Who Ever Said Talk Was Cheap?

By Barbara Rudolph

Ira Opper wonders how he got along without Surfline. A TV sports producer by profession and beach bum at heart, the Californian dials 976-SURF almost every day. For 95 cents a call, Surfline reviews beach conditions along 485 miles of coast from Santa Cruz to San Diego, updated twice daily based on reports from 100 part-time scouts. Says Opper, 39: "It's like having a direct line to King Neptune." Thanks to devoted dialers like Opper, the 3 1/2-year-old Surfline handles 1.2 million calls a year in California and has expanded to three area codes in Florida.

Caller-paid services like Surfline are increasing faster than a Valley Girl's phone bill. The number of such hot lines operating in the U.S. has doubled in the past year, to 3,800, offering a growing Touch-Tone emporium of services ranging from the practical to the kinky. Customers can call for soap- opera updates, used-car prices, stock quotes, sex fantasies or rock-concert schedules. Prices run from as little as 50 cents a call to nearly $5 for the first minute. Total revenues are expected to reach $450 million this year, up 50% from 1987. While the industry has already encountered a legislative clampdown that could limit the use of dial-a-porn and party lines, investors believe legitimate caller-paid services have huge growth potential. "This is a hot, faddish business right now," says Chris Elwell, senior editor of the Information Industry Bulletin. "But it's only in its infancy."

Today's dialing-for-data industry was actually born decades ago, when New York Telephone first started offering the time of day in 1928 and the weather report in 1937. The company added Dial-a-Joke in 1974 and a recorded Santa Claus message the following year. But no one made money on the announcements until 1980, when AT&T launched its Dial-It service. The 900-prefix, long- distance lines enabled callers to participate in automated polls, typically sponsored by TV shows, for 50 cents for the first minute. Initially AT&T pocketed all the toll charges, but in 1985 the company began sharing the proceeds with smaller companies that operated the information services. The arrangement sparked a proliferation of long-distance call-in lines, from which AT&T generated about $100 million in revenues last year.

Local dial-up services -- carrying such prefixes as 976, 540 and 410 -- started sprouting after the breakup of the Bell system in 1984. The so- called Baby Bells, legally prohibited from offering their own information services, began forging alliances with hundreds of small firms. In exchange for the use of the telephone lines and their billing departments, Baby Bells charge a fee and also pocket a percentage of the monthly tolls.

As the industry grows, hot lines are catering to increasingly specific audiences. Anglers in Ohio can call the 976-FISH line to find out what's biting. Superstitious residents of New York City can ring up the 976-TARO (short for tarot) to hear their fortunes, while nonsmokers can call 540- LUNG to find out about the latest tobacco-industry liability cases. Customers with Touch-Tone phones can program a wake-up service in which the customer will be greeted by a sultry recorded voice ("Time to wake up, tiger").

So far, sex has been the best seller, generating more than a third of the industry's revenues. The dial-a-porn lines offer everything from recorded fantasies to lusty personal ads. Bawdy party lines have also proliferated, though their popularity is fading. Many of the numbers are far from erotic, providing legitimate dating services or outlets for gentle conversation.

Yet the ease with which children can tune in to the dialogues, along with their capability of running up bills as high as $6,000, has inspired parents to protest the porn and party lines. Phone companies will usually forgive one month's charges if a customer claims the calls were placed by a child. As a result of these givebacks, some of the upstart phone services are facing uncollectible bills amounting to as much as 30% of their total revenue.

Even so, legislatures are coming under increasing pressure to ban dirty dialing. In April Congress banned the transmission to minors of obscene or indecent material for commercial purposes. Federal courts in New York and California promptly struck down the portion of the law applying to merely indecent matter (messages are deemed obscene if they discuss sexual activity in a clearly offensive manner, while an indecent recording might include nothing more than strong language).

While porn lines may wither, the dial-up industry is likely to thrive by attracting plenty of legitimate entrepreneurs. It has become a haven for people who have ample imagination but a shortage of capital. W. Brooks McCarty, 38, a former Los Angeles ad executive, invested $35,000 two years ago to start a dial-up service that listed job openings. McCarty's company, National Telephone Information Network, now offers 30 different services, which dispense tips on travel, business and other subjects. This year's expected revenue: $10 million.

McCarty has high hopes for the industry: "It's the beginning of a multibillion-dollar wave of information-providing services, all funneled through your personal phone." Those who want to follow his example can get a primer by dialing a New York City phone number, 540-4540. The message: how to start your own dial-up service.

With reporting by Thomas McCarroll/New York and Dennis Wyss/San Francisco