Perils of deregulating payphone tariffs

Posted on July 14, 2009  /  0 Comments

LIRNEasia is on record supporting tariff forbearance, another word for deregulation. But that does not mean that we support it in all circumstances. The key is that consumers have a choice of suppliers. For that to happen, there must be multiple suppliers. In places such as airports the owner of the building/space usually concessions out the payphones, partly to make his life simple and partly to generate revenue.

The result is the creation of a de facto island of monopoly power (qualified only by the existence of mobile phones). This is waht happens in hotels too. Now, within this island, the payphone operator can mercilessly fleece the consumer who does not have choices, as in the case below. US Congress made a mistake it should undo. If not, the airport authority should include price limits in its contract with the payphone operator. In the meantime, beware of airport phones.

In 1996, Congress essentially deregulated the price of pay-phone calls, hoping to make this shrinking business a little more enticing.

The upshot is that today, making a collect call on a pay phone is like stepping in one of those net traps that ensnare people in every other movie set in a jungle. Dial “0,” ask for an operator and, suddenly, you’re dangling from a rubber tree.

So Legacy is within its rights to charge huge sums. But, seriously, $32 for a quick collect call? And then brush-off rudeness on top of that? Is this how Legacy does business?

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