A federal regulator has blocked a plan to raise the cost of a local pay phone call to $1, up from 50 cents today.

Bell Aliant Regional Communications and Télébec had put forward a proposal to raise the cost of a cash call and double the rate of credit card calls to $2.

The companies had argued the rate at which pay phones are being removed would decline if they could raise the cost of a local call.

But the Canadian Radio-television and Telecommunications Commission said no, arguing that it had allowed the cost of a call to rise in 2007, but pay phones had continued to disappear.

It said pay phones are still crucial in rural and remote communities and continue to be necessary for low-income people who cannot afford phone service.

"This is, in our view, a victory for today," said Janet Lo, legal counsel for the Public Interest Advocacy Centre.

"We're very pleased that the commission stood up to Bell's request for the pay phone rate increase, which was in our view not warranted."

As more people carry cellphones, use of pay phones has declined, leading to lower profitability for companies providing the service. The CRTC says the trend to removing existing pay phones is likely to continue as Canadians become more dependent on wireless.

How much do we need payphones?

The regulator wants to find out just how much Canadians still rely on pay phones and has begun a consultation seeking comments about how payphones should be regulated.

Among the issues it wants Canadians to consider is whether it should prohibit companies from removing pay phones altogether.

Visit the CRTC's consultation on the use of payphones in Canada website here

"This consultation will give us a clearer picture of how pay phones are being used and by whom," CRTC chair Jean-Pierre Blais said in a press statement. "It will also help us assess how possible rate increases and the removal of pay phones may affect Canadians, and whether any regulatory action is necessary."