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AT&T to Exit U.S. Pay Phone Market


04/12/2007

Leading U.S. telephone provider, AT&T Inc., is planning to exit the pay phone business after 129 years, as high mobile phone penetration reduces the need for fixed-line public telephones.

America’s first pay phone was set up in 1878, and had an attendant who took callers’ money. The first coin-operated model was installed at a bank in Hartford, Connecticut, in 1889. Both devices were operated by American Telephone & Telegraph (AT&T).

The number of pay phones in the United States peaked at 2.6 million in 1998, but has since declined to fewer than 1 million, due to a lack of demand in recent years. Several incumbent telecom carriers, most notably BellSouth Corp., which was acquired by AT&T late last year, have already exited the public telephone market, selling off their remaining pay phones.

Most of AT&T’s 65,000 remaining phones will likely be taken over by independent operators, most of which have only two or three employees. There are about 1,000 of these low-overhead companies in the U.S., which now operate more than half of the country’s pay phones, and are able to squeeze a bigger profit out of the business model than big incumbent carriers.

Once AT&T liquidates its remaining pay phones, Verizon Communications will be one of the few incumbent telephone companies with a significant stake in the business. Verizon still operates around 250,000 public phones and has no plans to exit the market, according to company spokesman, Jim Smith.

There are people who still need them, and so we still sell them, Smith commented.



 

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