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As prices drop and cellular phones become ubiquitous, companies that own traditional pay phones are scrambling for ways to compete against a rapidly growing mobile industry.
An estimated 1.6 million pay phones remain nationwide, compared with about 80 million cell phones, according to the Cellular Telecommunications Industry Association. The Washington organization predicts that the number of cellular phones will continue to climb as the devices become smaller and cheaper.
Some companies that own pay phones admit the mobile industry has cut into their profits, but they deny that cell phones will trump their terminals to extinction because not everyone owns a mobile phone. Besides, they counter, what happens when the batteries run out?
However, U.S. telecommunications giants AT&T; and the Bell companies are abandoning their traditional phone-booth model. They're developing kiosks and terminals with touch screens that access the Internet and allow users to send and receive email, including photographs of themselves in the phone terminal.
"The pay phone as it is today -- there is no growth," said Peter Catalena, founder of NetNearU, a public Internet access terminal and software business that recently agreed to provide AT&T;, Bell Atlantic, GTE, and Sprint with kiosk terminals. "The good locations have all been taken, and what were good locations aren't good locations anymore.
"As email picks up popularity in growth -- and it has tremendously --people will want to access email more than their voicemail."
Catalena and NetNearU's other founder, Dennis Goehring, started the Texas Payphone Association and once owned a business called Texas Coinphone, which operated 1,400 pay phones in the state. They sold their business in 1997 because "the price was right and the pay phone route business as we knew it was in its prime," Catalena said.
They founded PayNet Communications in 1996 and later renamed it NetNearU. The company has installed 400 kiosk terminals in airports, truck stops, hotels, major retail outlets, and restaurants around the country. The company's next kiosk models, expected to be available by the end of the year, will include handheld sets to make phone calls.
Bell Atlantic, which operates 90 percent of public pay phone booths in the Northeast, is braced for the fierce competition from mobile phones. After experiencing a 14 percent drop in pay phone revenues in 1999 -- following a 10 percent decline in 1998 -- the company partnered with NetNearU and in April introduced three kiosk terminals at T.F. Green Airport in Providence, Rhode Island.
The company gained 30 percent more than its projected profits in the kiosks' first week of existence, said Bell Atlantic spokesman Jim Smith.
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