Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, April 25, 1993                   TAG: 9304250097
SECTION: VIRGINIA                    PAGE: C7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: TYSONS CORNER                                LENGTH: Medium

ON THIS PHONE, CALL ANYWHERE FOR A QUARTER

"It's 25 cents a minute, whether you're calling Hawaii, Florida or wherever. You just feed the coin box," said Kendall, president of the small firm marketing the phones.

Kendall believes the gimmick is the cheapest long-distance call in the country from a pay phone. Calls can be 80 percent to 90 percent cheaper than a telephone credit card or traditional coin calls.

A call from New York City to Los Angeles, for example, averages $2.10 for one minute on a pay phone operated by a Bell Telephone Co. subsidiary. A phone credit card call would be at least $1 during most of the day.

"Calling cards are certainly more convenient than carrying a big pocket of change around, but they have hidden costs," Kendall said. A calling card almost always is more expensive than a direct-dial call.

"This is 25 cents, no matter what time of day, no matter where you are calling."

So, how does he make money?

"Our business is pennies, really," he said.

For each minute of long-distance talking, Kendall's QCI Inc. pays his carrier, MCI Communications Corp., 15 cents. He also must pay the investor who nominally owns the phone, and give a cut to the merchant where the phone is installed.

He gets to keep the rest.

"It doesn't sound like much, but we are making a profit," Kendall said.

Kendall, 28, said the entrepreneurial firm is worth $2.7 million. The firm is privately held by four partners.

Telecommunications experts said most of QCI's savings come from bypassing the local phone company, which generally operates pay phones. The local company gets a cut of any long-distance business made from its pay phones, part of the reason both traditional coin calls and calling card calls can be so expensive.

QCI links directly to MCI's fiber-optic network, which also is cheaper than many traditional phone transmission lines.

The firm is one of a growing number of private pay-phone companies competing with local Bell companies, which still own about 75 percent of the pay phones in the United States.

Customers dial 1 plus the long distance number, just as one would do from a private phone. An operator requests 25 cents and returns once each minute with the same message. Customers also can make local and calling-card calls from QCI's more than 1,000 private pay phones.

Most QCI phones are in the Northeast. The firm plans to expand eventually to 8,500 phones, 5 percent of the nation's 1.7 million pay phones.

The phones look like conventional pay phones, except for the large advertisement proclaiming "Call All 50 States for Only 25 Cents."

Phones are installed only in high-traffic areas, Kendall said. There are phones in McDonald's restaurants, at truck stops and near military bases.

The computerized phones automatically phone home once a day to report revenue or any mechanical problems. Some problems can be fixed via computer, said Tom Yost, also a QCI partner.

The 2-year-old Tysons Corner firm sells the phones to investors for $2,495 each and then installs and maintains the units.