Industry Asks FCC to Lift Regulations on Pay Phones

Pre-cell phone era technology could be the next deregulation target at the Federal Communications Commission.

The Independent Telephone & Telecommunications Alliance last week filed comments with the FCC supporting a petition from Cincinnati Bell Any Distance Inc. requesting a waiver for required annual audits tracking pay phone transactions.

Long-standing regulations on a rapidly vanishing telecommunications tool would seem a ripe target for the FCC under Chairman Ajit Pai (R). Since ascending to the leadership role in January, Pai has pushed a swath of efforts to roll back regulatory constraints on telecommunications firms and broadcasters.

In their petition, Cincinnati Bell cited FCC data showing that that the number of U.S. pay phones has declined to fewer than 100,000 from 2 million in 1997. But the costs of related regulations have not declined accordingly, according to ITTA.

The trade group said in its filing that the cost of Cincinnati Bell’s annual audit “is now approximately five times the amount of payphone compensation that it pays annually.”

Sprint Corp. requested a waiver from the requirements last month.

“Sprint has filed waiver requests for this rule for years now and they’ve either been denied or ignored,” Mike Rogers, ITTA’s vice president of regulatory affairs, said in phone interview Monday. “It seems like it’s a different atmosphere now with Chairman Pai, so we’re hoping it will finally happen.”

The FCC did not respond to a request for comment.

In a speech last week, Pai reiterated his desire to nix any regulation that didn’t satisfy a cost-benefit analysis.

“We’re reviewing the FCC’s rules across the board and deciding which ones still make sense in the digital age,” he said. “When the facts warrant, we won’t hesitate to revise overly burdensome rules or repeal them altogether. And you don’t need a weatherman to know that the wind is blowing certain FCC rules toward modification or elimination.”

Sprint asked that the FCC respond by June 30.

But even with the help of ITTA and a friendly FCC, Sprint doesn’t seem as confident as they might be in expecting a response as part of the biennial review process. Audits are due on July 1, Rogers said, adding that they usually take at least a month to complete.

Broadband companies and pay phone operators used to share parent companies, making the audits little more than a formality. But the broadband companies started selling off their pay phones with the advent of mobile technology. AT&T Inc., for example, sold its last ones in 2008.

In addition to technological advancements, privacy was a factor in the near demise of the payphone. City governments started disallowing payphones after criminals realized they could conduct covert business in the booths — think “The Sopranos.” A 1967 Supreme Court ruling, Katz v. United States, protected individuals’ right to privacy when using pay phones.

But pay phones operators can still break even, and even make a profit. Their utility is felt most during emergencies and by low-income communities. Companies like Pacific Telemanagement Services, part of The Jaroth Inc. Cos.,  are offering free public Wi-Fi as an ancillary service in their pay phone booths.

And unlike the public Wi-Fi booths popping up in places like New York, those old pay phones still offer a private connection.

Rogers said the ITTA isn’t pushing for total elimination of payphone regulations. But that in place of third-party audits, sworn testimony on a quarterly basis should suffice.