Private Pay-Phone Firms Claim That Pacific Bell Is Dragging Feet on Hookups
Scores of entrepreneurs striving to get a piece of the nation’s lucrative pay-telephone business are complaining that they are getting nothing but a busy signal from the local phone companies that formerly enjoyed a monopoly in the $4-billion business.
The problem for the new competitors is that they not only compete with the former Bell telephone companies for pay-phone customers but also have to buy local phone lines from them. And there have been delays, sometimes for months, spokesmen for the new industry said in interviews last week.
“It’s a miasma nationally,” Peter Di Orio, chairman of the National Payphone Assn. and chief executive of Dallas-based Public Payphone Corp.
Delays Are Costly
Di Orio and other executives complained of inordinate delays by Pacific Bell, Southwestern Bell, Nynex and the four other regional phone companies created in the breakup of the Bell System in processing the competitors’ orders for service.
“The delays are costly for the new enterprises,” said Greg Gilbert, president of the month-old California Payphone Assn. “If you can’t drop lines, you can’t make any money. . . . “It’s a big market, and there’s a lot of money it, and they have an unfair advantage because we have to deal with them for our local lines.”
Gilbert claimed that the organization, which represents more than 35 pay-phone vendors in California, has “400 to 500 documented cases” of what he called “flagrant” abuses by Pacific Bell, many of which he said will be made public at a meeting of the association on July 22 in Newport Beach.
On the other hand, spokesmen for Pacific Bell insist that they view the newcomers not as unwanted competitors but as valued customers for local phone service. They readily acknowledge, however, that requests for privately owned pay-phone service exceeded their expectations and created a massive backlog of requests and orders.
“That’s the understatement of the year,” Jean Green, Pacific Bell’s project manager, said of the administrative confusion. “Some of what they are saying is true,” she added. “But remember, we haven’t done this before, either.” The backlog in processing applications for installation and service is being significantly reduced, Green said.
Martin A. Mattes, former administrative law judge with the California Public Utilities Commission and now counsel to the California Payphone Assn., agreed that much of the delay and confusion is understandable.
“It’s a difficult situation to judge at this point,” he said. “But the people who are out there in the trenches--small companies trying to get businesses started--do feel that Pacific is out to get them. . . . So far, we’re hoping that it’s just a matter of gearing up and getting the show on the road, but there are reasons to be concerned that it is more than that.”
The privately owned pay-phone business was first made possible barely two years ago in a decision by the Federal Communications Commission. But that ruling applied only to calls made between states and left the decision of opening up intrastate calling to state regulatory agencies. As a result, California only became an open pay-phone market in February, after the PUC adopted a decision written by Mattes as administrative law judge. All but a handful of states now permit competition.
The California ruling only applies to Pacific Bell’s service area in California. Waiting in the wings is a decision applying to territory served by Thousand Oaks-based General Telephone.
Meanwhile, the situation nationally varies from state to state, said Di Orio of the National Payphone Assn. Within Southwestern Bell’s five-state region, for example, Oklahoma has yet to allow privately owned pay phones to handle calls within the state, Texas has what Di Orio called “a tariff you can live with,” while Missouri has one he calls “progressively punitive.”
In addition, he said, vendors in New York and New Jersey complain that the local companies take advantage of their monopoly position to try to persuade pay-phone customers who have expressed an interest in signing up with a private vendor to stay with them instead. The phone company gets word of the potential switch when the vendors submit a letter designating them to act as agent of the customer in obtaining pay-phone service, Di Orio explained.
“PacBell is a competitor of ours, and they want to maintain certain accounts out there that we’re going after,” said Jim DeArkland, a partner in Van Nuys-based Southern California Public Pay Phone. “The law is very clear on this type of procedure; it’s considered an inducement to breach our contract” with the customer. DeArkland maintained that the problem is widespread in California as well as New York and New Jersey.
Jane Green of Pacific Bell conceded that the company may seek to verify a letter designating a vendor as a pay-phone customer’s agent “but,” she insisted, “we do not make a sales call on accounts that have signed a letter of agency.” So far, the PUC agrees with Pacific Bell’s position that it is trying to resolve problems in the new system, said Christopher Ungson of the agency’s enforcement and compliance division.
“We’re working with them to try to speed up the process and make it more efficient,” Ungson said. “We recognize that there are delays out there,” he said, but added that it is premature to judge whether Pacific’s role as sole provider of local phone service gives it an unfair advantage in the newly competitive pay-phone business.
To Mattes, however, “there is a real problem” in that “the same organization responsible for marketing pay-phone services is responsible for responding to the needs of its pay-phone competitors.
“So there’s an inherent conflict there.”
Added Jack Novita, vice president of Pacific Pay Telephone Co., a Van Nuys-based manufacturer and purveyor of pay phones: “It’s like fighting with City Hall!”
