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The role of payphones in a mobile world

Provision of payphones is a social obligation for many telecoms operators, but they are a high cost / low return proposition, so it is hardly surprising that operators are keen to reduce numbers and/or increase the price of calls.

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With almost universal mobile take-up becoming a reality in many countries, is there still a place for public payphones?

Over the past decade public payphone numbers in a number of mature telephony markets have plummeted:

  • in Australia, the incumbent Telstra has cut its payphones by almost half over the ten years to June 2011 (Exhibit 1)
  • Canadian payphones have declined by around 60% from 2001 to 2011, according to Canadian Radio-television and Telecommunications Commission (CRTC) statistics
  • Telecom New Zealand has around 3000 payphones, which has fallen from 5000 in 2005.
  • in the United Kingdom, BT currently operates over 51,000 public payphones, reduced from around 92,000 in 2002.


Exhibit 1:
Payphones in Australia, 2001 to 2011 [Source: Australian Communications and Media Authority]

Clearly the rise of mobiles has been instrumental in the decline of payphones. Payphones are now only used by those who cannot afford to use mobile phones, or by mobile subscribers who – for whatever reason – are either unable or unwilling to make calls on their own handsets.

Provision of payphones is a social obligation for many telecoms operators, but they are a high cost / low return proposition, so it is hardly surprising that operators are keen to reduce numbers and/or increase the price of calls. The latest example of this strategy is currently being played out between Bell Canada and the CRTC.

However both of these options increase barriers (through limiting accessibility and affordability) for those who have no alternative to the payphone. That is, those who are most in need of assistance.

Setting aside the argument that perhaps regulators need to redefine social obligations so that they better reflect a 21st century telecommunications environment, surely there is an opportunity here for an astute operator to reinvent the payphone? What if the payphone delivered additional services to attract new markets and revenue streams? Possibilities include:

  • pay-per-charge service for mobile handset batteries
  • enabling calls that are charged to a mobile postpaid or prepaid service
  • combine a payphone with a WiFi hotspot
  • deliver access to walled garden content, or content provided unmetered to the operator’s own mobile subscribers (which could be a great avenue to attract subscribers from competitors’ networks)
  • low latency service for groups of gamers.

Some of these ideas have been attempted before, but maybe the rise of smartphones combined with 3G / 4G mobile services will create the tipping point that will enable payphones to become a viable concern while simultaneously meeting operators’ social obligations.

Why not focus on the potential of payphones rather than their limitations?

September 2012


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