Dial "M" for Money

By Alexander L Taylor III

Telephone makers plug into profits with an array of new products.

Like the bathtub, a telephone can be found in nearly every American home, and, until now, it has been equally taken for granted. Yet, all of a sudden, consumers are being urged to jettison their old view of the phone as a utilitarian item and look at it as a fancy new entry on a shopping list. Local Bell System companies, as well as AT&T's brand-new baby, American Bell Inc., are beseeching customers to buy telephones instead of leasing them, and even to plug more of them into their homes. Department, specialty and discount stores are getting into the act too, stacking shiny new phones next to the portable TVs and toaster ovens.

For many people, used to buying a hair dryer but paying a monthly charge for their phone, the changeover is bewildering. Says Michael J. Friduss, an Illinois Bell executive: "We had a tremendous rush of people thinking that this was their last chance to get a new phone. Some customers thought we were going out of business, or that we were not going to repair their phones any more." That is not true--phone customers can in fact keep leasing their phones and getting repair service from their local Bell office--but the confusion is understandable. Although owning a phone has been possible since 1968, when the Federal Communications Commission started to unravel A T & T's monopoly on telephone service, many people still believed it was illegal.

Last year, while 25 million people acquired leased phones, only 5 million purchased them. Now the confluence of Government-ordered deregulation and the breakup of AT&Tis changing all that.

This year the number of Americans buying phones is expected to double, to 10 million. With 80 million households now potential customers, more than 100 manufacturers of telephone sets, including such giants as International Telephone & Telegraph and General Telephone & Electronics, are fighting for a share of a new market that is expected to reach $600 million this year and many times more than that by 1986. Says Harold Miller, ITT vice president for telecommunications: "Within the next three years, whether you like the idea now or not, you are going to own your own phone."

Fortunately, this free-market competition is paying big dividends for consumers. In shopping for new phones, buyers can indulge their tastes for the fashionable or merely eccentric and choose from a variety of helpful features, like automatic dialing for frequently used numbers and speaker phones. There are phones that carry the imprimatur of high-fashion designers, hide in leather boxes or chime instead of ring. Prices range from $15 for a non-Bell version of the standard rotary dial phone in basic black to the "Elephone," a unit encased in a silver-plated elephant's head that costs $2,150.

Customers who do nothing more than buy a phone like the one that is installed in their home can unquestionably save money. A standard dial phone, which is leased for 91-c- a month in Michigan, $1.50 in Oregon and $3.03 in New York, can be bought at American Bell stores for $35. While it would take a Michigan resident about three years to pay for the purchase, a New Yorker would save the price in lease fees in only twelve months. According to a New York City department of consumer affairs study, if all New Yorkers decided to buy their phones rather than lease, they would save $600 million over the six-year life of the phones.

Many customers are in fact taking an economical approach. According to Phone City, the largest non-Bell retail outlet in Manhattan, the bestselling phone is a $32.95 replica by ITT of the standard Bell rotary unit. But the temptation is to upgrade. The next most popular phone is Bell's Trimline ($72), the familiar model with pushbuttons in the handle, and similar versions by other manufacturers. At some American Bell stores, buyers are picking up phones with flair, like the suave, curved Genie ($99) and the French-inspired Celebrity ($159). The fastest-growing sales are being run up by the cordless phone ($130 to $299), which can be carried around the house or outdoors and has a range of up to 700 feet. The portability of the cordless phone occasionally causes problems. "I love the convenience," says Beth Jackson of Charlotte, N.C., "but next time I'm getting a different color. Mine is beige, and I've lost it under the leaves several times."

In this brave new world of telephone ownership there are a few pitfalls. Owners who are replacing their AT&Tphones must return them to a local telephone service center to avoid paying leasing charges. Installing a phone that has been bought is easy, provided that the residence has previously been wired. New phones have simple clip plugs that can be adapted to older existing outlets with an easy-to-use converter. Buyers who ask Ma Bell to make the hookup, however, can be charged up to $40 an hour. Some phones now being offered for sale are cheaply assembled and may last only about two years, compared with the old AT&Tphones that were designed to dial and ring for 15 to 20 years. Although the Bell System still makes free repairs on the phones that it leases, it charges about $30 for a service call on a customer-owned phone. With the cost of phones declining, ITT's Miller predicts that buyers will some day opt for cheap throwaways that can be tossed in the garbage instead of being fixed.

Since the average American home already has 1.6 phones, manufacturers are selling more than simple communication. Says Randall Tobias, president of American Bell Consumer Products: "We expect there will be telephones in rooms where their principal function is decorative." Some phones are designed as objets d'art: a porcelain unit with a hand-knotted silk cord ($495); the shimmering Shellamar Abalone, with its own pearlescent finish ($250) by TeleConcept Inc. of Hartford, Conn. Others are objets de nostalgia: the 1930s-vintage Candlestick ($139) with its separate mouthpiece and earpiece; the Country Junction ($265), which has an oak case and two brass bells.

The notion of phones as fashion has not escaped well-known clothing designers. A line bearing the signature of Pierre Cardin has already appeared, and Geoffrey Beene is also at work on telephonic conceptions. So far, the reception has not been entirely enthusiastic. Says Edward Alter, co-owner of Phone City: "Cardin should go back to making clothes."

American Bell is pushing the idea of phones in the bathroom. In its promotional material, the company observes, "Anybody who has dashed fresh from the shower to answer a ringing telephone can understand the value of a bathroom telephone." But it also notes that since phones use electricity, they should not be used when the caller is wet.

A yellow Pac-Man phone ($69.95) has proved popular with children, as have giant phones modeled after Mickey Mouse, Snoopy and Winnie-the-Pooh that sell for $149 to $189. Additional novelty phones include one that looks like a duck and quacks like a duck when it rings; another, shaped like a football, gives off a referee's whistle.

For people who still prefer function over form, American Bell earlier this month introduced a pair of new phones utilizing microprocessor technology that offers features of genuine value. The Touch-a-matic 1600 ($150), available in some stores in March, has flat key pads that are touched rather than pushed, a calculator-like display that shows the number being called, and a twelve-number memory that allows frequently called numbers to be rung with the press of a single digit. The Genesis ($350; available in May) comes with optional cartridges that can turn it into a small computer. One cartridge permits the automatic redialing of busy numbers, another serves as an electronic padlock to prevent the unauthorized placing of long-distance calls, and a third will store appointments, important dates or anything else.

Dazzling? Certainly. Expensive? That too. Bewildering? Probably. The frenetic activity in the telephone industry may make some yearn for simpler days when phones had cranks and switching was handled by a woman you could talk to. --By Alexander L. Taylor III. Reported by Frederick Ungeheuer/New York and Don Winbush/Chicago

With reporting by Frederick Ungeheuer, Don Winbush This file is automatically generated by a robot program, so viewer discretion is required.