Investing in Payphones

2 Jan ’06

Some years ago I was retained to help a client with an investment in a startup that was proposing to enter into the private payphone business. Telcos were getting out of the payphone business and the way had been cleared for private investment. I was not enamoured of the investment; I had just come back from a year in Eastern Europe during which some of my colleagues had been instrumental in getting early cel networks off the ground there. Celphones were very popular in Europe and it seemed obvious to me that they would be explosively popular in Canada as well.

In any event, while it wasn’t my role to counsel on the wisdom of the investment I threw in my $.02. But for various reasons I had to pass the file to someone else, and I never did find out what happened. I’d forgotten about the file – until today, when Tod Maffin posted this shot. (While Tod may be right – see the comments – about the need for some payphones, I never thought the need would amount to enough to support a viable business). It perfectly sums up my feelings about that business at the time.

(No doubt someone will now post a comment telling me that the business has been a smashing success.)

{ 1 comment… read it below or add one }

Stuart MacDonald January 2, 2006 at 23:02

While I completely agree with you on the, um, questionable value of an investment in payphones in this day and age, it is interesting to note that “progress” often does create opportunity to service those the “progress” leaves behind. For instance, while Telus/BCE/Rogers et al continue to move customers to faster bandwidth in the home (at higher monthly fees, natch), AOL Canada is repositioning its’ Netscape brand as a low-cost access alternative to broadband, for those for whom $50/month or whatever is just not good value. While the other guys are duking it out and upselling like crazy, AOL is taking a sleeping brand name with awareness and equity, snapping in some on-the-fly data compression technology, likely using some of their own bought-and-paid-for network capacity and offering a cheap “poor man’s broadband” for people the Big Guys are rushing to leave behind.

“Progress” creates opportunity. Smart, that.

– Stuart

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