mess

•

Four local businessmen find their calling in the
ever-changing and intensely competitive
telephone industry.

RUTH LITTMANN SPECIAL TO THE JEWISH NEWS

out of col-
rian
Os to pursue
lege
' on. m the real world.
an educa
Never mind a bachelor's or a
master's degree — Mr. Erlich re-
ceived the third degree from his
dad.
"It was the typical father-son
talk," Mr. Erlich recalls. Brian:, you had
better get a job.' I don't know what people
thought I was going to do. I wasn't plan-
ning an extended vacation."
Far from it. The younger Erlich, bright
but bored, shirked academia to take the
reins at one of his father's companies, Amer-
ican Public Telecom.
APT, a pay phone business, was bleed-
ing profusely, losing $50,000 a month. The
elder Mr. Erlich and his cousin had ac-
quired the sickly business as a stepchild to
their other, quite successful concerns. They
were relying on someone trustworthy, with
a sense for the bottom line, to keep APT
afloat.
When Brian came on board, revenues
took a turn for the better. Drawing on what
he did learn in school, Mr. Erlich cut out
"stupid expenses" like a company BMW.
He let go of unproductive employees. And,
he got rid of pay phones that just didn't pay
for themselves.
The business, he admits, doesn't seem
to make for the stuff of sexy dinner con-
versations. Yet, Mr. Erlich and his 29-year-
old sales manager, Michael Weinraub, are
well-aware of the field's risky and some-
times controversial complexities.
Pay phones are, perhaps, as taken-for-
granted as they are ubiquitous. Like dan-
delions along the roadside, they seem to

just be there.

Mr. Weinraub points out, however, that
phones at your local 7-Eleven, for instance,
presuppose a lot of hard work on his part.
As sales manager for APT, he must repeat
the mantra common to his colleagues in
the real-estate world: location, location, lo-
cation.
Bars and highly visible gas stations
make for lucrative business. Chinese food
restaurants, for some unknown reason, do
not.
After scouting out locations for APT
phones — anywhere from metro Detroit to
Traverse City, from Benton Harbor to Port
Huron — Mr. Weinraub must convince
property owners to permit installation. This
sometimes involves fighting a stigma of
pay phones as being magnets for drug deal-
ers and prostitutes. It's a bad miscon-

SJMs with business acumen:
President Brian Erlich and Sales
Manager Michael Weinraub
turned American Public Telecom
into a viable company.

ception, Mr. Erlich contends.
"Long before there were
pay phones, there were pros-
titutes," he says. "APT
phones don't allow incoming
calls, so no one is going to use
one of our locations for a
home office."
Prime spots for pay
phones are in stiff demand.
Mr. Weinraub must compete
with more than 125 other
Michigan companies — in-
cluding Ameritech — when
he approaches a property
owner in hopes of landing an-
other site.
The APT sales pitch guarantees prompt
service on repairs, all within 36 hours.
Sometimes, the company negotiates spe-
cial calling deals with the property own-
er. For instance, a gas station owner willing
to grant space for an APT phone might be
rewarded with free calls to his wife's of-
fice during lunch hours.
Generally, property owners don't pay for
APT phones. In fact, they get a cut of the
profits. Such expenses make the company's
balance sheet a regular "accounting night-
mare," Mr. Erlich says.
Other liabilities include a monthly ex-
pense of $2,000, which goes toward modem
usage. Each day, the APT computer dials
up all 1,000 phones just to make sure
they're in working order.
Depreciation, sometimes caused by van-
dalism, is another major drain of up to
$40,000 a month. Toothpicks get lodged in
coin slots. Broken, shredded phone cords
are a common dilemma.
Not too long ago, an APT phone literal-
ly blew up, the casualty of a plastique-wield-
ing thief. Trouble was, the criminal, in a
sophomoric pursuit of petty cash, evident-
ly burnt his fingers on the red-hot coins and
darted away. Would-be loot was found
charred on the ground the next morning.
Mr. Erlich and Mr. Weinraub, along with
their 10-person staff of young adults, aren't
letting mishaps eat away at their hope and
enthusiasm. From the dismal days of
$50,000 monthly losses, APT has turned
around and improved profits. About 40 new
phones are installed each month.
Turnarounds in the industry - as a whole

also are keeping their spirits high. On No-
vember 30, 1995, state lawmakers passed
the Michigan Telecommunications Act, in-
tended to create more competition among
local service providers.
Supporters of the bill, like APT, believe
the new legislation will lessen their debts
to large phone corporations like Ameritech,
which they allege prospered off government
regulations holding smaller companies at
bay.
"In a lot of ways, we've felt like David
and Goliath," Mr. Weinraub says. "We've
struggled to survive in a marketplace that,
up until now, has been largely dominated
and controlled by Ameritech. Finally, things
are starting to turn our way."
The new state telecommunications act,
reinforced by a federal bill that passed three
months later, also guarantees compensa-
tion for 1-800 and credit-card calls, Mr.
Lewen says.

Hitherto, a person could drive up to an
APT pay phone, for example, dial toll-free
or punch in a long-distance access number,
talk for as long as desired, then drive away.
Not a cent would go to APT, but the cred-
it-card companies and long-distance carri-
ers were making a bundle. Under new
regulations, the latter two types of enter-
prise must reimburse APT and other pay
phone owners.
'The chariges allow us to compete on a
more level playing field," Mr. Weinraub
says. "Now, it's my goal to go after as much
of Ameritech's market share as possible."
Mr. Erlich, similarly pleased, points to
the recent 10-cent jump in Ameritech pay
phone prices (from $.25 to $.35) as a first
step toward beating the big guy.
"I've been feeling like Ameritech is
the bully in school," he says. He pauses
and smiles. "But I've been drinking my
milk." O

Phones And Computers:
Two Are Becoming One

RUTH LITTMANN SPECIAL TO THE JEWISH NEWS

R

obert Shubow bought his first "cell
phone" in 1967 for $5,000, and in
those days, every call went through
live operators.
Times have changed. Mr. Shubow
should know.
Since the early 1980s, the Detroit na-

tive and business partner Harry Topper
have operated Ultracom, a Southfield-
based company that installs, services and
maintains telephone and voice-mail sys-
tems for businesses.

PHONES page 54

