Learning From Consumer Experience: Pay Phone Tips

When Mrs. Lou Letney of Lumberton took her son to Houston for a Kaplan review course, she told him to call her pager from a pay phone when he was ready to be picked up. She would be at the Galleria.

In the course of the afternoon, he made four short calls from the pay phone at the Kaplan offices, and charged them to the calling card Southwestern Bell had issued the Letneys.

Two months later, a charge by Oncor Communications for four calls totaling 6 minutes and costing $32.34 appeared on her phone bill. She couldn't believe it. The pay phone company billed two one minute calls to the pager at $5.95 each, and the two minute calls at $10.22 each.

Ms. Letney was furious and wrote to the Public Utility Commission, asking them to investigate and lower the charge. "Unfortunately, I made four calls on 7/27/97 from an Oncor Communications, Inc. pay telephone," she wrote. "The charges from Oncor were exorbitant."

Oncor responded that their charges "accurately reflect our market costs" including "commissions that are paid by Oncor to site owners." An Oncor customer service representative had already agreed to lower the bill $12.94, and the Oncor supervisor agreed to lower the charge even further.

Stratospheric Rates

But Oncor continues to charge high rates for basic pay phone services. During the course of our survey, two different Oncor operators offered to place our collect call from Austin to Houston for $11.06 for the first minute and $0.66 for each additional, far above the maximum allowed rate under Texas regulations

In February of this year, Gloria Fondon of Dayton complained of the high charges from Oncor on her phone bill as well. Three short calls totaling 5 minutes from a pay phone in Beaumont cost $27.18.

"I called them to question such high rates and was told that because the calls were made from a pay phone with a GTE credit card, that was why the rates were so high," she wrote to the PUC. "The average consumer does not know all the ins and outs of the long distance phone services and I do not feel it is the consumer's responsibility.The bill I have attached is a form of fraud on the public. Anytime someone places a call from a pay phone and is charged an average of $5.46 a minute on a call within the state of Texas, this is, to say the least, excessive or highway robbery."

Oncor agreed to reduce the charge by an "adjustment representing the difference between Oncor and the dominant carriers rates." At one time, the term "dominant carrier rate" meant a benchmark rate based on the rates charged by the four largest companies in the market. Currently, there is no longer a formal benchmark for intrastate long distance, so Oncor could be referring to an estimated benchmark, the AT&T rate (the dominant carrier), or the maximum rates allowed by PUC rule for intra-state long distance pay phone calls. In fact, Oncor agreed to deduct 80 percent of their charge, reducing her final bill to a total of $5.72.

The FCC determined that competition in the market place could adequately control rates, although Oncor admits that its rates are high enough to cover the commissions it offers to its location owners. Consumers Union believes that competition for locations through higher commissions tends to push up prices to the consumer (see discussion, "Making Cents of the Cost of a Pay Phone Call".) At this point, the pay phone market is clearly "Buyer Beware."

Consumer Tips

Although such high charges are sometimes unavoidable, several extra steps before you make a pay phone call may open up alternatives.

1. Before you make the call, ask for the rates. PUC regulations require pay phone operators to provide rate information upon request.
   
2. If the rates for a long distance call are too high, look for directions on the phone to "dial around" the pay phone long distance operator to another long distance company of your choice. You may still pay a small fee to the original pay phone operator for the "FCC charge" if you "dial around" using a 1-800 number (see story, page 7, on prepaid phone cards.)
   
3. You have the right to access a local operator for your local collect, credit or calling card calls. If you dial "0" or "00" according to the instructions, you may get a long distance operator. Ask them if they are the local operator, and if they are not, ask to be transferred to the local operator. A local collect call is likely to be far cheaper through the local operator (like Southwestern Bell), than if a long distance operator places the call. If you absolutely cannot get a local operator, look for another phone nearby.
   
4. And finally, complain to the PUC if you cannot access a local operator, the pay phone call results in high charges or you have any other problem. As these consumers discovered, an investigation by the state can reduce charges considerably. You may write to the Public Utility Commission, Office of Customer Protection, P.O. Box 13326, Austin, Texas 78711.