But a new Emmaus company, NetYou Stations LLC, hopes to use that slump to market a product that could help pay phone companies recapture lost revenue.

"The pay phone business is so bad right now, providers are ripping their phones out because they're not making any money," said Stuart Rogers, chief executive officer of the 7-month-old company.

NetYou designs and manufactures public Internet terminals that fit into standard pay phone housings. The terminals let users check e-mail, surf the Web or call virtually anywhere in North America or western Europe for 25 cents a minute.

Company officials say the Internet terminals are generating a lot of interest from pay phone companies looking for a fresh product that can boost sales in a shrinking industry.

Between 1995 and today, the number of U.S. cell phone subscribers more than tripled from 28.2 million to 133 million, according to the Cellular Telecommunications & Internet Association, a Washington, D.C., trade group.

In the same period, the number of U.S. pay phones declined 15 percent to about 2.2 million, according to the American Public Communications Council, a Fairfax, Va., trade association for independent pay phone service providers.

And as the number of calls made from pay phones declines an average of 10 percent a year, cell phone usage is skyrocketing. In 1999, Americans logged 147 billion minutes of cell phone calls, according to the cellular association. A year later, that number jumped 76 percent to 259 billion minutes.

Large pay phone providers have responded to the slump in pay phone usage by removing phones in unprofitable locations. And some, such as Bell South, are getting out of the pay phone business.

Meanwhile, smaller pay phone providers are left searching for a way to stop -- or at least slow -- the bleeding.

Rogers says NetYou has at least a partial answer to the pay phone industry's problem.

The company's Internet terminals come in two models -- one designed to fit into a standard pay phone enclosure and another that works as a free-standing kiosk. Both models come standard with a 12- inch color screen, keyboard, touchpad, floppy disk drive, magnetic card reader and a bill/change acceptor.

The terminals accept cash and credit cards. In the future, Rogers said, NetYou hopes to market terminals that will work with standard and pre-paid calling cards issued by major service providers.

Optional equipment includes a touch screen, printer, handset for Internet-enabled telephone calls and a digital camera that allows users to take a self-portrait and send it as an e-mail attachment.

"Anyone who's familiar with using the Internet can use this machine," said Christopher Betz, NetYou's director of sales and placement.

NetYou officials realize that their product isn't a good fit in every location where standard pay phones exist. However, they believe the Internet terminals can be very successful in areas with large volumes of foot traffic, such as busy downtowns and amusement parks, or places that attract large numbers of business travelers, such as hotels and convention centers.

"We're basically trying to capture people who are not near computer access, but they're going to be wherever they're at for a while," said Bill McMaster, NetYou's chief financial officer.

There are already about 150 NetYou Internet terminals in operation, including 16 in the Greater Lehigh Valley. Local terminal locations include South Mall in Salisbury Township and Banana Joe's Island Bar and Grill in Allentown.

NetYou reports that some of its best-performing units are generating revenue in excess of $2,000 a month.

"The market right now is pretty wide open," McMaster said. "Certainly, in the Allentown area, there isn't a lot of presence."

Nick Bizati, owner of the Days Inn & Conference Center in South Whitehall Township, said he is pleased with the NetYou terminal that has been in the hotel's business center for three months.

As a host location for a NetYou-owned terminal, the hotel provides NetYou with space, a phone line and a power outlet in exchange for a percentage of the revenue, Bizati said.

Although he doesn't have room for additional terminals right now, Bizati is interested in adding more.

"If I have a conference going on, or I have a lot of businessmen in town, then usage does pick up," Bizati said. "In the future, if I redesigned my lobby, I would probably put a couple of them in."

In addition to the 16 local units, NetYou has another 60 or so of its terminals placed at hotels, restaurants and other locations in and around Orlando, Fla.

About 10 employees work at a NetYou manufacturing facility in Orlando, where the Internet terminals are made. In addition to Rogers, Betz and McMaster, NetYou employs Administrative Assistant Donna Carl at its office at 860 Broad St. in Emmaus.

Although the NetYou production facility in Orlando and NetYou Stations LLC of Emmaus share a brand name, they are separate companies, Rogers said. However, he said the two privately-held firms have several owners in common and are closely affiliated.

Although NetYou owns and operates some of its own terminals, its main focus is marketing the units -- which cost $4,000 to $6,000 each -- to larger pay phone providers.

Once the up-front cost of acquiring a terminal is paid, monthly costs of operation aren't much higher than a standard pay phone, Betz said.

Betz said a dial-up Internet connection costs providers about $10 a month, with electricity for the unit running another $3 or so.

However, if a service provider wants to provide Internet-enabled phone calls with the unit, then a more costly broadband Internet connection is recommended, Betz said.

Bell Canada has installed more than 60 NetYou stations, with more planned.

Another customer, TCC Teleplex of New York City, recently installed two NetYou terminals on the streets of Manhattan and plans to add another 100 units within the next year.

"We want to get a critical mass of machines out there so people will start using them more," Rogers said.

TCC Teleplex is a 17-year-old company that operates 1,500 conventional pay phones throughout New York City. President Dennis Novick said the company has seen revenues fall three years in a row, but he is hopeful that NetYou terminals will help stabilize his business.

"I believe this is the natural evolution in public communications," Novick said. "I haven't felt this excited about the business in 15 years. It's something new. It's 21st century technology."

NetYou worked with TCC Teleplex to design an Internet station that can withstand the rigors of outdoor use, both in terms of weather and vandalism.

The result of their efforts is a terminal with a steel casing and a thick Lexan shield over the screen. There's also a waterproof, tamper-resistant keyboard.

"We've been looking at the Internet for the last two years," Novick said. "Finally, we found the right company with NetYou. The unit has performed wonderfully."

Novick said the two units he has installed so far -- thought to be the nation's first outdoor public Internet terminals -- are bringing in two to three times as much monthly revenue as a standard pay phone.

Although there is no official industry forecast about how many public Internet terminals will be installed in coming years, Novick said there is growing anecdotal evidence that the units will gain widespread distribution.

For example, Verizon, Sprint and AT&T are experimenting with various public Internet terminals at airports and other locations around the county. British Telecom announced in December that it will convert 30,000 standard pay phones throughout the United Kingdom to Internet phones over the next three years.

And Siemens, one of the world's largest makers of pay phone equipment, recently announced that it will introduce an Internet pay phone in 2003.

NetYou officials will market their products at the American Public Communications Council 2002 Conference & Expo May 14 to 17 in Las Vegas. Rogers said the company hopes the event will bring in a lot of new business.

"A year ago, people would come and look at them as more of a novelty," Rogers said. "This year, we think people will be more interested in buying."

Despite its small size, NetYou is ready to handle large orders, Rogers said.

"We think we could increase production very quickly," he said. "If we got a 1,000 unit order from Verizon, we think we could deliver that within six months."