Election Section

WASHINGTON — As pay phones rapidly vanish from the American landscape, the government wants to give companies incentives to maintain the service for people who don’t have cell phones. 

The Federal Communications Commission set up a clear system Thursday to ensure that pay phone businesses get compensated when people make toll-free, dial-around or prepaid calls. 

That action could prevent pay phone providers from being shortchanged some $300 million a year and sends a signal that the government is committed to keeping the industry alive, trade officials said. It ultimately could influence decisions of telephone providers, already feeling heat from the greatly expanded usage of cell phones, about whether to pull out of the pay phone business. 

“There were pay phone providers wondering whether anyone cared about pay phones,” said Vincent Sandusky, president of the American Public Communications Council, a trade group representing 1,600 independent carriers who operate about 500,000 pay phones. 

Each time a caller uses a calling card, a 10-10 number or a prepaid card to make a long-distance call, the pay phone operator is supposed to get 24 cents from the phone company handling the call. 

The call may travel a winding road to get to its destination, being passed off between different long-distance carriers, resellers and local phone companies.  

So who’s responsible for paying the pay phone provider? 

Finger-pointing among telecom industry players has meant that 20 percent to 50 percent of revenues for those types of calls go uncollected, the APCC says. 

Incurring such losses provides just one more reason for pay phone companies to get out of the business. Plummeting prices of cell phone calls and exploding growth in numbers of subscribers poses another serious challenge. 

The number of pay phones nationwide has dwindled from 2.6 million to 2.1 million in the past five years, since lawmakers freed telecom services to become competitive. Early this year, BellSouth Corp. said it would get rid of all 143,000 of its pay phones by the end of 2002. 

Seeking to boost competition in the pay phone market, the FCC clarified Thursday that the first long-distance carrier to handle the call must compensate the pay phone provider. Then that company can turn around and recoup costs from resellers who package long-distance phone service, sell directly to the consumer and make the profit. 

The long-distance carrier also needs to track the calls to see if its completed and provide figures on how many calls it receives from a particular provider’s pay phones. 

With the FCC settling the issue of who must compensate them, providers can make a better business determination about whether operating their pay phones are profitable, Sandusky said. 

Pay phones have long been seen as not only a convenience but a public safety issue. Despite the growing popularity of cell phones, pagers and other devices, wireless service is spotty and unreliable in some part of the country. 

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On the Net: Federal Communications Commission site: http://www.fcc.gov