AT&T to quit pay-phone business

By the end of 2008, AT&T will phase out its public phones and the phones it provides under contract in correctional facilities, the biggest U.S. carrier said Monday. It will honor customer service commitments during the phase-out period, according to a news release. The move will affect only AT&T's own 13-state service area. BellSouth, which AT&T acquired last year, had already left the pay-phone business in its nine-state area.

AT&T said it was leaving the "shrinking" business to focus its resources on areas with more growth potential.

Cell phones played a big role in killing the pay phone, acknowledged AT&T, which is also the nation's biggest mobile operator, without explicitly blaming itself. The number of pay phones in the U.S. fell from 2.6 million in 1997 to fewer than a million this year, the carrier said. In the same period, the number of cell phone subscribers rose from just 55 million to more than 250 million, according to the CTIA, a cellular trade group.

Alexander Graham Bell invented the telephone in 1876, but no one could get to a pay phone until 1878, when the first one was made. Early models didn't take coins, so callers had to pay an attendant when they'd finished talking. The first coin-operated phone was installed in 1889 in Hartford, Connecticut, according to AT&T.

Verizon Communications is sticking with pay phones because they still make money for the carrier, according to spokesman Jim Smith. Verizon operates about 225,000 pay phones across the 28 states where it offers wireline service, plus the District of Columbia. That's about half as many as it had when the company was formed through the merger of Bell Atlantic and GTE in 2000, he said.

"It's a challenge because of the competition from wireless, but we have found that there are a lot of customers," Smith said. Even people who have cell phones may not carry them all the time, and batteries run out, he said. The pay phones in transportation centers are among the busiest, according to Smith.

AT&T's pay-phone business is comparatively small even now, with just 65,000 phones. By contrast, in 1902, Americans on the go relied on a total of 81,000 pay phones nationwide, the carrier said. And vaudeville performances went ahead uninterrupted by rings and bleeps.