Pay Phones, Investing & Superman What Will the Next 20 Years Leave Behind?

The image is seared in our collective memories – Clark Kent dashing into a nearby phone booth to change into his Superman costume, just in time to save the day. And when villains were doing villainous things, Shoeshine Boy would duck into a phone booth and emerge as Underdog. But where would the two change today, given that phone booths are mostly considered relics and are nowhere to be found?

The History of the Payphone

The payphone can trace its roots to 1880, when the Connecticut Telephone Co. had a payphone in their office. But instead of depositing money directly into the phone, callers would hand the fee to an attendant. That changed in 1889, when the first public coin telephone was installed at the Hartford Bank by the Southern New England Telephone Company – but coins were inserted at the end of the conversation, not beforehand.

Then in 1891, inventor William Gray was issued a patent for the coin mechanism that rang a bell after each coin was inserted, thereby ushering in the payphone as we know it. Fast forward just ten years later to 1902 and there were 81,000 payphones in use. And by 1960, Bell System had installed its millionth pay phone.

According to the FCC, the peak of payphone usage was 1999, when there were over 2.1 million payphones in service across the United States. Since then, however, mobile phones have resulted in a dramatic decline in the number of payphones so that by 2013, more than 90 percent of payphones had been disconnected. Then over the next three years, half of those were disconnected so that by the end of 2016, there were only 99,832 payphones in service. And about 20,000 of those were in New York City.

Payphones Are Still a Business

Today, there are over 1,000 companies operating payphones across the country and surprisingly (at least to me), these payphones are generating approximately $285 million a year – or about $2,854 per payphone.

For the most part, payphones are profitable in places you might expect – where there is not cell or landline coverage. In addition, according to the FCC, payphones are still a lifeline for people who don’t have other options and during natural disasters, when cell coverage is interrupted.

Payphones & Investing?

While payphone usage may have peaked 20 years ago, most everybody I know can share fond memories of payphones and phone booths. Whether it was calling mom and dad collect from a dorm room or placing a pizza order, payphones and phone booths are part of our history. And while investing in payphones might not be a good idea today, at one point in the not-so-distant past, payphones gave rise to some very large publicly-traded companies, many of which still exist.

So, ask yourself this: what “technology” exists today that is integral to our daily lives now, but might not exist in 20 years? Physical credit cards? Hard drives? Stand-alone GPS devices? Calculators? Remote controls?

It’s an interesting conversation to have and one that must be considered when investing. Let’s schedule time to discuss what the next 20 years might bring – and more importantly, what the next 20 years will leave behind.

Distributed by Financial Media Exchange.