Pay-Phone Rivals to Have Pricing Options

Investors seeking to profit from a new Public Utilities Commission ruling opening up California’s pay-phone market to competition have a number of pricing options--including undercutting competition by aggressive marketing.

Details of the ruling made public Thursday indicate that, while the PUC has set price ceilings, private pay-phone owners have considerable latitude in setting their rates. The commission said that local calls could not cost more than 25 cents--a nickel more than Pacific Bell charges--and that local tolls must not exceed Pacific’s PUC-set rate by more than 10 cents. Long-distance tolls must be no more than 10 cents more than the rates charged by AT&T; Communications.

Private owners must also offer free directory-assistance and emergency 911 calls.

Nonetheless, there is considerable latitude for individual pricing strategies, a PUC spokesman pointed out. An entrepreneur can price local calls at less than the 20 cents charged by Pacific Bell and General Telephone in order to promote the service. The owner also can use a lower-priced long-distance carrier than AT&T; while still charging AT&T; rates or up to 10 cents higher.

Pay phones themselves, now made by 40 manufacturers, cost as little as $500 for used Bell equipment to more than $3,500 for new deluxe models. One new model, offered by Rand of Phoenix, offers a computerized “voice” that talks customers through use of the machine.

In the fixed-cost category, pay-phone owners must pay the local phone company $110 to install new service or $75 to replace an existing phone. In metropolitan areas--including Los Angeles, San Francisco and San Diego--owners will pay a $20 monthly charge (incorrectly reported as $10 in some Thursday editions of The Times), plus 4 cents for each call’s first minute and 1 cent for each additional minute. In other areas, where calls cannot be timed to apply minute-by-minute rates, monthly service charges will range from $28 to $41.