A blast from the past

In “The Origin of the Species,” Charles Darwin espouses on the intertwined theories of natural selection and survival of the fittest, which can be summed up succinctly: adapt, or risk extinction.

For some time, pay phones have been caught at an evolutionary crossroad. The proliferation of mobile phones have made them less relevant, so much so that the number of pay phones in service has slipped from 2.6 million two years ago to 2.2 million, according to the American Public Communications Council.

Undaunted by the current environment, AT&T last week introduced the Public Phone 2000i, which may save the pay phone from the fate suffered by the 8-track player.

Slated for deployment in major airports, hotels and resorts across the U.S., the phone makes it as easy for travelers to access the Internet via high-speed T-1 lines as it is to make a voice call, according to Jim Agliata, director of business development-public markets, for AT&T. Features include a full-size keyboard, a mouse glide pad and a 12-inch monitor.

“It's just like your home computer,” he said.

Unlike most home computers, the Public Phone 2000i lets users also make voice calls by picking up the handset and pushing the button marked “phone” once they've logged on. The charge for using the phone is 25¢ per minute, with a minimum of four minutes. The phone accepts credit cards as well as cash.

“They're absolutely right on with their pricing,” said Francie Mendelsohn, president of Summit Research Associates. “Our research has shown that the magic number is 25¢. If it's higher than that, they'll walk right by.”

Trials conducted by AT&T resulted in some user sessions lasting as long as an hour. APCC President Vince Sandusky believes airport-bound travelers will be happy to pay $15 for an hour session.

“AT&T charges you three or four bucks for the first minute of a voice connection, and then there's a significant amount of change on top of that,” he said. “So this is cheaper than their calling-card rates, which makes it a pretty good deal. And I'd do anything not to have to carry my laptop for communications.”

While the Public Phone 2000i may well contribute to AT&T's revenues, it also should give the pay-phone space a needed boost, says Imran Khan, senior analyst for The Yankee Group.

“It's definitely a way to revitalize the dying pay-phone business,” he said. “It's a way to take something from the past and refurbish it and use it as an additional revenue source.”

Partnering with AT&T on the initiative is Bryan, Texas-based NetNearU, which developed the software for the Public Phone 2000i, and National Cash Register, which developed the hardware.

To deploy the phone — each of which will cost about $8000, compared with $1600 for a conventional pay phone, according to Mendelsohn — AT&T typically will run a T-1 line to an optimal phone closet, which will house a DSL access multiplexer connected to the phones with Category 5 cable. The phones will be grouped in banks of 16 to maximize the investment in the T-1, and a DSL modem will be positioned at or near each bank.

“We're basically creating own local area network dedicated to the Public Phone 2000i,” said Agliata.

The phones will provide symmetrical DSL service with transport speeds ranging from 500 kb/s to 1.5 Mb/s. While Mendelsohn doesn't believe the high-speed access is all that important because she believes e-mail will be the killer app, Khan thinks it is crucial to foster longer user sessions (see figure), which will translate to more revenue.

“When you look at Internet usage between a dial-up user [compared with] someone who has high-speed access, there's a marked difference in the number of days they access the Internet and the amount of time they spend,” Khan said.

“And if someone is trying to access their corporate LAN, by the time you look up one e-mail, you may have used up four minutes, so on average, a user may end up spending at the very least 20 to 25 minutes per session. So the revenue potential is definitely there.”