Payphones have been suffering a slow death thanks to the rise of smartphones and mobile internet services. Where almost 40,000 boxes were in operation in 2009, less than 30,000 were still in use in 2013 with Telstra running 18,000 in 2014.

But in a generous twist of fate for the orange-topped boxes most Australians grew up with, the very technology that accelerated its demise could be its saviour in the future.

Telstra on Tuesday launched a trial of 1000 new Wi-Fi hotspots that will be switched on in November for the Christmas crush in Australia's tourist hubs. Part of the trial involves converting some of Telstra's payphones into WiFi hotspots that will temporarily allow all users to access the internet using smartphones and tablets free of charge.

The sites launched today include Sydney's Bondi Beach, Melbourne's Bourke Street Mall, Brisbane's Queen Street Mall and Perth's central business district. Telstra said the maximum range of the hotspots will be between 30 and 50 metres, so customers will need to stay relatively close to get the Wi-Fi signal.

This will form part of the $100 million Wi-Fi hotspot network Telstra announced in May. The company will build 8000 of its own hotspots while partnering with retail stores and local governments to get 2 million hotspots around the country over five years. After the trial period, the Wi-Fi hotspots will only be free for Telstra fixed-line internet customers with others paying a fee to use it.

Telstra retail group executive Gordon Ballantyne said the program would encourage customers at rival telcos to switch providers.

"We've got 3.7 million fixed-broadband customers today and they want to consume their allowances in and out of their homes," he said. "We would expect about half a million hotspots being enabled by ... the end of the financial year."

Mr Ballantyne said Telstra stores, exchanges and payphones would be upgraded to carry WiFi signals.

"High-traffic areas and popular hotspots are the areas that matter to our customers and that's where we're going first," he said. "As part of the first wave we've identified 8000 sites and some of these are payphones.

"We'll review that over time and see where there's a need to invest over time."

Telstra has been relatively slow in converting its payphone network to include WiFi hotspots with the option already available in New Zealand, New York City and London.