Pay phone operators slammed by Mexico
(San Antonio Express-News; 06/16/98)

 MEXICO CITY - Mexico clamped down on hundreds of illegal telephone exchanges 
for over-billing Monday, saying the kiosks charged tourists rates of as much as 
$25 to make a three-minute, long-distance call.

   The government removed or dismantled 759 public telephones that were 
charging unregistered fees and illegally bypassing local lines belonging to 
Telefonos de Mexico SA. Those telephones used operators, often in the U.S., to 
transfer calls out of the country.

   Eight Mexican companies, including Landmark Communications SA, Modutel 
Comunicaciones SA and BBG Comunicaciones SA, were accused  of overcharging on 
calls from phones in the resort towns of Cancun, Puerto Vallarta, Culiacan and 
Ciudad Juarez and Tijuana, on the  U.S. border.

   "These users were not respecting long-distance regulations. This has been 
damaging Mexico's image abroad," said Javier Lozano, chairman of the Federal 
Telecommunications Commission, a government agency.

   American TeleSource International de Mexico SA - a subsidiary of San Antonio-
based American TeleSource International Inc. - was  among three companies 
licensed to operate telephone services, but  charged in the sting of violating 
the conditions of their  concessions.

   Officials with American TeleSource said the Mexican government removed 45 of 
its 1,200 phones because they were not "smart phones" capable of accepting, 
cash, credit cards and pre-paid calling  cards. The Mexican government wants 
all pay-phone operators across  the country to replace their old phones with 
new smart phones.

   Although 900 of American TeleSource's phones use the new technology and it 
is in the process of replacing its old phones, it had not moved fast enough to 
satisfy the Mexican government, said Arthur L. Smith, the company's chief 
executive officer.

   "This came on suddenly," said Smith, who added that the company has met with 
government officials since the crackdown and has sped up its plans to replace 
the old pay phones.

   American TeleSource's decision to speed up the replacement could decrease 
its short-term revenues by up to 10 percent, Smith said.