Consumer Pay Telephone Protection Act of 1998 - Amends the Communications Act of 1934 to express the sense of the Congress that: (1) public interest pay telephones should be available and maintained in locations where there would not otherwise likely be a pay telephone; and (2) such telephones should be fairly and equitably supported.

Directs each State agency that receives amounts representing unrefunded change from the use of public pay telephones to use such amounts to promote or support the installation, maintenance, and use of public interest pay telephones, including specially designed payphones for the disabled and the provision of payphone service in remote locations, nursing homes, emergency homeless shelters, hospitals, facilities that assist the disabled, schools, and other appropriate locations.

Requires a payphone service provider to provide an individual using such payphone the amount of change which exceeds the actual cost of the call, applying such requirement to any local telephone call which exceeds ten cents. Authorizes such provider, in lieu of providing such change, to transfer all excess amounts collected to the appropriate State agency or the Federal Communications Commission (FCC) to promote and support public interest pay telephones. Directs the FCC to: (1) prescribe regulations to carry out such requirements; and (2) report to the Congress on the availability of technologies or systems that permit persons who do not have exact change to use pay telephones for local calls without being overcharged.

Directs the Federal Trade Commission to study and report to the Congress on the competitiveness of the intrastate pay telephone market. Authorizes the FCC, after such study, to: (1) limit the rates for local pay telephone calls; (2) allow the States to establish such rates on a cost basis; (3) limit commissions that providers pay to persons who lease space to such providers for pay telephones; or (4) prohibit providers from entering into exclusive lease contracts which cover multiple locations.