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Bell payphones: Rate increases target those most vulnerable

Carmi Levy

Do you remember the last time you used a payphone? Do you remember the last time you even saw one?

Thought so.

Despite their declining role in the lives of smartphone-carrying Canadians — a report published by the CRTC in 2010 confirmed 28,000 payphones across the country had disappeared over the previous four years, and per-phone annual revenue had dropped to $860 from $1,148 in the same period — they can still generate headlines.

Bell Canada's and Bell Alliant's joint application, submitted in mid-January, to the federal regulator to increase the maximum allowable rate for payphone-initiated local calls from 50 cents to $1 for cash payment, and from $1 to $2 for calls paid via credit card or similar forms of plastic, has touched off a firestorm of opposition, mostly from anti-poverty groups who say the 100 per cent increase hits those who can least afford it. Victims' advocates organizations have also sounded off, seeing pay phones as one of the last bastions of the truly anonymous call.

In their joint application, the companies claim planned changes by the Royal Canadian Mint to the one dollar coin leave them no choice but to increase their rates. The new loonie -- made of cheaper, lighter steel -- is expected to hit the streets later this spring and won't work in existing phones, forcing "significant capital expenditures" to retrofit existing pay phones.

Public phones led tough lives even before cell phones began killing them off. Even one act of vandalism could easily wipe out a year's profit from a phone that could cost $5,000 or more to replace. The two Bells say they can't continue to operate their existing fleet of phones profitably without the requested rate increase.

And that fleet will only shrink more as Canadian mobile ownership rates — which Statistics Canada estimated at 78 per cent in 2010, up by four points since 2008 — continue to rise.

While most of us probably won't pay much attention as we chat away on our mobile devices, the requested rate increase will, if it sees the light of day, likely make a bad business situation even worse by adding yet another disincentive — beyond graffiti, disembowelled phone books and shattered plexiglass — to picking up a handset and making a call.

As already-dropping demand falls off even more steeply, the providers will find it even more difficult to maintain the phones that are still in service in a cost-effective way. It's a classic diseconomy of scale, and it's a clear sign their longer-term plan has nothing to do with stabilizing the business to ensure it survives for the increasingly small, increasingly disconnected minority that relies on it.

The national argument over something that could cost a buck when all is said and done may seem silly to some, but when you can't afford a mobile phone to begin with, or you're too afraid to use your own phone for fear of betraying your own privacy, it's as dead serious as it gets.

Price increase the nail in the pay phone coffin?

The 100 per cent increase, which comes barely five years after another doubling in cost, suggests it may be time to have a national discussion over who uses pay phones, why they use them, and whether the rights of profit-seeking providers should trump those of some of the most vulnerable members of society. Which could also be the trigger to ask whether payphones represent an essential service for some.

The Public Interest Advocacy Centre and Canada Without Poverty filed a joint intervention with the CRTC last week, claiming the increases would be the nail in the coffin of pay phone use in Canada.

"PIAC/CWP  therefore contend that a 100-per-cent price increase in payphone rates and in particular in coin payphone rates will disproportionately affect lower income Canadians who are least able to afford sudden large increases in their expenses," they wrote in their statement.

For their part, the two Bells say the business isn't viable at the current rates. Fair enough, as no business sticks around long if it can't make money. But the amount and timing of the increase suggests they no longer want to be in the business, anyway, as it's little more than a deliberate attempt to kill demand from a customer base differentially affected by even small increases in living costs.

Indeed, one can easily see these same providers returning to the CRTC in a few years to ask for additional increases to fund yet another round of maintenance for an ever-shrinking fleet of phones.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own.