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Bell Canada and Bell Aliant told the CRTC that, in 2013, they had 636 pay phones that had no usage at all over a 13-month period.Fred Lum/The Globe and Mail

Even in the age of the smartphone, Canadians aren't ready to hang up on the payphone.

In a surprising report Thursday, the Canadian Radio-television and Telecommunications Commission said 32 per cent of Canadians used a payphone at least once in the past year, despite the declining numbers of phones available and the ubiquitous adoption of mobile phones.

Still, payphone call volumes are falling by 24 per cent a year, the CRTC said, and phone companies are yanking payphones out at an annual rate that will rise to 15 per cent a year by 2016. Next year, there will be about 55,000 payphones across Canada, about one-third of the number that were in place in 2005.

As the CRTC understated it, in dry commission-speak: "Payphone service is not relied upon to the same extent as it was in prior years."

The CRTC is concerned with what happens to small communities when the last payphone is removed. Since 2004, the regulator has required that a phone company wanting to take the last phone out of a community must notify the local government, post a notice on the phone booth itself, and put an ad in the local paper. Then, in 2013, it put a temporary moratorium on the removal of payphones in any small communities.

Now, the CRTC is asking for public comments on a proposed tweak of the rules that would define a "community" as a municipality or a First Nations reserve, and add the notification provisions to any payphone in a location where there isn't cellphone service.

While the commission acknowledges that payphone use is declining, it also notes it can be a vital service – particularly for Canadians who are "economically or socially disadvantaged." Far fewer lower-income Canadians have cellphones than those with the highest incomes – where mobile phone penetration is well over 90 per cent – according to data gathered by the CRTC.

Payphones are also sometimes used "as a last resort in times of inconvenience and emergency," the commission noted.

For phone companies, however, many payphones are money losers. Bell Canada and Bell Aliant told the CRTC that, in 2013, they had 636 payphones that had no usage at all over a 13-month period, and 10,500 phones with revenue of less than 50 cents a day, on average. Phone companies are not allowed to charge more than 50 cents cash for a local pay-phone call, or $1 if it is a non-cash payment.

Despite that many payphones aren't covering their costs, the CRTC insists "tens of thousands of payphones are forecast to remain financially viable for the foreseeable future at current rates."

Telus Corp. spokesman Chris Gerritsen said his firm "has always taken a moderate approach to removing payphones, collaborating with communities to ensure the best possible access to the service even as use declines and phones become unprofitable."

A Bell Canada spokeswoman said, "Bell continues to ensure that payphones are affordable and accessible, especially in high traffic locations such as shopping malls, airports, hospitals and other community facilities. We plan to maintain payphones in these locations and many others for the foreseeable future."

The Public Interest Advocacy Centre, which presented the CRTC with evidence of the value of payphones to low income earners, noted that even people who have cellphones sometimes need to use payphones. People who run out of prepaid minutes will need other means of making calls, it said, and low-income individuals often have plans where rates are higher during the day time, so they prefer to use a payphone for some calls.

In an interview, PIAC executive director John Lawford said it is crucial that all Canadians have affordable access to the phone network – and for many people, payphones are the answer.

"Everyone [needs] to have some way of getting on the network and communicating in a way that is affordable and in a way that works for them," he said.

Mr. Lawford said phone companies could also use payphones in more creative ways – setting them up as WiFi hot spots or "dressing them up with advertising" to generate more revenue. "They are often in good public and semi-public spots," he said. "The ten square feet of real estate they hold is actually pretty valuable."

The CRTC report said most payphone removals are initiated by the owners of the property where they are located, not by the phone companies themselves.