A woman in New
York City needed to call her husband from a pay phone. She couldn't
find any change in her purse, so she charged the call to her calling
card. It wasn't a very long conversation, just a brief discussion of
the pros and cons of her stopping for take-out food on the way home.
She thought the call would cost at most a dollar, maybe even less since
she was only a few blocks from home. When the bill arrived at the end
of the month, she was quite surprised to discover that she had actually
been charged more than ten dollars for the call. Dinner had only cost a
dollar or two more. Because the payphone she chose was not owned by the
local phone company, her call was subject to all sorts of hidden costs.
This report explains why a call from a payphone can cost so much and
what you can do to protect yourself from high payphone prices.
The Effects of Deregulation
In 1996, Congress passed the Telecommunications Act of 1996, which
required that payphones no longer be subsidized by local telephone
companies. Subsequently, the Federal Communications Commission (FCC)
deregulated local coin rates, allowing the marketplace to set its own
rates for local payphone calls. According to the FCC, this was done in
order to encourage competition and the greater availability of
payphones. However, consumers should be aware that privately owned
payphones might carry several hidden costs so that their phone calls
may sometimes turn out to be more expensive than they anticipated.
Long Distance Calls
Prior to deregulation, all long distance calls were handled by
AT&T. Now, payphone owners can choose the company that provides the
phone’s long distance service, as well as its credit/calling card and
collect calls. Companies called Alternate Operator Service Providers
(AOS or OSP) operate the pay phones for their owners. These operators
purchase long distance service from an interstate carrier and collect
billing information from the consumer. Deregulation gave AOS companies
more freedom to set their own rates, resulting in the large disparities
in price from one payphone to another.
Payphones have become a lucrative business for the payphone industry,
which sets the long distance rates and adds surcharges for different
services; for pay phone owners who add surcharges of their own; and for
landlords and business owners, who earn commissions from payphones on
their premises. Unlike residential customers who will pick the long
distance service with the lowest rates, businesses with pay phones on
their premises have an incentive to choose a higher-priced carrier that
will pay a large commission on each call, regardless of what rates the
customers will pay.
Consumer Protection Laws
Callers on the road generally have no choice about which payphone they
use, nor do they generally have any idea what carrier is connecting the
call. People often assume, incorrectly, that if they charge a phone
call to their AT&T, MCI, or Sprint calling card, they will be
charged that carrier's rates. However, if an AOS company handles the
call, then the AOS sets the rate and bills the caller, no matter what
card the caller uses. A caller will only be charged AT&T, MCI, or
Sprint rates if they access that carrier. In addition, the AOS may tack
on a hefty surcharge.
Federal and state laws do exist to protect the consumer. These laws
require disclosure of specific information about the company servicing
a particular phone and the rates that company charges. Consumers should
look for this information before they make a call, so they will know
what company they are dealing with, and they can avoid unpleasant
surprises on their phone bills. Federal laws require that:
-
The identity of the AOS be marked on the phone and announced at the
beginning of the call before the consumer incurs any charges.
- The AOS provide, upon request, information about the charges for the call.
- The AOS allow the consumer to terminate the call before it is connected without incurring any charges.
- The consumer be able to bypass the AOS and access the long-distance carrier of his/her choice.
- Toll free numbers, special access codes, calls to 911, and calls to the operator not be charged for.
The New York State Public Service Commission also has jurisdiction over
privately owned payphones located in New York. The Commission's
regulations require that each COCOT post the following information:
- The name and telephone number of the COCOT's owner.
- Information on how to obtain a refund.
- The rates for local calls.
Most payphone companies can charge whatever fee they want for using
their phones. The only exception is pay phones owned by Bell Atlantic.
An agreement made between Bell Atlantic and New York State limits the
charge for the first three minutes of a local coin-pad call to $0.25.
This agreement is in effect until the year 2003.
Steps to Protect Yourself
There are several steps payphone users can take to protect themselves from becoming unwitting victims.
Know Who You're Dealing With. Look
on the phone to see if it belongs to the local phone company, or if it
is a privately owned phone. Call the toll-free number provided on the
phone to find out how much the call will cost. If the identification
sign is damaged or missing, pick up the phone and press "0" to hear the
company's name. Stay on the line after pressing "0" to speak to an
operator and inquire about the charges for the call.
Shop Around
Be selective when using a payphone. If the rate for one payphone is too
high, there is probably a cheaper one nearby. Let the payphone service
provider know that you think their rate is too high.
Try Coins.
Using coins for a call may be cheaper than charging it or calling
collect. Even the major carriers and local telephone companies
generally add a surcharge for these services. Many private pay phone
operators charge significantly less for coin calls than for calling
card or collect calls; when the caller uses coins, some phones will
charge $1.00 for a call to any location in the United States. In
addition, the caller knows how much he or she is paying and can't be
surprised later by the phone bill.
Access Your Regular Long-Distance Company.
If you have a calling card from a particular long-distance company, or
you prefer a certain phone company, you can use that carrier, even
though an AOS might normally handle all calls from a particular phone.
Instead of dialing "0," dial your phone company's access code. Then,
you can dial "0" plus the phone number to charge a call to a calling
card (or, with some companies, a major credit card) or make a collect
call. This may even be cheaper for local calls if the caller isn't
paying with coins.
To switch carriers, dial the access code for your long-distance
carrier: for AT&T, dial 10288; for MCI, dial 10222; for Sprint,
dial 10333. (If you use another long-distance service, contact your
carrier for an access code or other instructions.) Pay phones must
allow callers access to the carrier of their choice. If an AOS company
refuses to switch you, contact the NYS Public Service Commission. They
may have grounds to order the phone disconnected.
Callers can also reach their carrier, even on a blocked phone, by
dialing its 800 number. The 800 numbers for the major carriers are:
AT&T: 800-CALL-ATT
MCI: 800-950-1022
SPRINT: 800-877-8000
VERIZON: 800-244-3737
MCI also provides collect call services to consumers who dial
1-800-COLLECT, as does AT&T to those who dial 1-800-CALL-ATT.
Callers who dial either number will bypass the AOS company servicing a
pay phone, and the cost of the call will be determined by MCI or
AT&T.
Use A Pre-Paid Card.
Some companies offer pre-paid calling cards with pre-set long-distance
rates. Callers can be sure that they will be charged a certain rate,
according to the terms of the card, even when they use a pay phone
serviced by another company, as long as the caller must dial an 800
number or access code to reach the phone service before making their
call.
Resolving Complaints
If you believe that you have been unfairly charged for a call from a
pay phone, or if you were blocked from reaching your long-distance
carrier, before you pay your phone bill, your first step should be to
contact the AOS company or COCOT owner. File a complaint with the
Better Business Bureau in the area where the AOS company or COCOT is
located.
If the call was made from a New York pay phone to another location in
New York State, the NYS Public Service Commission or the Attorney
General may be able to help you. Call the Commission's Helpline at
800-342-3377 and the Attorney General's Office at 518-474-5481.
For problems with an interstate call, contact the Federal Communications Commission at 202-632-7553 or write to them at:
Enforcement Division, Common Carrier Bureau
Federal Communications Commission
1919 M Street N.W.
Washington, DC 20554.
For more information you may also visit the Federal Communications Website at
www.fcc.gov.
