The most common pay phones, until the 1970s, were "ground start". What
> this meant was that the phone was de-energized, so to speak, and
> there was no dial tone in it, until...
>
> ... until the "hot" wire in the phone cable was shorted to ground. >
> This signalled the central office to activate the wires and
> send a dial tone across.
>
> The official way this occurred was when the pay phone detected
> a coin falling through it and toggled an electrical switch.
In rural areas there was a dial-tone-first "post pay" design that worked a bit differently. One listened for dial tone then dialed the number. Upon actually reaching the desired party (not a busy or no answer), one would then put in a dime or two nickels to allow the transmitter to function. These pay phones were simpler all way around--the phone was simpler since it didn't have a deposit holder-- the coins just dropped straight through. The CO gear was simpler, too.
As an aside I noticed that all the payphones in my village have been removed; the last ones in front of the convenience store were just pulled out.
At one time a few square blocks of the village center had pay phone at:
1) In front of convenience store (pair).
2) in front of the drugstore (booth)
3) in front of pizza shop
4) inside lobby of bar
5) outside of bar
6) inside nice restaurant
7) semi-public inside coffeeshop.
One pay phone remains at the train station, but I think it is essentially subsidized by the railroad to serve as an emergency telephone. It appears various railroads are doing that. The phone co will install a payphone anywhere, but the property owner must guarantee a minimum revenue or they must make up the difference. I would guess that the cost of a stardard public pay phone is less than the cost of a dedicated 'lift-receiver for help' phone directly connected to a 911 center, and of course more flexible for public use.
Not everyone, even today, has a cellphone, and even for those that do the batteries run out, the phones get lost, the pay-as-you-go contract is not kept up, etc.