Evaluation of Payphone Alternatives and Payphones in Emergency Preparedness

While the enclosed study was commissioned by the Commission, the observations and conclusions are those of the author alone. The Commission makes this study available for reference by the telecommunications industry and other potentially interested persons.

25 March 2014

Disclaimer

The information in this document is provided for reference purposes only and is subject to change at any time without notice.

Although efforts have been made to ensure the accuracy of data, Red Mobile Consulting does not warrant the quality, accuracy, or completeness of any information, or data in this document and assume no responsibility for any possible errors or omissions.

It is the responsibility of all persons who use this Report to independently confirm the accuracy of the data, information, or results obtained through their use.

In no event will the Authors, their Directors, Employees, and Agents; the Government of Canada or its employees, servants or agents have any obligation to the users of this report for any reason including claims arising from contract or tort, or for loss of revenue or profit, or for indirect, special, incidental or consequential damages arising from the use of this information.

This Report has been prepared for the exclusive use by the Canadian Radio and Television Commission (CRTC). Permission must be obtained to use the contents of this Report for any other purpose from the Authors. At all times, the Authors must be identified as the source of the reproduction.

1 Executive Summary

Study Objective:

RedMobile Consulting (RedMobile) leveraged its industry expertise and experience in telecommunications, public safety, and emerging technologies to assess the public payphone environment in Canada. This study addresses the following:

1. Public Payphones as an affordable and accessible alternative to other methods of communications

2. Public Payphones as an essential communications service in emergency situations

Methodology:

The study was conducted through the use of both primary and secondary resources. These included interviews with stakeholders such as local exchange carriers (LECs), consumer groups, and public safety associations. As well, publicly available information and submissions made to the CRTC in Consultations 2013-337 & 2013-338 were reviewed.

A key element of this study was to assess alternatives and the impact that they might have on consumers, particularly those considered to be in vulnerable groups. Therefore, in this study, RedMobile has identified commercially available options to payphones. To measure the impact of payphone substitution, we established a set of three evaluation criteria for comparison of typical use cases where consumers have opted to use payphones. These evaluation criteria are affordability, availability, and usability of payphones vs. payphone alternatives.

Alternatives to Payphones:

Without regulation to ensure payphone placement and quality of service, usage remains the primary factor that will determine the fate of the payphone industry. Payphones offer cost advantages for infrequent users, flat-rate calling, no credit requirements for use, and anonymous access in a public place. However, their usage has been in constant decline over the past decade - a trend likely to continue. This is predominantly a result of maturity-level of alternatives, such as cellular phones and VoIP.

Local Exchange Carriers suggest that they are in no rush to remove payphones, as there is a cost associated with their removal. However, as alternatives to payhones become ubiquitous, more affordable, and offer more flexible payment options, LECs and landlords/land use authorities may consider removal of payphones as their usage drops.

Socio-Economic Evaluation of Payphone Alternatives:

In an environment where payphones become less available, the study looked at the impact of this trend on the most vulnerable consumers. The socio-economic impact was assessed using three criteria:

• Affordability: Options such as cellular services and VoIP have reached a maturity level in Canada that has resulted in lower total cost of ownership. The cost of devices and service continue to decline. Also, as a result of increased competition, consumers have more flexible options for payment terms and credit requirements.

• Availability: Continued infrastructure investment in alternatives to payphones (i.e. cellular, broadband connectivity) have resulted in expanded coverage and improved service quality, providing dependable service in most places. In addition, as payphones become less available, alternatives like cellular phones become more attractive. The ability of consumers to be accessible for incoming calls is also a major benefit of alternatives.

• Usability: Payphones offer consumers a well known and easy to use interface. However, devices for alternatives are starting to provide consumers with more user-friendly, easy to use interfaces that can be adapted to meet their personal needs.

Emergency Communications - Payphones & Alternatives:

RedMobile was also asked to assess the role of payphones and alternative technologies options in case of emergencies, particularly in addressing immediate crisis situations that would require 911 services. The assessment of payphones and alternative options was completed through an investigation of the 911 calling process, identification of trends in 911, an evaluation of technologies for emergency use, and interviews with 911 Operations as well as Public Safety industry experts.

Payphones offer benefits critical to emergency service delivery, including reliable location data and resiliency in disaster situations. In addition, payphones provide caller anonymity in sensitive cases such as domestic abuse. Payphones provide an access point in vulnerable communities where the cost of acquiring alternatives are beyond economic means. However, data and feedback provided by public safety groups indicate that, on average in many communities, over 60% of calls made to 911 originate from cellular phones. In May of 2013, E-Comm 9-1-1 tweeted that 64% of the 65,681 calls they received were from cellular phones.^{Endnote i} This trend is expected to continue as options such as cellular and VoIP become more economically viable and pervasively used. The added benefit of some alternatives - such as cellular, is that they are readily available to the user when and where an emergency occurs.

Public safety agencies concede that they must strive to react in a consumer-driven telecommunications environment. While payphone presence ensures that communities have access to emergency services, it is widely expected that payphones will continue to face availability declines as usage declines. The greater challenge that exists for PS groups is in the education of consumers, as it becomes dangerous when consumer expectations run too far ahead of emergency service capabilities.

Trends Affecting Payphones:

Both the private sector and municipalities have been investing in telecommunications infrastructure (i.e. wired and wireless broadband). In addition, technologies have been evolving, and more device and service options are becoming available to consumers. This collectively enables higher quality, greater reliability, and choice of lower cost options to consumers. Added market competition has also resulted in the emergence of greater choice of services and more flexible payment models.

Conclusion:

Consumers have been using alternatives to payphones as their preferred choice of communications. This trend is expected to continue. As such, payphone usage will likely continue to see decline. Thus, eventually, resulting in, diminishing value for the on-going support of payphones.

2 Introduction

2.1 Background & Objectives

On July 16 2013, the CRTC issued Telecom Decision 2013-336^{Endnote ii}. In this decision, the CRTC denied an application submitted by Bell Canada, Bell Alliant, and Télébec to increase the price ceiling for local payphone rates. In conjunction with this decision, the CRTC also issued Telecom Notice of Consultation 2013-337^{Endnote iii}. This consultation was issued to collect information on the current role that payphones play in the Canadian communications system, including the extent to which Canadians rely on payphones, and the effects, if any, that further payphone removals and possible rate increases may have on Canadians. The CRTC also placed a moratorium on the removal of the last payphone in a community while it conducts its fact-finding process (Foot note CRTC 2013-337 and 2013-708)

Prior to CRTC decision 2013-336 and the corresponding consultations, the competitive payphone market in Canada had already been under pressure from alternative technologies, most notably, the adoption of cellular devices and internet-supported alternatives. Growing from around 21.5 million subscribers at the end of 2008 to over 27 million subscriptions in Canada at the end of 2013^{Endnote iv}, the increased use of cellular phones has been cited as the primary cause of reduced payphone use. With access to more affordable cell phones and flexible rate plans, including pay-as-you-go plans - consumer adoption of the cell phone as their preferred means to communicate is becoming rather evident. Payphones, once the only outlet for consumers to make private calls in public areas, have seen continuous usage declines - a trend some stakeholders in the payphone ecosystem cite as a consideration for removing terminals or increasing rates.

Of greatest concern amongst consumer groups is the impact that changes to the Canadian payphone ecosystem would have on the most marginalized groups, classified as "vulnerable consumers" by the CRTC. These consumers would be considered disproportionately more susceptible to increases in payphone rates; or by the reduced availability of payphones due to a combination of economic, geographic, or physical reasons.

To assist the CRTC in making any further decisions on the payphone market in Canada, this study was commissioned to complement the consultations. The purpose of this study is to assess the socio-economic impact of alternatives to payphones and evaluate the role of payphones in emergency situations and PS infrastructure.

2.2 Methodology

This report begins with an introduction of various alternatives that are available to consumers for real-time voice calling. This would include technologies that connect based on fixed access points, connect wirelessly through a mobile network, or connect via the public internet.

To evaluate the identified alternative technology options, the payphone ecosystem was analyzed to determine key attributes offered by payphones. These attributes where then used to assess the viability of each alternative under various use cases. Particular attention was given to users in vulnerable groups. Through a review of filed submissions and interviews with consumer groups, it was determined that comparing alternatives under the criteria of 1) affordability; 2) availability; and 3) usability, would represent the socio-economic considerations for vulnerable consumers.

Once a set of use cases and attributes for payphones were identified, payphones were compared with the alternative technology options identified earlier. The process involved a combination of primary and secondary research. One-on-one interviews were conducted with service providers and consumer groups, their submissions to the CRTC were reviewed, and secondary research of publicly available data was undertaken.

Finally, this report assesses the importance of payphones in the National and Provincial emergency infrastructure of Canada. A number of interviews were conducted with Public Safety associations to obtain input on the role of payphones in emergency situations, and discuss the viability of alternative technology options to payphones for 911. Alternative options were then assessed from a technical perspective to determine their applicability for use in emergency 911 situations.

The following stakeholders were contacted for input to this study (* indicates those that were interviewed):

3 Payphones & Alternatives

Canadians are provided with a wide range of voice calling options to suit their needs. Investments continue to evolve the capabilities and technologies behind wired and wireless infrastructure, providing Canadians with more choice, mobility and personalization in their telecommunications.

This section of the report will introduce the alternative technologies to payphones and briefly discuss the extent of their use in Canada. Telephone options have been classified as 1) fixed 2) mobile or 3) Voice-over-internet-protocol.

3.1 The Canadian Public Payphone Ecosystem

Payphones connect to existing analog telephone infrastructure to provide telephone service on a pay-per-use basis in public and semi-public areas. Local Exchange Carriers (LECs)^{Footnote 1}, in combination with municipalities and property owners, make business case decisions to provide and maintain payphone terminals. The relatively low-cost access to telephone services outside of the home or office was a primary driver for the extensive expansion of payphones across Canada, as mobile options for calls in public areas were limited, unreliable and unaffordable for many at the time. As a result of the expansive payphone availability across the country, payphones would transition to become an important community outlet for public services, offering toll-free access to 1-800 numbers and public services such as emergency 911.

However, overall payphone usage has declined over the much of the past decade, led by the increased viability of cellular phones in enabling calls without the restriction of being in a fixed location. The CRTC Monitoring Report for 2013 shows continued declines in both average revenues and overall number of payphones in Canada. By the end 2012, 68,000 payphones were in service, representing a drop of 7.1 payphones per 100 people in 2008 to 5.1 in 2012.^{Endnote v}

3.2 Fixed Telephone Options

Telephone and Cable providers provide fixed telephone options through infrastructure that connects directly to the subscriber. Fixed telephone options include Analog (also known as Plain-old-telephone-service or POTS) and digital cable telephone service. POTS was the only fixed option available in Canada until 2005, when cable providers introduced digitalized voice technologies and entered the market.

Telephone cables connect a subscriber’s home system directly to Central Office (CO) of the telephone provider. The CO provides power to system to enable telephone calls. Digital telephones use the coaxial cable connection into the home. Telephone service requires a digital adaptor and a local power supply to connect the home telephone system to the cable operator’s private network. The private network then connects calls to the public telephone network.

Total fixed residential telephone subscriptions in Canada totaled 19.38 million at the end of 2012. Between 2011 and 2012, overall fixed residential telephone service subscriptions in Canada fell from 19.918 to 19.38 million. In the same time period, cable telephone subscriptions increased from 3.8 to 4.4 million, while POTS subscriptions fell from 16.14 to 14.98 million.^{Endnote vi}

3.3 Mobile Telephone Options

The advancement of wireless technologies has provided alternatives to traditional fixed telephone systems, enabling mobility for telephone users. Using wireless frequencies, both cellular and satellite technologies are capable of connecting to the public telephone network. Fido (now part of Rogers Communications) started the process of fixed line substitution by being the first wireless carrier to register as a CLEC and offer number portability from traditional fixed telephone numbers.

Satellite options are provided by globally-focused service providers who have primarily targeted users who need service in remote areas. Satellite telephone users obtain service through connections with satellites in the sky. Satellites are either geostationary, being very high up and remaining in place, or low earth orbit satellites, which are much lower and remain in constant orbit. Satellite phones establish direct connections with satellites through line of sight, providing expansive coverage in many parts of the world.

Leveraging cellular networks rather than cable or telephone wires in the ground, cellular phones transmit voice conversations wirelessly to connect with a cellular tower in the area. These towers then connect to the public telephone exchange network through underground fiber cables or via microwave signals to another tower. The most recent information from the 2013 CRTC Communications Monitoring Report indicates that there were 27.9 million cellular subscribers in Canada at the end of 2012, with about 19% of these subscribers on pre-paid plans.^{Endnote vii}

3.4 Voice-over-Internet-Protocol Options

Voice-over-Internet-Protocol (VoIP) is an alternative voice option that traverses wired and wireless networks. Using a broadband internet connection, VoIP services access the public telephone network through the public internet. Access to a VoIP solution is independent of the internet source, granting users additional flexibility of choice and enabling further mobility. VoIP services can either be hardware or software based. From 2011 to 2012, the number of VoIP residential local lines grew by over 100% to approximately 800,000 subscribers in Canada.^{Endnote viii}

Hardware-based VoIP (H-VoIP) options are similar to digital telephone service, utilizing a digital adaptor that connects to the subscribers telephone system or device. Unlike digital cable phones, the adaptor also requires a connection with a broadband internet source to enable service over the public internet.

Software-based VoIP (S-VoIP) options offer users the highest degree of mobility because they are decoupled from specified hardware. Subscriber credentials can be entered on any device capable of running the provider’s software, requiring only a microphone and speaker to support a voice call. S-VoIP users can also make direct connections between users of the same service, bypassing the public telephone network altogether. A paid subscription is often required to obtain a local incoming number or to make calls to landline telephone numbers.

VoIP options are considered nomadic because they allow the subscriber to use the same service (and phone number) anywhere a broadband connection is available. Broadband internet may be provided by fixed internet providers (through DSL or Cable), or through mobile options offered by cellular networks. Continued investments in cellular, especially in data-friendly technologies such as Long-Term Evolution (LTE) networks, promises to expand the mobility of VoIP solutions.

3.5 Summary

Voice communications options in Canada are offered by fixed telephone infrastructure, wireless infrastructure, and VoIP technologies that utilize broadband internet. The table below summarizes the characteristics of voice technologies available.

4 Socio-Economic Evaluation of Payphone Alternatives

There have been a number of concerns expressed by consumer groups regarding changes that might occur in the Canadian payphone industry. In particular, there are concerns regarding the disproportionate impact some changes may have on vulnerable groups who are seen as most reliant on payphones.

In this section of the report, RedMobile analyzes:

1. The circumstances in which payphones are chosen over alternative technologies

2. The extent to which payphone alternatives are affordable, available, and usability for consumers

4.1 Communication Use Cases

RedMobile conducted interviews with stakeholders to determine appropriate use cases for communications that are provided by payphones and alternative technologies.

The Canadian telecommunications market offers a suite of options available to match the usage needs of consumers. Payphones and alternative options are offered under a variety of business models that have a direct effect on the flexibility and costs that consumers consider when using one service or another. As the only voice technology offered as a public access point, payphones provide a unique set of characteristics that affect how they are used and their functionality.

It is also important to recognize the usage of non-voice communications, made possible by the introduction of data services over telecommunications lines and increasingly powerful devices.  In addition to real-time voice calls, applications such as Short-Messaging-Service (SMS), Email, Picture messages, Real-Time Video Calling, or Instant Messaging (IM) are available and may be preferable for some user groups.  For example, SMS has been a popular form of communication for Canadians, who send over 270 million text messages per day.^{Endnote ix} While some payphone terminals are capable of sending SMS messages, users must subscribe to an incoming number to receive an incoming SMS.

The digitalization of personal telecommunications has provided a range of services that are not accessible or are limited in payphones. While alternative communication services may be preferable to some, it is also important to consider if both parties are able to accept the choice of communication. For instance, while text messages such as SMS or IM are a popular communication choice among consumers, most institutions will not accept text messages or emails to conduct some formal transactions, especially where private records are involved. These include simple actions such as changing user account information with banks via email or text; health providers sending patient information via public emails or public text messaging services, etc.. In certain cases, such as with health records, privacy and data protection regulation (i.e. The Personal Health Information Policy Act) may actually greatly restrict, or prohibit use of applications such as public email and public text messaging services to communicate private data.

When evaluating the uses of communications technology, RedMobile found several important factors to consider:

1. Flat-rate Calling: Telephone services can be offered on a pay-per-use basis without call time limitation. This is a preferred option for infrequent or cost-conscious users who only wish to pay for services when they are used.

2. Toll-free Calling: 1-800 numbers and directory services are usually offered toll-free to callers. The receiving party typically covers the cost of the call. However, customers using wireless options are typically still charged for the airtime used in these scenarios.

3. Anonymous Calling: Most personal telephone services require user registration. This may prevent users from making anonymous calls when needed.

4. Incoming Calls via Dedicated Number: A personalized phone number provides users with a callback number and also enables incoming SMS services.

5. Non-voice Communications: Non-voice communications have become popular alternatives and may be a preferred method for some user groups.

The table below quickly identifies how telephone technologies can address some of the particular telecommunications needs of consumers:

4.2 Payphone Use Cases

RedMobile further analyzed the extent to which payphones and payphone alternatives were available to consumers. Several situations were identified where payphones were chosen over alternative technologies. In particular, vulnerable groups identified several cost sensitivities related to telephone options.

Scenarios where payphones are preferred over alternative technologies include:

1. Flat-rate & Pay per-use Calling: Payphones provide the option of payment on a per-use basis. This is particularly important for longer calls that might involve "dead air" due to being on hold or in queue.

2. Toll-free Calling: Payphones provide free access to toll-free calls to 1-800 numbers and directory services. The receiving party often absorbs the cost of these calls in their business.

3. No Credit Requirements: Payphones offer service based on cash payment. Low-income groups may not qualify for subscriptions that require credit or are conscious of paying for services they do not use.

4. Anonymous Calling: Payphones calls are considered anonymous. The lack of call history has been claimed as important in some instances (for example, in the case of domestic abuse where the abusing party has access to service history).

5. Concerns of the Most Marginalized: Some income sensitive users use payphones because they choose not to own a personal device. Homeless and vulnerable communities are concerned about cellular phone theft. As well, the cost of purchasing and marinating a personal device ownership is a concern at times. Local exchange carriers are responsible for the costs associated with installing, repairing, and maintaining payphone terminals.

6. Perception of Higher Reliability & Quality: Some users prefer payphones because they feel that the quality of service is better than wireless options. Poor call quality and the inability to find a signal were main concerns.

4.3 Socio-Economic Analysis of Alternative Technologies

RedMobile determined that affordability, availability, and usability considerations were appropriate classifications to analyze the socio-economic impact of payphones and alternative technologies.

4.3.1 Affordability

Affordability was determined as an evaluation criteria because it has been repeatedly cited by consumer advocacy groups as the leading challenge faced by the most vulnerable. To evaluate affordability concerns, RedMobile analyzed payphones and alternative options from the following perspectives:

1. Cost of Service Plans

2. Cost of Devices

4.3.1.1 Cost of Service Plans

RedMobile analyzed the service plans available for voice technologies and found that non-payphone options do not provide telephone services on a flat rate, pay-per-use basis.

An evaluation of fixed telephone options found that POTS and cable telephone options provide unlimited local calling on monthly subscription costs that can start at around $25.

Satellite options were seen as prohibitively high for most consumers due to pricing that included a monthly subscription plus used airtime. Plans started at around $40/month plus additional charges for usage (starting around $0.90/min).^{Endnote x} Incoming calls are offered as a free service, but calling parties are charged satellite long-distance rates, which start at $7 a minute in Canada.

VoIP subscriptions provide local unlimited calling for a single monthly fee, but also require a broadband internet connection.^{Footnote 2} Hardware-dependent options start at about $10/month, while there are software-based options that can start at $2.50/month. ^{Endnote xi Endnote xii} Furthermore, platforms such as Google and Facebook allow free outgoing calls to North American numbers. Access to broadband internet and any associated costs are additional considerations for VoIP solutions.

Cellular price plans were examined in great detail due to the wide range of pricing options available. RedMobile decided that it was appropriate to evaluate cellular service plans available for basic levels of voice service. Acknowledging affordability concerns that included access to credit and inconsistent telephone use patterns, the following types of cellular rate plans were analyzed: 1) Postpaid subscriptions, 2) Prepaid month-to-month plans and 3) Prepaid pay-as-you-go (PAYG).

RedMobile evaluated cellular plans offered by national carriers, their subsidiary brands and regional carriers. Basic voice plans were examined, with the 2013 average landline subscription cost of about $34 as an upper limit.^{Endnote xiii}  A detailed evaluation and explanation of this analysis can be found in Appendix 8.1.

Postpaid subscriptions typically require a two-year commitment with plans starting at about $29/month. Basic plans offered a predetermined allocation of daytime minutes, unlimited evening and weekend calling, and unlimited SMS.

Prepaid month-to-month plans are offered without a contract commitment and can be offered to users without access to credit. RedMobile found prepaid month-to-month plans are offered under different pricing models between incumbent carriers, regional carriers and "new entrants".^{Footnote 3} New entrants offer monthly plans that start at $19 and provide unlimited anytime calling within their network areas. National and regional carriers plans start at $20/month, but do not offer unlimited calling. Instead, their plans include an allocation of minutes and options for unlimited evening/weekend calling and SMS.

Prepaid PAYG plans require users to purchase airtime in advance and are also offered without a contract. PAYG can provide an advantage for users who only wish to pay for services they use. However, purchased credits are subject to expiration. Rates can range from $0.10 to $0.50 a minute. Some carriers offer one-day add-ons for about $1-2 that permits unlimited incoming calls, evening/weekend calling, or unlimited calling for a day.

4.3.1.2 Cost of Devices

In addition to service subscriptions, voice technologies require capable hardware. RedMobile found that payphones provide a cost advantage due to the public nature of the service. Costs associated with acquiring, maintaining and repairing payphone terminals are assumed by the local exchange carrier.

All alternatives are offered as a personalized service where the subscriber is responsible for the cost of device acquisition, maintenance and security, and any other supplemental costs (e.g. electricity, broadband internet connections).

Fixed telephone devices can range from as little as $10 to $200+, depending on the brand and associated features. Cable telephone users will require an additional purchase or rental of an adaptor that connects the incoming cable line to the home telephone system. H-VoIP solutions require a modem and internet connection in addition to an adaptor and telephone device.

Satellite phone hardware is typically cost prohibitive for mass consumer use. Options include dedicated satellite phones to cellular phone accessories that enable satellite service, starting at around $500 without subsidies.^{Footnote xiv}

For basic voice service, simple cellular phones, also known as a feature phone, can be sufficient to access cellular networks. Feature phones have limited data capabilities and can start at about $50. Newer, entry-level smartphones can start as low as $200, with older generation phones available for less. Some carriers offer subsidies that may also help with the cost of acquiring a device under some conditions. Alternatively, there is an extensive secondhand market where smartphones and feature phones can be found for less. Finally, social initiatives for cell phone donations exist, aiming to distribute used cell phones to the socially disadvantaged.

Software-based VoIP services can be used on a wide range of consumer devices with a microphone and speaker. Though devices may vary in price, ownership of a device may not be necessary. In some cases, user credentials entered on another person’s device will enable voice service.

4.3.2 Availability

The ability of users to have service reliably and conveniently is assessed as availability, in this study. The availability of reliable telephone service is another factor to consider for users. RedMobile analyzed availability concerns in regards to the following:

1. Service Reliability

2. Availability for Public Use

4.3.2.1 Service Reliability

Consumers expect their telephone services to be readily available when they need them. Telephone services are offered through fixed telephone infrastructure, wireless infrastructure, or through broadband internet offered by fixed and wireless technologies.

Payphones are perceived to be more dependable for consumers than wireless options because they are not potentially subject to signal degradation. They are extensions of the same fixed infrastructure that enables service on the POTS network. In cases of power outages, payphone terminals have access to 911 emergency services and may continue to provide telephone services. However, some terminals may face limited functionality when there is a loss of power.^{Footnote 4}

Fixed telephone options are made available due to extensive infrastructure investments made by cable and telephone providers. Using physical lines, POTS and cable telephones provide high quality service and reliability. Telephone providers provide backup power from their central office, enabling telephone service to continue during power outages. In contrast, cable telephone services require constant power running through all points in the connection, especially local power to the digital adaptor. Although available to most Canadians, access to these fixed access solutions may not necessarily be extended to those in remote areas or some neighborhoods.

Mobile technologies provide consumers with telephone access unrestrained from fixed access points. However, the reliability of wireless telephone service is highly dependent on the quality of the radio signal. Telephone service offered by cellular has experienced great adoption in Canada and wireless providers continue to invest in improving their networks. However, consumer groups have voiced concerns in regards to signal quality - particularly for service in remote areas, service in-building and underground, and disruptions that may occur due to weather or cell tower issues. Alternatively, satellite technologies - utilizing line-of-sight communications with satellites in the sky - may be the best option for consumers in remote coverage areas. Mobile options also require sufficient power in the device and receiving transmitter to enable telephone services.

The reliability of VoIP solutions is dependent on the quality and availability of the broadband internet connection being used. Broadband internet can be is available through Digital Subscriber Lines (DSL), cable lines, or cellular networks. Wireless VoIP solutions that use cellular or WiFi technologies are subject to factors that affect signal quality, such as the presence of walls and physical objects, the weather and other interference.

4.3.2.2 Public Access

The availability of public access points for telecommunications is claimed to be an important consideration for the general benefit of the community. Public access to telephone services is important for reasons of access equality, the delivery of community services, and public safety situations.

Evaluating the business models used by payphones and alternative technologies reveals payphones to be the only service offered as a genuine public access point to telephone services. Without subscription requirements, payphones may be used by anyone who is willing to pay for the service, equally available to all members of the community without prejudice. Unlike other services that might be provided as a courtesy, payphones users cannot be denied usage at the discretion of a subscriber.

While providing public access to telephone service is an important consideration, finding a public payphone is increasingly becoming difficult. The Independent Telecommunications Providers Association (ITPA) emphasized that the placement of terminals are made independent of regulatory requirements and subsidies.^{Footnote xv} Decisions to remove terminals are made on a market-driven business cases rather than regulatory provisions to provide public service. It should also be noted that LECs indicate that the installation and removal of public payphones usually is at the request of third parties with contractual relationships with the exchange carriers.

Wired telephone options and hardware-based VoIP technologies are commonly arranged to include unlimited local calling. There have been initiatives in place, especially amongst larger institutions, to provide courtesy phones on their premises. However, public availability of courtesy phones is at the discretion of subscribers who pay for these services. In situations where courtesy phones are available, permission of use may be required and time limitations may be implemented.

Mobile devices often considered to be personal devices, with incoming numbers tied to the subscribers identity. There are situations where device owners decide to allow another party to use their telephone service as a courtesy, but this is often a personal choice.

Publicly available internet (usually through Wi-Fi hotspots) help to provide communities with public access points for communications. Municipal governments and local establishments are often the third parties that sponsor these access points. S-VoIP users can use their devices to access telephone services through these public gateways. However, public WiFi zones may not be designated for voice calls, potentially being a challenge in regards to personal privacy.

Another advantage of S-VoIP solutions are that they can be installed and used on a multitude of devices - some of which may be available for public use (e.g. public computers). However, access to publicly available devices may be more difficult to find than public payphones.

4.3.3 Usability

For this study, usability of a service is determined by ease of set-up and use by the consumer. Utilizing telephone services may be troublesome and challenging for some members of the community. Telephone users are often required to take steps in enabling their services and must interact with device interfaces to access telecommunication services. In evaluating payphones and alternative options, RedMobile examined the following usability issues:

1. Complexity of service setup and dependencies

2. User interface options

4.3.3.1 Complexity of Service Setup and Dependencies

Payphones are offered as a public outlet to telephone services. When it comes to considerations for installing payphones, users do not have to take any responsibilities to ensure that their services are enabled.

Personal voice technologies, however, require steps to be taken in setting up the devices that will be used. Consumers who subscribe to a personal telephone service are expected to take the personal responsibility of setting up their services and acquiring any required devices or supplemental services.

The table below identifies some of the key steps that must be taken to enable personal service using non-payphone options:

4.3.3.2 User Interface Options

Users that wish to make outbound calls must input their commands into the telephone device in order to access a service. Payphones are standardized devices that offer a familiar 12-button number pad and, in some cases, a small keyboard for tele-typewriting (TTY).^{Footnote 5} However, payphone terminals may prove to be challenging and cumbersome for some community members to use.

Personal telephone subscriptions allow users the flexibility of choosing a device that may better suit their needs. Telephone devices are offered with a range of features and form factors that may assist users with disabilities. Digital displays, larger buttons and pre-programmed settings are a few of the features that may be available with a personalized device.

Finally, some users may benefit from the flexibility of software driven user interfaces available for S-VoIP solutions and devices with touchscreens.

4.4 Summary

Payphones and alternative options offer a range of characteristics that suit the individual needs of telephone users. A summary of the comparisons made between telephone options can be found in the chart below:

5 Emergency Communications - Payphones and Alternatives

The use of public payphones has been cited as a critical form of communication to access emergency services outside of the home. Offered as a toll-free service, payphones provide the public with a reliable and anonymous outlet to emergency 911 services. The availability and development of the payphone network has historically been driven by a combination of market-driven interests by Incumbent Local Exchange Carriers (ILECs) and contractual arrangements with municipalities or property owners. While overall use has declined over the past decade, significantly influenced by the massive public adoption of cellular phones, the payphone remains an important public utility for access to emergency services.

This section of the report evaluates the role that payphones play in National and Provincial emergency infrastructure and assesses the reliability of alternative services in delivering emergency services.

5.1 The 911 Emergency Call Process

When receiving emergency calls, two critical goals exist for public safety agencies to effectively respond:

1. Connecting the caller to the appropriate Public Safety Agency to handle the emergency

2. Obtaining accurate information about the caller’s location and situation

The 911 short code was implemented in North America to provide users with a universal number that directly dials into the emergency telephone system to a local Public Safety Answering Point (PSAP) - a public safety call centre responsible for being the first point of contact in emergency situations. This universal number is used instead of a local contact number. Most PSAPs in Canada have been upgraded to automatically obtain, if provided, the Automatic Number Identifier (ANI) and Automatic Location Identification (ALI) of the calling party. Automatically obtaining these two key pieces of information helps in the efficient delivery of emergency services and can be critical when any communication barriers exist.

Numerous PSAPs exist across Canada, responsible for serving various cities, counties or regions. Upon confirming location information from the caller and details about the emergency situation, the PSAPs will then facilitate the delivery of emergency services through contact with the dispatch center of the appropriate public safety agency. Some PSAPs may be combined with the public safety dispatch centres due to their size or area of coverage.

5.2 Evolution of 911

Emergency services are mostly offered across Canada using the 911 telephone code. Depending on the province, basic or enhanced 911 services may be offered. Most of Canada provides enhanced 911 service, with some areas in Newfoundland and Labrador and Yukon providing basic 911 at the time of this writing. There remain some areas throughout Canada (mainly in remote locations) that are not served by 911 and instead are provided emergency services via a local 10-digit telephone number.^{Endnote xvi}

5.2.1 Basic 911 Services

Basic 911 service is provided to the caller when their callback number and/or location data is not automatically sent and must be verbally provided to the 911 operator by the caller. Upon receiving location information, the operator will then transfer the call to the appropriate PSAP or Emergency Service agency for the caller’s location. PSAP operators are not provided with a call back number, exposing emergency calls to risks should the caller be disconnected before providing location and contact details. The time delays involved with providing caller and location information over Basic 911 makes Enhanced 911 a more accurate and efficient emergency service.

5.2.2 Enhanced 911 Services (E911)

Enhanced 911 service is provided when the caller’s number and location are automatically provided upon connection with the operator. PSAPs are able to reduce response times and overcome any communication barriers that might exist when automatically provided with number and location data. While PSAPs may offer E911 service, calls that originate from a telephone service that do not provide ANI and ALI information will fall back to Basic 911 service.

5.2.3 Text 911 (T911)

Text 911 allows for those with hearing difficulties or speech impairments to access 911 emergency services and all telephone and wireless companies were mandated to offer the service by January 24, 2014.^{Footnote xvii} T911 requires that users pre-register their numbers before use and, when using the texting service, to establish a connection with the emergency dispatcher through a live call. It was noted that T911 may still be subject to location identification risks. Therefore, establishing a ‘live call’ is still essential as it may provide dispatchers with important situational and auditory cues to assess the situation. T911 is offered by telecom providers, but may be limited in practice, as there is no requirement of compliance for municipally-funded PSAB call centres, who have raised concern that the software and/or hardware upgrades needed to accept this type of communication may not be completed until 2015.^{Footnote xviii}

5.2.4 Next Generation 911 services

Emergency services are currently limited to voice calling and T911 services are at the early stages of being rolled out by PSAPs across Canada. Next Generation 911 (NG911) services are being investigated to evaluate the processing of other available technologies such as e-mail, pictures, video, social media, and even automated vehicle/asset messaging. With carriers pushing towards IP-based networks and communications, public safety agencies recognize the possibilities of alternative means of communication, but consider these to be more an augmentation of existing 911 to provide enhanced situational awareness. Public safety agencies have expressed concerns that public expectations of the use of emerging technologies be tempered due to a number of limitations for reliable use in real-time emergency situations.

5.3 The Role of Payphones in Emergencies

911 service is offered toll-free over public payphones. Being terminals to the traditional POTS telephone network, combined with availability in public areas, payphones have become an important and reliable enabler for emergency calls. The reliability of payphones in providing extremely accurate ALI and ANI data to PSAPs allows for effective and efficient delivery of public safety services.

Payphones, as well as traditional wireline services on the POTS network, are devices capable of operation without the presence of local power to the telephone device (except in the case of cordless phones). This is possible because the telephone provider’s CO provides a low level of power that is independent of the local power grid.

However, the functionality provided by payphone terminals during a power outage may be limited. All payphones have access to 911 emergency services when there is no power to the terminal, but, depending on the type of terminal, other types of calls may be restricted. One ILEC mentioned that, their newer types of payphone terminals, which represent upwards to 65% of all payphones, have limited functionality during power outages.

A greater number of contact points allows for better emergency service coverage and response. While cellular phone adoption continues to increase across Canada, the continued decline in the number of payphones available removes potential fixed access points to contact emergency services.

Canadian PSAPs provide 911 services to a number of regions that vary in population density and socio-economic environment. The Coalition Pour Le Service 9-1-1 Au Québec - a group that represents nearly all of the emergency 911 call centres in Quebec - found that payphones represented between 1%-5.4% of all 911 calls received in the province in 2012.^{Footnote xix} In their submissions to the CRTC, they indicated that 911 calls originating from payphones were highest in "rural and forest areas" as well as in the "very urban" areas, at 5.4% and 3.7%, respectively. Low cellular coverage, due to lack of service in the area or due to poor in-building and underground signal reception, were cited to be contributing factors. Some LECs report that calls made to 911 from the payphones they provided represented fewer than 0.5% of all calls made since 2010.

Payphone placement and availability is not mandated by regulatory requirements, but is instead driven by market-driven business cases. ILECs note that decisions regarding payphone placement and removal have largely been at the behest of third-party contracts with municipalities and property owners. As a result, the continued availability of these public payphones involves a balance of interests between multiple parties who bear the responsibilities and costs.

5.4 Trends in 911 service

Discussions with public safety groups have indicated that call origination and volumes have changed drastically over the past 5 years. They indicate that the emergence of affordable cellular phones and falling cellular service costs have had a dramatic impact on emergency 911 services. Some regions reported that cellular-originated 911 calls had risen to represent over 65% of all calls by 2013, compared to less than 50% of calls in 2009.^{Footnote 6} However, total 911 call volumes have not changed with increased use of mobile, and in some cases, have declined. Without an in-depth investigation, general consensus among public safety agencies indicates that greater public education on 911 use and the emergence of alternative directory services such as 311 have improved the appropriateness of calls that end up going through to 911.

With cellular-originated calls growing to represent the majority of calls that PSAPs receive, the proportion of calls originating from payphones have also seen declines in some areas. For instance, ECOM911, the PSAP serving Metro Vancouver, the Sunshine Coast, Whistler, and Squamish, reported that 911 calls from payphones have continued to experience declines. Since 2009, calls from payphones have fallen from 2.3% to 1.1%, while overall 911 calls have dropped 3% in the same time-period.

Payphones, while capable of providing the critical location information that emergency responders need, are subject to the effects of being exposed in public locations. PSAPs tend to treat 911 calls from payphones with greater scrutiny due to their public exposure. They note that the number of inappropriate calls made to 911 are higher from payphones. For example, both ILECs and public safety agencies reported instances where schools have requested the removal of payphones from their premises due to the abuse of 911. In these situations, 911 calls have been supported through increased availability of office phones and student ownership of cellular devices.

5.5 Analysis of Communications Technologies for 911

From a network perspective, enhanced 911 services can be provided so long as the caller is using a service capable of providing automatic location information and the local PSAP is equipped to receive the E911 call. However, there may be limitations in connectivity and identification that exist with some telephone services, potentially reducing the effectiveness and delivery of emergency 911 service.

5.5.1 POTS (including Payphones)

With service that is fixed, telephones using the POTS network are considered the most effective for emergency 911 services because they provide accurate and reliable automatic number and location information. Users with wired devices are also provided with provisional telephone service during power outages. This is made possible by backup power from the telephone provider’s CO, which is independent of the power grid.

All payphones are required to be able to provide access to 911 emergency services during power outages. However, full phone functionality may be limited when there is a power disruption, depending on the type of payphone terminal being used.

5.5.2 Cable/Digital Phone

Telephone services provided by cable providers use a private network to route calls to the public telephone network and have additional considerations for emergency services. The service is offered in a fixed, specific location, allowing cable telephone service to provide E911 services because they can confidently provide PSAPs with ALI and ANI information. However, cable telephone service relies on access to a local power source for the adaptor that converts analog voice to digital signals. Most adaptors typically have backup power of only 6-8 hours. Cable telephone providers recommend that subscribers install an uninterruptable power supply (USP) to provide additional battery backup.

5.5.3 Satellite

Satellite phone service relies on device power and line of sight to satellites. For emergency usage, satellites fare quite well in placing calls because they are routed to satellite base stations that may be powered outside a local emergency zone, and satellite service is available in remote and underserved areas.

All calls made from satellite phones are sent back to satellite base stations on the ground that may be anywhere in the world, complicating the efficient delivery of 911 emergency service since there is no specified local calling zone or PSAP. Consequently, if a satellite provider offers 911 services, a third-party operator is required to properly route the emergency call to the appropriate PSAP.^{Footnote xx} Therefore, satellite phone users are typically recommended to pre-program local emergency numbers into their phones in order to obtain service.

5.5.4 Cellular

Cellular phones have had great adoption by Canadians and now account for over 65% of all 911 emergency calls. They provide a great deal of mobility, extending the reach of 911 away from fixed points of access. However, location information remains a concern, as users can utilize the service almost anywhere they can get coverage.

CRTC Regulatory Policy 2003-53 (also referred to as Phase I) set initial mandates on the level of 911 service to be provided by wireless service providers (WSP). Phase I required WSPs to provide information about the caller’s service provider, number identification, and the address of the cell tower being used. Phase I would be replaced by Phase II, which extended that information to include approximate longitude and latitude of the call, as well as the degree of confidence and uncertainty for the location information.^{Footnote xxi} CRTC Regulation Policy 2009-40 required that cellular phones implement Phase II E911 services where they were available for wireline phones by February 2010. Accuracy of location has improved significantly with Phase II, but the nature of mobility makes it less reliable than fixed landlines. For example, elevation information is not provided for in-building service (this is being looked into for NG911).

Despite improved location data, there are still other critical factors to consider when using cellular for emergency services, primarily with regards to power and signal quality.

Both the caller’s device and the cell tower have to be powered to establish a wireless connection. Feature phones have batteries that may last a few days on standby, while smartphones have comparatively lower battery lives due to the increased processing demands. Additionally, cellular towers are dependent on the power grid, but often have battery backups in place. Typically, battery backup on towers can range from 2 to 6 hours in metropolitan areas, and longer in more remote areas. There are no regulatory requirements for the length of battery backup that would be provided.

Signal quality and coverage are additional concerns that have been raised. While Canadian carriers have spent billions over the years on improving their networks and expanding their coverage footprint, the availability of cellular coverage may vary widely. Cellular tower planning considers the business case benefits and density of customers in a service area. In addition, wireless coverage is subject to signal quality factors, especially in more difficult to service areas such as in-building, below grade, or in remote areas. While fixed access points may provide more reliable service, wireless carriers continue to invest in improving the reliability of service to these areas.

A very critical feature that is provided by cellular phones adds to its importance in emergency preparedness for Canadian citizens. All cellular phone devices, regardless of active service provisioning, are capable of dialing 911 to reach emergency services, making any powered up device a 911 terminal if needed.

5.5.5 VoIP

The adoption of lower-cost VoIP solutions has provided consumers with a viable alternative for voice calling. However supporting emergency 911 services for VoIP calls have had well-documented concerns expressed by the public safety community. These include the inherent risks of the public internet and the additional layers of hardware and software required to use the service.

Recognizing the potential limitations created by VoIP service, the CRTC issued Telecom Decisions 2005-21 and 2005-61, requiring VoIP service providers to obtain express customer consent that they understand that there may be limitations to their 911 service and to issue notifications about the availability, characteristics and limitations of their 911 service at least annually.^{Footnote xxii} Additional CRTC rulings furthered the obligations of VoIP providers in relation to 911 services, including contractual obligations to offer 911 services, the requirement for callback numbers and the use of high-priority routing methods to PSAPs.^{Footnote xxiii}

VoIP requires a combination of services and devices that add complexity to its reliability for 911. In obtaining number identification and location data, factors that may affect the delivery of emergency services may include devices, the ability of users to move their VoIP location, and the quality of internet connections.

The variety of ways that VoIP service can be delivered increases the risk of hardware failure amongst the many components needed to complete an emergency voice call. Power is essential to VoIP solutions, as the devices, adaptors and internet sources rely on electricity to function.

Number identification and location are further complicated due to the nature of the public internet and increasing mobility of VoIP services. Using the public internet, connections are routed through a number of paths that make efforts for location tracing unreliable. Additionally, the fact that many VoIP providers offer subscribers the choice of obtaining non-local numbers, further complicates call routing to appropriate PSAPs. VoIP providers have required users to register a physical address to their accounts and have become more vigilant in reminding customers to update their physical address should they move or use the service in a different location. This is especially a concern in solutions such as MagicJack, where the subscriber can move their location several times in a day. The lack of confidence on call back numbers and locations prevent VoIP solutions to offer true E911 service, as most VoIP providers are using third-party operators as an intermediary to route calls to appropriate PSAPs, increasing the time it takes to reach emergency services and the possibility of more issues.

The evolution of software and platform based VoIP alternatives threatens to further complicate the reliable delivery of emergency services. Providing subscribers the ability to use their VoIP service on a variety of devices, platforms like Google Voice and Skype increase consumer mobility but complicate reliable 911 service. As mobile internet data becomes more prominent, it is very likely that it will be coupled with software-based VoIP services. Unlike cellular, VoIP over mobile internet is not associated with location data and creates complications in detecting the appropriate PSAP for callers.

Finally, network connectivity and VoIP service provider reliability may also be a limitation of reliable emergency 911 service. The broadband internet being used is subject to the quality and reliability of the local connection (via Ethernet cable or wireless) as well as the external network, all of which contribute in the transmission of a VoIP call. Additionally, the VoIP provider must adequately maintain its own system to ensure subscribers are provisioned to use their services and are routed to the public telephone network correctly.

5.5.6 Summary

The table below summarizes how alternative technologies compare in regards to important factors for 911 delivery

5.6 Public Safety Concerns

While Public safety groups see the evolution of telecommunication technologies as offering opportunities, they also express concerns about public expectations.

5.6.1 Reliability of Connectivity

From an infrastructure standpoint, connectivity to the emergency network increases in risk as more technologies and layers are placed between the caller and the PSAP, including power sources, digital networks, cellular towers, internet connections, etc.

5.6.2 New Devices and Services

Public safety agencies acknowledge that they do not have influence to consumer communication choices and must continuously review and investigate emergency service delivery protocols to meet the demands of a constantly changing telecommunications environment.

5.6.3 Location Information

While number identification has, for the most part, been successfully delivered to PSAPs during emergency calls, correct location information continues to be the most pressing concern amongst public safety groups with the increased use of alternative technologies. Regulations placed on VoIP providers to obtain location information and the introduction of Wireless Phase II in 2009 has helped, but issues with accuracy still exist.

Wired telephone options are extremely reliable and accurate for the 911 systems that exist today, but call origination continues to shift to cellular and is a going concern.

5.6.4 PSAP Challenges

Telecommunication capabilities continue to advance due to expanded service offerings and consumer adoption of those services. T911 is a great example of a communication service being implemented to extend the capabilities of emergency services. However, PSAPs face their own issues of funding and training procedures to accept other communications methods. With investigations into NG911 services, public safety agencies have noted that PSAPs must not be forgotten when considering communication advances.

5.6.5 Impact to Low-Income and Socially Vulnerable Groups

One public safety association voiced concerns regarding the impact of reduced payphone presence in areas with a high concentration of lower income or socially vulnerable groups. Concerns revolve around providing access to public safety services in situations where affordability becomes a barrier to telephone services.

5.6.6 Consumer Education & Expectations

The consumer appeal of lower cost services and the simplicity of fewer devices and services have been recognized as benefits provided to consumers, however, some agencies have voiced concerns about whether consumers truly consider or are made aware of the risks associated with emergency service delivery when considering various technologies.

The use of non-voice communications, such as SMS and social media, has certainly grown in Canada. However, there are concerns that the adoption of these services may in fact start to become dangerous if the public expects that they can rely on these services for immediate emergency services. In a 2010 survey, the Red Cross found that almost 74% of respondents expected a public safety agency response within an hour of a tweet or Facebook post.^{Footnote xxiv}

A commonly argued topic amongst public safety agencies is for the continued public education of emergency 911 services, including proper warning about technology limitations and additional knowledge of the appropriate situations to call 911. This is a responsibility shared between stakeholders, including public safety agencies and telecommunication providers.

5.7 Regulatory Considerations

The payphone market in Canada is subject to regulation in regards to maximum tariffs and notification of the removal of the last payphone in a community. LECs have noted that historically, they have not been subject to regulations regarding payphone placement nor for guarantees of service availability levels. Similarly, alternative options are subject to regulations that may limit tariffs, but regulators do not require guaranteed levels of service. Additionally, regulators have attempted to promote initiatives to extend service of telecommunications to rural and remote areas.

Taking account for these factors, service providers are not under any regulatory obligation to ensure service during cases of emergencies. However, providers invest and plan to ensure the continuity of their services, as the competitive market exposes them to possible negative reactions from their customers should their services be deemed unreliable or are unavailable for extended periods.

5.8 911 - Steady-state vs. Disaster Situations

Community expectations are high for effective response from public safety agencies in times of emergencies - despite external conditions. This requires robust and reliable telecommunications to inform first responders of emergency situations. Under most circumstances, telecommunication services in Canada are highly capable of transmitting emergency calls to public safety agencies, thanks to the infrastructure investments made by carriers and the appropriate regulations placed to ensure delivery of 911 services.

However, some extreme emergency situations, such as disasters, may occur that strain telecommunications infrastructure, causing service quality degradation or unavailability. Some localized emergency events attract the attention of many people, resulting in call volume spikes originating from the same area and to the local PSAP. Public Safety agencies have noted that these incidents, despite fully functional telecommunications infrastructure, may place additional strain on the system, resulting in overloaded networks (wired and wireless) and call queues at the receiving PSAP.

Emergencies resulting in infrastructure damage or service unavailability also challenge effective public safety response. In these situations, the choice of telecommunications method may play a large role. As noted earlier, additional technologies and service layers create more points of vulnerability in the telecommunications system. At the same time, several alternative options to reach 911 in such cases are desirable.

Payphones and telephones on the POTS network are considered the most robust in emergency situations because of their simplicity compared to other services, but they may still be subject to service unavailability.

A final consideration during emergency situations is the point-to-point contact between consumers. While payphones have been cited as a necessity to contact family and friends in time of emergencies, there are limitations to consider. Receiving parties must also have fully functional telephony service because of the one-way nature of payphones, and in cases of power outages, the type of payphone terminal may limit who the user may be able to call.

6 Trends Affecting Payphones

Consumer Demand and Adoption for Alternatives

Exchange carrier submissions continue to indicate that the demand for payphones and overall usage per payphone have declined significantly over the last decade and are forecasted to continue along that trend. This has been attributed to the increased market penetration of cellular phones and the competitive changes in the industry. Public safety agencies have noted the dramatic shift of emergency calls origination towards cellular services. It becomes quite evident that consumers are speaking with their wallets, as many areas that payphones once serviced have faced overall usage declines and are being served by cellular phones instead.

As consumers continue to adopt telecommunication options, payphone usage will likely continue to decline. These declines result in decision-making stakeholders losing incentives for keeping payphones around. However, these decisions stretch beyond merely those of ILECs, involving contractual agreements amongst municipalities and property owners who may choose to deploy their space and resources differently.

Infrastructure Investment

Communication providers continue to spend billions of dollars in infrastructure investment as demands continue to change and technologies continue to advance. The investments in both wired and wireless infrastructure aim to expand service capabilities with higher capacities and increased reliability, extending the possibilities of IP-based services and furthering the divide of service options provided by traditional analog telephone lines. The expansion and replacement of telecommunications infrastructure may extend and overlay existing telephone infrastructure, potentially creating opportunities for new types of public access point businesses. However, changing the dynamics in payphone industry may require yet-to-be-determined business models and new contractual arrangements with stakeholders, typically driven by commercial interests.

7 Conclusions

Payphones continue to play a role in the telecommunications structure of Canada, albeit a diminishing one. In this study, RedMobile analyzed the Canadian payphone industry and alternative communications option to:

1. Assess the socio-economic impact of payphones and alternatives based on affordability, availability, and usability

2. Evaluate the role of payphones and alternatives in emergency situations and within Public Safety infrastructure.

Payphones and Alternatives

Without a presence of regulations to ensure payphone placement and quality of service, usage remains the primary factor that will determine the fate of the payphone industry. While having some cost advantages for infrequent users and existing as public access points for telephone service, payphone usage has been in a persistent decline. This trend is expected to continue, especially as newer, more affordable, and accessible alternatives become available. As such, local exchange carriers and their contractual partners are likely to consider payphone removal as volumes drop to levels that do not support business cases for continued service and support.

RedMobile’s analysis of alternative options indicates that, in an environment where payphones become less available, options exist that meet some or all of the following:

• Affordability: Options such as cellular services and VoIP have reached a maturity level in Canada that has resulted in lower total cost of ownership. The cost of devices and service continue to decline. Also, as a result of increased completion, consumers have more flexible options for payment terms and credit requirements.

• Availability: Continued infrastructure investment in alternatives to payphones (i.e. cellular, broadband connectivity) have resulted in expanded coverage and improved service quality, providing dependable service in most places. In addition, as payphones become less available, alternatives like cellular phones become more attractive. The ability of consumers to be accessible for incoming calls is also a major benefit of alternatives.

• Usability: Payphones offer consumers a well-known and easy to use interface. However, devices for alternatives are starting to provide consumers with more user-friendly, easy to use interfaces that can be adapted to meet their personal needs.

The Role of Payphones in Emergency Communications

The emergency response system found throughout most of Canada was initially built to service traditional telephone technologies. While traditional telephones (including payphones) offer benefits such as reliable location data and resiliency in disaster situations, consumers are preferring alternatives such as cellular phones to call 911 more frequently.

In fact, on average, over 65% of all calls made to 911 originated from a cellular phone last year.  This trend is expected to continue, as alternatives to payphones become readily available and affordable.

While the mass adoption of cellular phones and alternatives provides a greater number of contact points to reach emergency services, these alternatives do present some new challenges. The accuracy of location data has improved for cellular phones, however, this data isn’t as accurate as landline phones, and lacks elevation, for instance.

Public safety agencies recognize that payphones will also be subject to the pressures of a consumer driven telecommunications market. As consumers adopt methods of communications that include wireless, IP-based, and non-voice options, the greatest concerns come from the management of public expectations. While opportunities presented by alternative options are being investigated in next-gen 911 initiatives, public education of risks is seen as a top priority. PS groups have cautioned that it may become dangerous should consumer expectations extend beyond the capabilities of existing emergency service infrastructure.

Lastly, while payphones are handy if you know where they are, they are not ubiquitous and readily available, making access to them in time-sensitive situations a challenge.

8 Appendices

8.1 Appendix A: Cellular Plan Comparisons

Cellular advancement has led to a large range of service options and price plans consumers. Additional evaluation was required to align available plans with comparable payphone cost features. For consumers looking for access to a basic level of cellular voice service only, carriers are able to offer services that depend on the level of commitment provided by the user:

1. Post-paid Subscriptions

2. Pre-paid (Month-to-Month or Pay-As-You-Go)

8.1.1 Post-Paid Subscriptions

Post-Paid subscriptions require consumers to commit to contracts for cellular service, often with incentives from the carrier. In 2013, the CRTC Wireless Code limited contract commitments to a length of 2 years. With a wide range of available post-paid plans, subscription costs increase with additional minutes and/or features such as SMS and data. Postpaid options provide subscribers with a pre-allocated amount of features (minutes, SMS messages, data, etc.) for a pre-defined base monthly rate, plus any overage charges should a user exceed their allocation. Any unused but allocated services expire at the end of each month. Postpaid subscriptions require a subscription commitment, but in return, typically offer subscribers with a comparatively better value for services than prepaid plans and subsidies for cellular devices.

This study made the following assumptions to compare cellular voice costs to the cost of service offered by payphones:

• Using the 2013 average landline subscription costs of about $35 as an upper limit. The lowest monthly post-paid plans available up to this amount were analyzed from national and regional service providers to determine the lowest cost postpaid plans available, as well as what those plans would provide.^{Footnote xxv}

• Rate plans included phone subsidies for basic feature phones, which were ignored in price comparisons. In most cases, carriers offer a discount if a subscriber brings their own device or forgoes the carrier subsidy.

• Taxes and additional fees were not considered.

Comparing public postpaid plans across National & Regional wireless service providers (including most of their sub-brands) suggests that the lowest postpaid subscription plans start at about $29, offering 200 daytime minutes, unlimited texts and unlimited evenings and weekend calling.

The tables below evaluate post-paid plans offered by National and Regional wireless providers:

8.1.2 Prepaid Subscriptions

A major concern that was cited by consumer groups was regarding the limited access to credit for many members in vulnerable consumer groups. Without a credit card, prepaid options are the only option to access cellular service without a month-to-month commitment. Payments are required to receive cellular service over a specific time-period. Prepaid options can be month-to-month or pay-as-you-go.

8.1.2.1 Prepaid Month-to-Month

Prepaid month-to-month options purchase an allocation of features in advance, but unlike postpaid subscriptions, service is cut off once the allocation has been used up. Subscribers can then decide if they wish to purchase additional service for the time period and/or renew in the following cycle. Cited benefits of prepaid month-to-month service include placing limitations on subscribers, lack of "bill shock" and lack of monthly commitments. Similar to postpaid subscriptions, unused allocated services expire at the end of the month.

Most national and regional carriers offer month-to-month prepaid payment options. This payment option has been the preferred go-to-market plan for some of the "new entrants" from the 2008 spectrum auction, such as Videotron, Mobilicity, Public Mobile, and WIND. The new entrants offer unlimited anytime calling for as low as $20 within their coverage areas. Subscribers pay roaming charges per minutes for calls outside of the provider’s coverage area.

National Carriers (and sub-brands) offer a mix of options that include unlimited text, with a combination of anytime minutes, unlimited evenings and/or unlimited weekends for $20-$25. These rates ignore any bonuses or subsidies offered by carriers as well as applicable taxes.

The tables below compare the lowest cost prepaid month-to-month plans offered by National and Regional wireless service providers:

8.1.2.2 Prepaid - Pay-as-you-go

Pay-As-You-Go (PAYG) cellular service is also an important option for some subscribers, as they provide basic access to cellular voice calls to those who wish to have an incoming contact number phone for emergency/infrequent usage or have an inconsistent need for phone services. Rates for PAYG prepaid services are set by the minute, offered as low as $0.10/minute from national carrier sub-brands and regional carriers, to as high as $0.50/min. In efforts to provide options for infrequent PAYG users, some carriers have offered pre-paid daily add-ons that provide a range of options that include unlimited text, evenings, weekend, or incoming calls for $1-2/day. These comparisons ignore any applicable taxes and promotional offerings such as bonus minutes or device subsides.

Typically, larger one-time prepaid purchases allow the phone subscription to be active for longer periods of time. For a subscription to be active for 365 days, it is common for a $100 non-refundable service deposit called a "top-up" (7-11 Speakout is the exception, with a minimum top of $25 for a 365 day activation). Lower top-up options exist, but result in shorter active subscription periods. The minimum $10-$15 top-up will extend active service for 30 days. Unlike prepaid month-to-month and post-paid subscriptions, PAYG accounts will carry over unused credits until they are used or the service subscription expires. There are also one-year prepaid options available from Fido and Rogers. These plans start at $85/year (plus applicable taxes and fees) and provide 100 minutes for the year and a choice of unlimited texts or unlimited evenings and weekends.^{Footnote xxvi}

The tables below compare the PAYG options offered National and Regional wireless service providers:

Date modified:

2015-02-26