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Press Release |
Contact: Consumers Union Southwest Regional Office |
After October 7, having one quarter left in your pocket is no guarantee that you can still make a phone call. Callers nationwide can expect higher prices to show up on payphones over the next few months as the result of the Federal Communications Commission's decision to deregulate the payphone industry, according to Consumers Union.
Historically state regulators set the price for a local coin call from a payphone. Last September the FCC took away states' ability to regulate payphone rates and did away with price caps.
"What's frustrating for consumers is that payphone competition is not about customers," said Janee Briesemeister, senior policy analyst for the Southwest Regional Office of Consumers Union. "It's about location."
Payphone operators compete for prime locations. The way to get a phone placed in a prime location is to charge as much as possible per call so that the store owner or property owner can get a higher commission. The person who pays the billthe callerdoes not benefit from that type of competition. Further, the caller is not usually in a position to "shop around." Also, there are no guarantees if the consumer does travel to another location that the next payphone will offer a cheaper rate. Therefore, the customer has little choice but to pay the higher rate.
In November of 1996, Consumers Union, the Consumer Federation of America, and the Texas Office of Public Utility Counsel filed a lawsuit against the FCC seeking to overturn the order that allows companies to increase payphone charges. On July 2, the United States Court of Appeals for the District of Columbia ruled against these consumer groups. The court said the FCC had the authority to completely deregulate local coin rates.
"Allowing payphone providers to charge an unlimited rate for payphone calls will disproportionately affect the poor and those consumers who are least able to afford an increase in payphone rates," Briesemeister said. "We know that lower income families frequently do not have phones in their homes and rely on payphones. For families trying to get ahead increased payphone prices will make it harder to call school, doctors and employers." The FCC regulations allows states to develop programs to maintain payphones in the interest of health, safety and welfare.
Callers who are dissatisfied with the price at a payphone should complain to the location owner. Sales commissions paid to the location owner by the payphone provider influence the price of payphone calls. Second, callers should complain to their public utility commissions about high pay phone charges. While the state regulators cannot set a price cap, they can petition the FCC to change its deregulation order based on lack of competition in their state.
