Jasper County Democrat, Volume 11, Number 79, Rensselaer, Jasper County, 10 March 1909 — THE TELEPHONE COMPANY’S SIDE [ARTICLE]

THE TELEPHONE COMPANY’S SIDE

The telephone company is asking for a new franchise at a higher rate. It is an undisputed fact that unlike most businesses the cost of the installation and operation of the telephone system per telephone, increases in direct proportion to the number of telephones. The reason for this is that as the number of telephones increase, the sources of trouble multiply, the equipment is more expensive and the operation of the switch-board is more complicated and requires more operators for a given number of telephones. In'a small exchange one operator cares for only about 250 telephones; in the largest plants one operator cares for onl yabout 35 telephones. Again the value of telephone service to the subscriber is measured solely by the number of telephones in the exchange. It is obvious that servlca to eight hundred subscribers is worth more than service to two hundred.

When the present franchise was granted there were only seventyfive telephones in the Rensselaer exchange, and it was never expected that the exchange would grow to its present proportions. The telephone company is giving more to its subscribers when it offers eight *hundred free telephones than when it had only seventy-five, and it is costing the company more per telephone to give this service. The company has forty-eight thousand dollars ($48,000) invested in this plant, and during a business existence of fourteen years, has never paid over a six per cent, dividend, and that only four of the fourteen years, and has been unable to accumulate any surplus whatever for natural depreciation and stohm calamities. It is estimated by the best authorities that a telephone plant depreciates ten per cent, per annum, and that to be on a sound business basis the company must accumulate a surplus pf that amount to take care of this depreciation. The Company is now facing a large financial loss' owing to the recent storm, and to repair this damage will necessitate the borrowing of the money to pay for it, and there is no possible way to pay this debt except to suspend all dividends until this loss is in this way cleared. Perhaps before it is paid another storm will wreck the plant again, and in the meantime there is a steady depreciation in the value of the property at the rate of at least |en per cent per annum These storms come periodically, and the damage resulting is necessarily a legitimate part of the operating expense, and if the revenue does not provide for these losses how can they be paid? This Company has suffered storm damage twice in two years, and a loss resulting will exceed eight thousand dollars ($8,000). Can any one suggest a method of meeting these losses except by providing a revenue sufficient to cover them? Does the public have any moral right to expect or demand that any public service corporation serve it without a fair return on the capital invested? A considerable part of the Company’s equipment is old and out of date, and the people have a right to expect and to demand modern, up-to-date telephone service, but the Company also has a right to expect a fair price for what they sell. It is proposed that if an increase in rate is granted, to rebuild the plant, put in a new and modern switch-board that will dispense with all ringing when “central” is called, simply remove the receiver and “central” is thereby notified that a connection is desired. All lines will be metallic, thereby removing all cross-talk and electric light noise. To make the lines metallic means two wires Instead of one, to each subscriber, thereby doubling the present wire mileage, and consequently requiring cable and more and heavier poles to carry the additional load. A large per cent of the bare wire now obstructing our streets will be removed and in their place cables will be strung. It is only a question of a comparatively short time until this plant will have to be rebuilt and modernized, and now when it is practically wrecked, seems the proper time to make this change. To repair it now, and then in a few years to throw this all away and modernize it then, seems a poor business policy. It is estimated that the advance in rates, which is only one and two-thirds cents per day per telephone, will enable the Company after its debts are paid, to pay a six per cent dividend and accumulate some surplus for renewal and storm damages. Surely six per cent is not an unreasonable income on capital invested in an undertaking as hazardous as the telephone business. The proposed improvement will necessitate the outlay of a sum estimated at' fifteen thousand ($15,000) dollars, and with the present franchise expiring

in 1913. no Company can afford to make the additional investment at the present rate. The service under the new conditions will be worth the additional price asked, and the Company is not asking something for nothing; for the increased price it proposes to give a service equal to that given by any city in the country. There is* no other business that is so hampered and cramped by law as the telephone company. The rates they may charge are nearly all fixed, are limited by law so that it is impossible to make more than a bare five or six per cent. In all other business there is a chance of a prosperous year bringing extra or increased • dividends. Would it seem right to limit by law the profits of the merchant, the lawyer, the doctor, the grain merchant, the farmer, or any other business to a bare five or six p6r cent with no chance or hope for more at any time? The telephone company, by its franchise, is in no way obligated to give to its City subscribers free.service to the farm lines, and a toll charge could be piade for each call by a City subscriber to a farmer's line. The City subscriber is getting free service to the farmers’ line without paying anything for it at all. Experts have been employed to appraise the plant of this Company, and have advised that the Company’s property has depreciated in value at least fifty per cent; in other words, it is more than half worn out. The revenue has not provided one cent to take care of this depreciation. The life of poles in the ground, according to Government statistics, is ten years, and wires and switch-boards much less. Depreciation an natural wear is a necessary part of the legitimate expense of every telephone company as well as all other forms of business.

All railroads charge five per cent depreciation per annum as a part of their operating expense, and the depreciation of a telephone plant is at a much more rapid rate. Ths telephone company here is a home organization, that pays out for labor and material in this city each year, a sum exceeding seven thousand dollars ($7,000). The City is now trying to induce manufacturing industries to locate here. If the City is successful in this effort, does it propose by law to compel them to sell their product for cost, or less? Because a few feel they cannot afford to pay for. a telephone at an increased rate, is It right or just that the Company be compelled to sell them service for less than it costs? No one is compelled to pay the increased rate, because no one is compelled to subscribe for a telephone. Is it possible that JMs community desire to simply confiscate the property of this telephone Company by legislation that will gradually force it into bankruptcy. The Company porposes to invest fifteen thousand dollars of new money in the plant, to give its patrons better service, and with the hope of eventually saving what is left of its property. In all candor and fairness, is the Company, asking anything unreasonable? JASPER CO. TELEPHONE CO.