March 08, 2007

KIOSKS Case Study -- Payphone approaching footnote status

BT still struggling with dying payphone. Diversion into multimedia phone (Marconi) didn't pan out as expected. It's a lesson on how quickly technology can change (or not change) and prosper (or slowly die).

From The Times
March 07, 2007
BT seeks variable pricing to save the endangered kiosk
Elizabeth Judge, Telecoms Correspondent

BT is seeking permission to charge varying tariffs in its 60,000 payphones in an attempt to save the telephone box from a lingering death.

The telecoms giant has applied to the regulator for permission to tear up a four-year agreement and charge different prices from its payphones in certain parts of the country.

The plans could see the introduction of cut-price tariffs on calls to India from payphones in cities with high Asian populations.

BT said that consent for the proposals, which it wanted to introduce for a three-year period, would help it determine the “acceptable pricing of pay-phone calls” without the commercial risk of implementing untested new prices nationally.

Ofcom was proposing to allow the plans, which it said were not “unduly discriminatory”. A spokesman said: “We propose it will benefit consumers in the long run for BT to experiment with pricing.”

However, he added that Ofcom would keep any changes under review. The regulator would have the right to withdraw consent or change the terms of the plans at any time.

Following a deal struck at the time of privatisation, BT was bound to supply certain basic services to consumers, including access to call boxes.

However, as mobile phones have grown in popularity, the number of calls made from kiosks has plummeted. Today 40,500 of its 63,795 boxes are unprofitable.

Calls from BT payphones have more than halved in the past three years and the pay-phone business’s revenue has dropped by more than 40 per cent.

The group, which last year made profits of £2.2 billion, has complained that it was saddled with a hefty annual maintenance bill. In 2005, BT tried and failed to make the rest of the telecoms industry help contribute to the boxes’ upkeep.

The commercial pressures on the group have already seen it introduce various schemes, such as combining kiosks with vending or cash machines as a way of encouraging more spending.

The requirement to offer uniform pricing was implemented by Oftel in 2003. The new proposals will enable BT to run unlimited geographic trials simultaneously on call boxes for the next three years.

Ofcom’s proposed consent for the variable pricing plan was offered on the basis that each trial, which will cover entire cities or regions, will last for no longer than 26 weeks.

Once each trial is completed, the call boxes concerned must return to the original price or BT must uniformly implement a new national price, it said.

In a letter to Ofcom, Sarah Jefferson, BT’s consumer regulation specialist, said that the proposals would not be unduly discriminatory because the “differential charging would apply to all persons using public call box servies and will only apply in the area of the trial for a limited time”.

Boxed in

— BT has sole responsibility for the upkeep of its 63,795 phone boxes. In other countries, the cost of payphones is funded through a levy on all telecoms operators

— BT’s biggest phone box rival is NWP Spectrum, which operates 8,950 kiosks

— NWP Spectrum is not under any obligation to provide the booths and can cherrypick the most profitable areas in which to place them

— The requirement for BT to offer uniform pricing across its boxes was implemented in 2003


BT clearly can't be spending that much on the maintenance of phone boxes; most phone boxes are filthy and windowless!

Catriona, WGC, UK

This situation was inevitable, the death of the payphone has been on the cards for over a decade, the last British manufacturer died with the Marconi debacle.

The business model has been in decline all over the world as the commoditisation of the mobile phone voice market has inevitably happened. Cheap mobiles are still a more attractive proposition to standing in a kiosk that is more often used as a public convenience.

I was involved in the industry at its peak and as it sought to diversify into the multimedia kiosk market. Needless to say that the same predator took that market away too, as soon as WAP, Bluetooth and 3G were available.

The 'box has had it's day.

Peter, Lancaster,

Posted by staff at March 8, 2007 08:30 AM