Rensselaer Semi-Weekly Republican, Volume 41, Number 51, Rensselaer, Jasper County, 12 March 1909 — TELEPHONE CO. PRESENTS ITS CASE [ARTICLE]

TELEPHONE CO. PRESENTS ITS CASE

Offers Argument for Granting of the Franchise and Asks the Consideration of Tax Payers.

4 The telephone company is asking to a new franchise at a higher rate. It is an undisputed fact <hat 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,thefeouble multiply, the equipment is more expensive and the operation of the switchboards more complicated and requires more operators for a given number Of telephones. In a small exchange one operator can take care of about 250 telephones; in the largest plants one operator cares for only about 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 service to eight hundred subscribers is worth more than service to two hundred. When the present franchise was granted there were only seventy-five 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 subscribed when it offers eight hundred free telephones than when it had only seventy-five, and it is costing the company mo e per telephone to give this service. The company has $48,000 invested in this plant, and during a business existence of fourteen years, has never paid over six per cent dividend, and that only four out of the fourteen years, and has been unable to accumulate any surplus whatever for natural depreciation and stoim calamities. It is estimated by the best authorities that a telephone plant dep elates ten per cent per annum, and that to be on a sound business basis the company mqst accumulate a surplus of that amount to take care of this depreciation. The company is now facing a large financial lo s owing to the recent storm, and to repair this damage will neeess tate 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 paid. Perhaps before it is paid another storm will wreck the plant again and in the mean time there is a steady depreciation in the value of the property at the rate of at least ten per cent per annum. These storms come periodically 1 , and the damage result ng is necessarily a legitimate part of the operating expense, and if the revenue does not provide for these losses how |ean| they be paid? This company has suffered storm damage twice in two years, and the loss resulting will exceed SB,OOO. 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 J 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 — pimply 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 percent 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 yean 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 twothirds 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 find storm damages. Surely six per cent is not an unreasonable incqpe on capital invested In an undertaking M hazardous as the tele-

phone business. The proposed improvement will necessitate the outlay of a sum estimated at fifteen thousand ($15,000) and With the present franchise expiring in 1913, no company can aford 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 limited by law so that it is imjpossible 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 Tjy-law“th6“profitff Txf-the merchant, the lawyer, the doctor, the grain merchant, the farmer, or any other business to a bare five or six. per 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 made for each call by a city subscriber to a farmer’s line. The cjty subscriber is getting free service to the farmer’s line without paying anything for.it at all. Experts have been employed to appraise the plant of this company, and have advised it that the company’s property has depreciated in value at least 50 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 and natural wear is a necessary part of the legitimate expense of any telephone company as well as all othe forms of business. AU railroads charge five per cent depreciaion per annum as a part of their operating expense, and the depreciation of a telephone plant'is at a much more rapid, rate. The telephone company here is a home organization, that pays out for labor and material in thi 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 telephony Is it possible that this community desires to simply confiscate the property of the telephone company by legislation that will gradually force it into bankruptcy. The company proposes to invest fifteen thousand dollars new money in the plant to give its patrons better service, and with the hope of eventually saving what is left of its proprety. In all candor and fairness, is the company asking anything unreasonable? The Jasper County Telp'one Co.