’s City Hall, a single pay phone remains among six phone bays. Under existing subsidy rules, the city — which contracts for multiple phones — is ineligible for a subsidy.

It seems like high time to figure out how to restore some conventional lines of communication. Instead of shifting the whole cost of backup phones to the public, why not consider allocating it between the industry and ratepayers, placing the industry’s contribution on a sliding scale to be reviewed every year or two along with revenues, and even incorporating a percentage of more competitive telecom video and cable profits?

Admittedly, this goes against the current tide. Avid deregulators — like former PUC commissioner Susan Kennedy, now Gov. Arnold Schwarzenegger’s chief of staff, and current commissioner Rochelle Chong — have aggressively promoted advanced technology and less oversight.

But is what’s good for AT&T and Verizon really good for ratepayers or small businesses? Letting the pay phone network — a real, decentralized public space — be dismantled just because many of us now have private cell phones violates fairness and common sense. Corporate-minded advanced-tech boosters may dismiss the older technology, but it serves everyone.

"Just because it’s old," TURN’s Nussbaum said, "so what?"<\!s>*