Peoples Telephone Company Comments on Local Coin Call Rate Deregulation and FCC Ruling.

MIAMI--(BUSINESS WIRE)--Oct. 16, 1997--Peoples Telephone Company, Inc. (AMEX:PHO) announced today that it has begun to adjust its local coin call rates to market-based price levels. As mandated by the Telecommunications Act of 1996, local coin call rates in every state were deregulated effective October 7, 1997, under the terms of an order from the Federal Communications Commission ("FCC").

E. Craig Sanders, Chief Executive Officer, stated: "We are encouraged by the national deregulation of local coin calling rates, which for the first time will allow market forces to govern our largest revenue source. At the new market-based rates, local coin calls will remain one of the best values available to U.S. consumers, with the average price per minute at or below other public communications alternatives."

The Company also commented on the latest Payphone Implementation Order issued on October 9th by the FCC. The FCC issued this remand order with respect to the compensation which interexchange carriers must pay to payphone providers, including the Company, for subscriber 800 and carrier access code calls ("dial-around compensation"). The FCC had originally issued its Payphone Implementation Orders in late 1996 requiring a flat monthly interim dial-around compensation rate of $45.85 per payphone, beginning November 6, 1996, calculated at a rate of $.35 per call applied to an industry average 131 calls per payphone per month. This flat rate structure was then scheduled to be replaced by a per-call compensation rate of $.35 beginning on October 7, 1997. Those orders were remanded to the FCC for further consideration by the United States Court of Appeals for the District of Columbia Circuit (the "Court") on July 1, 1997, and subsequently vacated by the Court in a clarification order issued on September 16, 1997. The FCC's latest order replaces the vacated orders and prescribes a dial-around compensation rate of $.284 per call beginning October 7, 1997.

While the FCC's latest order does not completely finalize the payment terms for the initial interim compensation period of November 6, 1996 through October 6, 1997, the order does tentatively conclude that the new $.284 per-call rate will apply to all applicable calls retroactively for this initial interim period. The FCC further indicated in its latest order that it will finalize the compensation obligations for this interim period in a subsequent order. Accordingly, the Company is presently evaluating the impact of the FCC's tentative conclusions on its financial results.

Mr. Sanders added: "While Peoples believes the record in the FCC's remand proceeding supports a dial-around compensation rate closer to the original rate level which the FCC had established, we are pleased with the certainty created by the FCC's rapid reconsideration and clarification of its dial-around compensation ruling and with the FCC's adherence to the congressional mandate for fair compensation to payphone service providers on each and every call made from their payphones."

Peoples Telephone Company is one of the largest independent providers of public pay telephone services in the United States and a leading provider of value-added services to the public communications industry. The Company owns and operates over 41,000 public pay and inmate telephones nationwide and provides value-added services to more than 15,000 additional pay telephones throughout the United States. -0-

NOTE: Statements in this press release relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Peoples Telephone Company, Inc. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such known and unknown risks, uncertainties and other factors include, but are not limited to, the following: the impact of competition especially in a deregulated environment, uncertainties with respect to the implementation and effect of the Telecommunications Act of 1996 including any new rule making by the Federal Communications Commission ("FCC") or litigation which may seek to modify or overturn the FCC's order implementing such act or portions thereof, the ongoing ability of the Company to deploy its public pay phones in favorable locations and the Company's ability to continue to implement operational improvements. Such factors and others are set forth more fully in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission.

CONTACT: Peoples Telephone Company, Inc., Miami

E. Craig Sanders, Chief Executive Officer

305/593-9667, ext. 106

or

William A. Baum, Chief Financial Officer

305/593-9667, ext. 118