PAY PHONE RATES MAY INCREASE.

Byline: Wendy Tanaka San Francisco Examiner

Starting next week, it could cost more than two dimes to make a local call on a pay phone in California.

On Tuesday, the pay phone industry will be deregulated, allowing owners of the state's 277,000 coin-operated phones to charge whatever the market will bear.

Some public phone operators may begin charging for directory assistance calls, which currently are free. The emergency 911 number, however, will remain a free call from all pay phones in the state.

Both industry members and consumer advocates say deregulation most likely will result in higher rates. Currently, a call made within a 12-mile radius of the caller costs 20 cents for 15 minutes of phone time.

But how much more it will cost to make local pay phone calls and when consumers will start paying more are up in the air.

``We're just as much in the dark about this as the consumer is,'' said Sharon Carpenter, regulatory adviser for the Payphone Service Providers Group, an industry association, and the owner of a small pay phone company in Fremont.

``Pay phones have been a very regulated industry from Day One,'' she said, explaining that it would take time for the industry to figure out how it should function in a deregulated arena.

As a result, pay phone operators say immediate rate increases are not likely.

San Francisco-based Pacific Bell, which operates 140,000 public phones in California, said: ``We anticipate a modest increase to be implemented by the end of the year.''

Although Pacific Bell could not say how much the increase would be, a 35-cent figure has been bandied about in the industry. That is the amount the Federal Communications Commission, the agency that mandated deregulation of the nation's public phone industry, found when it surveyed rates in four Midwestern states that had already stopped regulating their pay phones.

The FCC's decision to let the market dictate pay phone rates is part of the sweeping Telecommunications Act of 1996, which Congress passed to boost competition in local phone service.

Consumer advocates say anticipated rate increases could hurt some residents who use pay phones because they cannot afford telephones at home.

``It will have a devastating impact on low-income consumers,'' said John Gamboa, executive director of the Greenlining Institute in San Francisco.

Ken McEldowney, executive director of San Francisco-based Consumer Action, added that pay phone rates in public housing developments, airports and hotels most likely would soar because they have a captive audience.