Around the time the payphone was 35c they were deregulated by the government, meaning a payphone owner could charge whatever he wanted, from 5c to $1 or more. Some of this resulted from competition from privately owned payphones.
The cost of communications equipped overall has reduced the cost of telephone service. Pay phones are an exception. Due to vandalism, the phones require more protective steel and that makes them expensive. The cost of labor to retrieve the coin box is expensive. The greatly increased use of 800 numbers and alternate reduced long distance revenues. Payphones were declining already, the widespread use of cellphones only accelerated that trend.
For emergencies, particularly while driving, e.g. car break down.
My $20/month cell phone is free nights and weekends in my local area (which is rather large). However, NYC is outside my local area ("roaming") and I was there during peak times, so the per minute cost would be rather high compared to a pay phone.
If I paid $40/month I could get a cellphone with free day and roam calling, but it's not worth the extra $20 for the limited times I would use it. I considered the pay as you go plans but they are much less convenient and not much of a saving.
I can't speak for that state, but not much is required these days for telephone services.
Well the Verizon pay phones in NYC offered coin long distance. Who is handling the cross LATA long distance calls? Who is asking for and controlling the coin deposit?
P.S. I don't know if I mentioned, but the instruction card said $1/minute, 4 minute minimum. But when I dialed a call, it asked for $1.05. I don't know why it wanted the extra nickel.