BT in plea to Ofcom over payphones

BT will urge Ofcom to allow it to close a significant proportion of its payphones from next year as it looks to strip more cost out of the declining business.

With more mobile phones in use in the UK than there are people to use them, the payphone has become something of an anachronism for most consumers. Yet BT still operates 62,500 public payphones, more than 60 per cent of which lose money. It is required to operate the telephone boxes to comply with rules set out by the regulator, but with cash revenue halving since 2004, the company is keen to cut further the number of loss-making payphones it is required to support.

Nigel Stagg, the managing director of BT Enterprises, said that Ofcom is set to review the regulatory regime for payphones in 2010, but that timeframe is far too long given the rapid decline in usage. He said BT is compiling a report to gauge the social benefits of payphones and will put pressure on Ofcom to launch a review next year.

BT has slashed 38m from its cost base over the past two years, vastly improving its financial profile. As it does not have total freedom to close unprofitable phone boxes, it has saved costs elsewhere by making its engineers clean the kiosks and introducing cashless phone boxes for emergency calls, which reduce maintenance costs.

Another problem for BT is vandalism. The company spent 10m in 2006 alone fixing and cleaning public payphones, replacing 31,000 panes of glass.

AT&T in the US has just closed all of its public payphones, yet Mr Stagg does not see a future when all of the UK's payphones will disappear. But he said that the public payphone will inevit-ably become a completely urban business, given that usage in rural areas has all but dried up.

Yet even in urban areas, BT is weighing up the need for so many public payphones. Mr Stagg said that a large proportion of the emergency calls made using payphones are crank calls made by children.