Monday, December 3, 2007

AT&T to leave pay phone business (Bloomberg News, Reuters, The Associated Press)

SAN ANTONIO, Texas: AT&T said Monday that it would leave the rapidly shrinking pay phone business by the end of next year, getting out before it becomes unprofitable. AT&T will sell 65,000 pay phones, located in prisons and in public places, within its original 13-state area before the end of 2008, a spokesman, Michael Coe, said. AT&T decided to leave pay phones, a tiny segment for the telecommunications company that has 67.3 million wireless subscribers, before they reach the point of being unprofitable, he said. Company executives said they expected the pay phones to be purchased by independent operators.

"This business has been shrinking rapidly," said Coe, who said AT&T had already begun phasing out its operations by not renewing contracts as they expired. "We've known for a while that we would exit." The pool of U.S. pay phones has decreased in the past decade to one million from 2.6 million, the company said. BellSouth, which AT&T acquired at the end of 2006, already has left the business, as has Qwest Communications International.

The first pay phone, which had an attendant who took callers' money, was installed in 1878, and the first coin-operated phone was placed in a bank in Hartford, Connecticut in 1889. Both devices were operated by companies that were predecessors to AT&T, Coe said The number of wireless subscribers has quadrupled in the past decade and about 80 percent of people in the United States have mobile phones, according to CTIA-The Wireless Association, an industry group. AT&T itself added two million mobile subscribers in the third quarter to reach its current total and help make it the largest American phone company. Coe would not disclose how much AT&T expected to save by dropping pay phone operations, saying only that it represented "a very small part of our overall business."

Verizon Communications, the second-biggest U.S. carrier, still operates pay phones, a spokesman for the company, Robert Varettoni, said. The use of pay phones has been declining in much of the developed world because of the popularity of mobile phones. But some complain that ending pay phone service restricts access of low-income, low-credit consumers to communications.

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