opportunity to service him with pay phones, especially
when it is on a more profitable basis to the customer than
[with] the Bell company.
"So far we have not seen a private pay-phone com-
pany that provides the vending service. Everyone that
has gone into it has been interested in selling or leasing
the phone."
Are you talking about those outside the coin-op
business?
George: "Yes, there are a lot of other types of busi-
nesses getting into it. But we don't look for them to be
real successful. They may sell a few phones, but they
don't have the service, the technical back up, and that is
important. If I was a customer, and I was going to buy or
lease a phone, the first question I would ask is, what's
your service? So, if the only interest is selling, there is
little importance placed on service, nor are they expe-
rienced in service."
Are some people hurting this business for others?
George: "No question. We are familiar with a
dozen locations where the customer has bought or
leased a pay phone from a new company, and it's just a
matter of time before that customer has insisted upon
the removal of that phone and asked Ohio Bell to put its
phone back. It's a matter of someone not knowing what
he is getting into. So then it will be twice as hard for
anyone to go back into that location and put in a phone.
But on the other hand it can work to our advantage. That
dissatisfied customer can now be given a state-of-the-art
phone, reputable service, generous commissions, and
no expense. They can try it with us without it costing
them anything. They'll make double the commission
they'd make from Ohio Bell."
Borkan: "When the video boom started about six
or seven years ago , linen salesmen, meat salesmen, and
pot salesmen were all putting out video games. They got
into something they could not control. We are seeing the
same thing in private pay phones. There is no way of
stopping it, but, rest assured, it will run its course. In any
new business you will see people coming in just for the
cream and then changing to something else."
What about long-distance revenues?
George: "It's going to happen, and it is the carrot
of our business, the icing on the cake. The local-call reve-
nue is the bread and butter and will pay the bills and grind
out a profit, but once the long-distance profitability is put
into place, it's going to be very, very profitable."
If people make calls without paying, the operator
gets stuck with the cost. Is that a problem?
Borkan: "It is a problem if you don't know what
you are doing. There is something called call screening
which takes care of that problem."
Do you think the private pay-phone business will
go through a shake-out as the video-game business
did?
Borkan: "Exactly. Now you've got about a dozen
manufacturers of phones. It's going to go way down. Just
like video when everyone was working out of their
garages; now they have gone belly up or combined with
other large companies. I think the same thing will happen
with phones. But a company must have financ ing and
service to have staying power."
16
George: "If the private pay-phone business is
approached professionally by an established operator,
he will have a tremendous advantage over the people
Norm just mentioned that will start out with a half a
dozen phones and try to pay for them. I don't believe this
business is going to be worthwhile for operators like
that.
"There are tools built-in to make a private pay-
phone business profitable. An example here in Ohio is
the ability, in accordance with the deregulation, to obtain
from Ohio Bell the past 12 months of the performance
history of a location in which Ohio Bell has a phone. I've
never known of another business where you can find out
what your competition has done. Then you can decide
whether you want to tackle that account.
"The customer must request the information, and
we act as their agent to get the information from Ohio
Bell. Then we do an account analysis, break it down, and
share that information with the customer. We can tell
that customer what he is getting from Ohio Bell and tell
him, based on commissions, what he can expect from us.
There are a lot of locations that look like they would be
high-volume pay-phone accounts, like hotels where the
phones are always busy. But you find that there is little
cash in the box because most are credit-card or collect
calls. Now we are not able to share in that revenue. That
is why I said that long-distance revenues will be the icing
on the cake for private pay-phone operators ."
At an AMOA seminar a speaker said that in 60 to
90 days there should be some equipment break-
throughs. It's been about that long now. Have
there been any breakthroughs?
George: "No, I haven't seen any. I'm not saying
they are not there, but we haven't seen them. I think we
are in contact with every major manufacturer of pay
phones, and I agree it is on the horizon, but the speaker's
timetable may have been a little optimistic. Hopefully, in
March at ACME in Chicago, we'll see new product. But
we haven't really gotten excited about anything we've
seen since the AMOA show."
How do you think an operator should evaluate a
manufacturer?
Borkan: "He should have a spec sheet on what is
necessary to operate a good phone. For example, the
dial tone must come on very quickly when the receiver is
picked up. There must be a rate table and an answer
detect. Anyone with any interest in the phone business
will know the terminology.
"You must also check the company's capitalization,
background, and what kind of warranty. There are a lot
of companies making phones as assemblers , not really
manufacturing. The company just buys component
parts and puts them together as opposed to [doing]
research and development, making their own chips, and
programming chips. You should know what the com-
pany in question is doing. Then you must check on the
phone itself. An operator should be familiar with what he
is looking for and what features a phone needs. It's
unbelievable how many operators who profess to be
interested in pay phones don't know the first thing about
the equipment. "
Williams, a company that has a good reputation in
the games business, has announced it will manu-
facture phones. How does this fit into the scheme
PLAY METER, January 15, 1986