Way Cleared for Private Pay Phones : PUC Allows Service but Imposes Strict Rules on Operations

Times Staff Writer

The vending-machine industry was handed a new opportunity in California on Wednesday: private pay-telephone service.

The Public Utilities Commission ruled that privately owned pay phones may be hooked up to California's public networks and charge slightly more than local phone companies now offer. The ruling opens up to competition one of the largest segments of a national market that has been estimated to be as large as $4 billion a year.

Pay-phone service has been a monopoly of local telephone companies, which the PUC regulates. Eighteen months ago, however, the Federal Communications Commission ruled that there was "no valid basis" for denying customers the right to own their own coin-operated phones since they now can own home and business phones. But the FCC left the final say to state regulators.

About 40 companies have registered pay-phone models with the FCC. One of them, Rand of Phoenix Inc., touts the new market as offering potential "mini-profit centers" for owners of convenience stores, service stations and other common sites of coin-operated phones. It quotes a management consultant as predicting that "pay telephones will be what jukeboxes were in the '60s and video arcades were in the '70s."

Price Guidelines Set

On the other hand, Pacific Bell operates 165,000 pay phones in California and expects to continue operating most of them, a spokesman said. Pacific and General Telephone can now sell their pay phones, after modifying them for private use, but under pricing guidelines set by the commission.

Wary of the potential for price-gouging, the PUC clamped tight rate rules on private pay-phone operations: Owners can charge no more than 25 cents for a local call--5 cents more than Pacific Bell and General Telephone can charge. And their toll rates can be no more than 10 cents higher than those charged by Pacific and General for local toll calls and by AT&T; Communications for long-distance calls between local service areas.

In addition, the PUC ruled that private vendors must provide their customers free access to directory assistance, phone-repair services and 911 emergency calls, and they must post their prices and complaint procedures by each pay phone. Applicants who wish to provide private pay-phone service must register with the PUC.

Local phone companies will charge vendors $110 for establishing new pay-phone service, $75 for replacing an existing phone, plus $10 monthly service charges. Maintenance will be the owners' responsibility.

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