Billy Baxter was an unseen character in the episode "The Tale of the Phone Police".
He was a troublesome boy whom years and years ago fooled around and made prank phone calls. Eventually he was caught, arrested and jailed by The Phone Police. The Phone Police placed him in a prison cell that altered his life's reality outside the building. This made it look as though he never existed, or was nothing but an urban legend. Soon however he was given a six digit phone number. This number stood out in big bold letters in the phone book. Possibly as means for The Phone Police to sting out other boys and girls who had the nerve to tamper with the telephone.
Billy had a phone in his cell, but it could only take incoming calls. Also it could only call back the last number who phoned him. So it possibly had a means of an auto call back button. For many years, Billy was trapped in the phone police's prison. No one could help him or hear his cries for help. Since his life outside the Phone Police Prison was altered no one ever knew him, so no one even missed him. However some people claimed there was a legend going around about him, but how the legend got out is unknown.
Then eventually in the 1990s two boys named Jake O'Brien and his friend Chris got into the habit of fooling around and making prank phone calls. They were warned by Jake's older sister Annie that if that kept it up, that the phone police would sooner or later catch them. Also she told them the story of Billy, although how she heard about it is unknown.
Then out of curiosity Jake looked up Billy's phone number and was curious that it only had six numbers thinking it wouldn't work. When he called the number it was static like in a very deep voice Billy asked him to help him. Since Jake called Billy first, he was able to call him back. So he kept phoning his back over and over again. every time he asked Jake to help him get him out of there. This began to drive Jake crazy.
Soon enough, Jake O'Brien was arrested by the phone police. So it seemed that Billy's reality removal was replaced with Jake's reality removal. Then Jake's six digit number was now in the phone book instead of his. Also Jake O'Brien seemed to be the urban legend now instead of Billy. This is possibly because Billy escaped when Jake was brought in or Billy was paroled or went back to his old life. Jake escaped later on and got his life's reality back. So it was unknown whether or not if Billy was brought back to the prison, or possibly works for the phone police undercover to help the phone police catch people.