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Friday, August 30, 2002

By Bill Schackner, Post-Gazette Staff Writer

INDIANA, Pa. -- With a girlfriend in Michigan and family back home in the Netherlands, Cornelis Oudenaarden admits he can get carried away making long distance calls.

	Freshman Rebecca Krueger uses a break between classes to talk with a friend. (V.W.H. Campbell Jr., Post-Gazette)

That can be dangerous at a college that charges 5 cents to 15 cents a minute for those calls.

So when the school he attends, Indiana University of Pennsylvania, tried to sign him up for long distance service in his dormitory, Oudenaarden didn't hesitate.

"I got the envelope and I threw it away," he said.

In doing so, he joined a growing number of college students nationwide who are shunning long distance plans offered through their schools in favor of flat-rate cell phone plans with unlimited nationwide calls and pre-paid phone cards.

For students, it can be a bargain, like the 3.7 cents-a-minute card that cut Oudenaarden's phone bill in half. But it's also become a nagging worry for colleges, which are losing hundreds of thousands of dollars in commissions.

	The Series: Day One: A late bloomer learns to read Day Two: Word is out on how schools can get funding for reading Day Three: A kinder, gentler phys ed Day Four: Law allows businesses to rack up tax breaks through gifts to schools Day Five: Troubled schools struggle with new transfer law Today: When students go wireless, colleges lose money Day Seven: In 2003, students in danger can request school transfer

Those payments have helped maintain phone systems and even the residence halls themselves, and some administrators say they may have to recoup the losses through higher room fees. Some schools are slashing their long distance rates to win customers back, or are pursuing money-making deals with cell phone marketers. Still others have simply dropped dormitory long distance service altogether, leaving students to fend for themselves when they phone home.

Many schools are just beginning to see the financial results of the shift to cell phones, and the timing could not be worse for public universities that already are dealing with cuts in their state appropriations.

"We live and die by our fees," said Jim Froelicher, an associate director in IUP's office of housing and residence life. "We get no state aid. We get no money from tuition."

Long distance billings on his campus plunged from $1.6 million in 1995 to $100,000 last year. That means IUP, which gets 20 percent of the bill through an agreement with AT&T, brought in $20,000 in revenue last year compared with $327,000 seven years ago.

The loss equals nearly 3 percent of IUP's total budget to operate its 13 residence halls and two on-campus apartment buildings.

"We used that money for renovations, furniture and whatever. It helped keep housing costs down," Froelicher said.

A shrinking business

In the past, phone companies were eager to pay colleges for access to students, either through flat fees or percentages of the long distance revenue. But now, the shrinking number of campus phone users is making the business far less lucrative.

At Penn State University, for instance, the share of dormitory students who signed up for long-distance service plunged from 93 percent in 1995 to 30 percent last year.

Millersville University of Pennsylvania saw such a decline that it is no longer offering long distance service and instead will remind students and parents about the availability of phone cards, wireless phones and e-mail.

"Income from student long distance was approaching the point where we would begin losing money," said Susan Komsky, vice president for information technology.

At the University of Pittsburgh, a 30 percent drop in long distance billings last year made Jinx Walton, director of computing services and systems development, more aware of how many cell phones she sees on campus. The 12 percent commission Pitt gets from dormitory long distance charges helps the university extend free local calling to students.

Walton said schools also are losing out to other forms of communication, such as e-mail. E-mail is so prevalent, she said, that Pitt has installed 104 e-mail kiosks around campus.

Features like text messaging on phones also let students with crammed schedules avoid talking at all. That's one of the reasons Rebecca Krueger, 18, an IUP freshman from West Grove, Chester County, uses the text feature.

"If you really don't want to get into a huge conversation with someone, you can just ask them one question," she said.

It's all part of a much larger shift occurring throughout the nation.

Sixty-two percent of American adults own a cell phone, up 29 percent over the last two years, according to a March report by Scarborough Research, a New York City consumer information firm.

Cell phone explosion

Industry observers say the explosion in popularity is partly because of widespread advertising, but also has to do with cost. Cutthroat competition has depressed phone prices, including wireless charges, which have fallen by 30 percent since 1997, according to one industry group.

By the time some freshmen arrive on campus, they already are enrolled in family cell phone plans allowing unlimited calling back home, or they carry phone cards purchased by cost-conscious parents.

"I've got a sister in Texas, a sister in North Carolina and friends who are out of state. I've also got in-state friends, but that's still long distance," said IUP senior Noel Handran, 22, of Edinboro, Erie County, explaining why he won't go near the plan offered in his dormitory.

"Society wants cheap," he said. "They want a good deal."

For Sara Moore, 19, an IUP sophomore, also from West Grove, the awakening came when her dormitory bill topped $100. She purchased a cell phone and spends half as much to talk across state to her family and boyfriend.

"I get basically free nights and weekends -- that's about 3,500 minutes -- and then I pay for a basic 400 minutes during the day," she said.

"I pay about $40 bucks a month," Moore said. "My region is, I think, Maine to Georgia. I can go all up and down the East Coast and not pay any roaming charges."

Going above those allotted minutes can mean big surcharges and not all plans necessarily mean a substantial savings, some students say. But the heavily advertised notion of cheap long distance calling is a powerful lure.

Chris Kernan, a manager at the University of Maryland said his school may cut long distance prices to lure users back.

The University of Iowa has already done so. In June, it announced a 50 percent cut to 5 cents a minute, saying its long distance provider made the move in response to heightened competition.

American University in Washington, D.C., has taken a radical approach -- a wireless campus.

It will outfit residence halls with an in-building antenna system, enabling its 3,500 resident students to replace their room phones with wireless phones. The school hopes eventually to derive some income from wireless plans sold to students but said the real financial advantage will be in no longer having to maintain lines in residence halls.

In just four years, American had lost 80 percent of its revenues from long distance calling. Instead of lamenting the switch to cell phones, "now, of course, we'll be encouraging people to buy them," said Carl Whitman, American's executive director of e-operations.

That shouldn't be hard. Surveys on his campus suggest usage already is at much more than 50 percent, so high that whatever social cachet there once was in getting a cell phone call while walking to class or heading to a dining hall is gone.

"It's like everybody is wearing jeans," Whitman said.

Bill Schackner can be reached at bschackner@post-gazette.com or 412-263-1977.