Denny’s to Install Private Pay Phones in Its Outlets

Denny’s Inc. said Wednesday that it plans to install private pay telephones in most of its Denny’s restaurants and Winchell Donut Houses, making it the first sizable California company to enter the newly deregulated pay telephone market.

Denny’s, based in La Mirada, said it will take about a year to replace its existing 4,500 pay phones, mostly in California, Texas and Florida. Those phones are owned by the local telephone companies.

Denny’s said that Big Apple Telecommunications, a privately owned Queens Village, N.Y., company, will own and maintain the telephones and pay Denny’s a commission. Ed Saez, telecommunications manager for Denny’s, said Big Apple agreed to pay “more than double” the 6% that Denny’s receives from local phone companies.

“We look upon it as a profit center,” said Saez. “It’s a way to add money to the bottom line.” Saez said he believes that Denny’s is the first company to sign a national contract with a private pay telephone company.

Pay telephone deregulation began nationally in June, 1984, when the Federal Communications Commission deregulated interstate pay phone calls. The FCC left it up to the states to deregulate in-state calls, and about 35 states now permit private firms to operate pay phones. California deregulated its pay phones Feb. 18, after a year of hearings before the Public Utilities Commission.

Dozens of companies are vying for a piece of the lucrative California market. California Pay Telephone, a Los Angeles-based firm, tried to beat its rivals to the punch Tuesday by installing a pay phone--believed to be the first in the state--in La Casa di Vida Country Club in Torrance. William A. Gleba, executive director of the club, said the firm would own and operate the phone and pay the club a 20% commission. Pacific Bell, he said, paid 5% on phone revenue of about $400 a month.

Pacific Bell, which connects private pay phones to its lines for a fee, said the demand for private service has been moderate. Bell doesn’t plan to aggressively sell its own pay phones, which cost an average $995.

“Our marketing stance is informational at this point,” said spokesman Scott Smith. The company owns about 170,000 pay phones in California.