Street Access to the Cyberhighway


Stop and think about it. When was the last time you used a pay phone? If it has been a while, don't feel left out. You're probably just one of the 50% of Americans who bought a cell phone and now consider pay phones little more than historical landmarks. But Dennis Novick, president of TCC Teleplex, thinks he's pushing all the right buttons to get people in New York City to think differently. His company, a leading installer of pay phones in Manhattan, has installed 27 Web phones that offer all the services of a PC Internet connection in the comfort of your very own New York City sidewalk.

Just 25 cents buys users a minute of high-speed Web access. E-mails cost 50 cents and can incorporate photos and Web video taken right on the spot. Teleplex also provides a free primary search for sub-pages on Google as well as access to city Web sites such as www.nyc.gov and www.nycvisit.com, thus offering tourists maps and information about events in the city. The Web phones double as Wi-Fi hotspots, and Novick believes it's only a matter of months before other U.S. cities dial in to this new tech phenomenon.

Novick recently spoke with BusinessWeek Online's Erin Cockren about the multipurpose pay phones and his plans for expansion. Edited excerpts of their conversation follow:

Q: When did you first consider expanding your business to the Web phone?

A: We were doing research throughout 2001 looking for a suitable terminal. We worked with a small manufacturer to develop one that we could put out on the streets. We launched in February, 2002, wanting to gain some experience with its use, its accessibility, its reception from the public, and what services they're looking for.

Q: What were some of your early concerns?

A: New York City is a tough environment. We've been in the public telecommunications business here going on 20 years. We own and operate 1,500 public pay phones across the city of New York. We wanted to see how well a Web phone would survive on the streets. We gave it over a year of testing to see how it performed and the revenue we received.

Q: Who is the target user of the Web phone -- tourists, businesspeople, residents?

A: Tourists are certainly very important. New York gets 35 million visitors annually, and these people are not walking around with laptops or PDAs. We've situated our kiosks in midtown as well as the Village and other areas [popular with tourists].

But we also have several terminals uptown, and the ones at East 86th Street and West 79th Street are some of our busiest ones in terms of overall usage and revenue. There are no office rises in those areas, it's all residential, and those phone locations are busy thoroughfares for residents. So our assumption is that residents are using those phones.

Q: Why might a resident use your Web phone?

A: There's a convenience to using a high-speed terminal for a very low fee, which is very much like their PC at home. With a full keyboard it's nothing like using the minuscule keys of a cell phone or a PDA scratch pad. They're able to look up sites that are of interest to them -- whether it's eBay (EBAY), checking stock quotes, looking up subway maps, or retrieving e-mails.

Q: How long is the average customer's online session, and how much does an average customer spend?

A: The average session is running 5 to 6 minutes. We're charging 25 cents a minute. We accept commercial credit cards, with a $3 minimum. About 25% of the sessions are paid for by commercial credit card. The rest is done by coin. People like the fact that they can pay in coins like they would with a conventional public pay phone. They can put in a quarter or two and see if they enjoy the experience.

Q: Which services are most popular?

A: People are frequently sending e-mails on the terminal. We recently introduced video e-mails in the past 30 days, and that has taken off. Every terminal has a built in Webcam, so for a dollar anyone can send a full-motion video with audio to any PC with internet access in the world.

Q: What kind of revenue is an average Web phone making per day?

A: The average Web phone is doing about $10 to $20 in revenue daily, about three times the revenue of a public pay phone.

Q: How does your Wi-Fi service work?

A: We're getting ranges of 300-600 feet from our phones. People are finding they like the convenience we offer, and our pricing is extremely competitive. The nice thing is that with any one of our hotspots you can be anywhere within a radius of one or two blocks -- in a caf?, restaurant, waiting for a bus, sitting on a bench -- and be online. So not only tourists but also New Yorkers are subscribing to use it, whether it's by the session, by the day, and so on.

Q: What new services can we expect from Teleplex?

A: Right now, we're speaking with an organization that has been extremely successful with SMS messaging [text messaging and instant messaging] in Europe. Through our terminals people could also purchase ring tones and wallpaper for their cell phones. There are going to be a whole host of services made available. Most of these new services are software-based, so there's no need [for us] to alter the hardware.

Q: Will this technology spread across the country?

A: I certainly hope so. I think we'll be seeing a lot more of these Internet Web phones throughout the country in the next year.


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