The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1897-03-10
The Disappointing and Disastrous
Outcome OF Telephone
Competition.

In an interview Mr.. A. X. Rodgers, late
president of the Topeka Telephone and
Electrical Company, formerly known as the
Topeka Harrison Telephone Company, To-
peka, Kansas, in reply to some questions
about the proposed organizations OF q new
opposition telephone exchange said;
." Yes, notice by the newspapers that
tho organization of another telephone COM
pany has been talked OF to operate an ex-
change in Topeka in opposition to the Bell
Company, and that competition will result
in reduction of rates and corresponding
saving to subscribers. Having had consid-
cradle experience In an opposition exchange
in this city which proved disastrous to the
subscribers interest, 1t my not be out of
place for me to mention some of the dis
appointing features OF an opposition tele-
phone enterprise.
while competition is the means by
which people usually expect to obtain any
product at the lowest price, and, generally
applied, the reasoning is correct, yet 1t Is
not 30 in the telephone business. For the
telephone is natural monopoly, and COM
petition does not bring the desired results
either in lessened price or in the quality
of the service. This is true, because the
telephone is Of value to an exchange SUBJ
scriber in proportion to the number of per-
sons that he can reach by its use, and any
division of the telephone subscribers in a
city renders the divided service less desira-
BILE and therefore less valuable than when
all can be reached by one system. Water,
gas or electric light from any one of several
companies may meet the needs Of a con-
sumner, but with telephone service the b ISL
ness man must be able to reach practically
all OF the subscribers in the city, and to do
this, he is compelled to patronize as many
exchanges as may be in operation, which
not only means the annoyance incident to
each of the different systems, but an in
creased expense without any material bene-
| fit, loss OF time and ofttimes a confusion
in calling that is es ecially vexatious to the
busy man
"Pror to the suspension of the Topeka
Telephone & Electrical Company, the rates
| of each company in this city were S13 for
residence and 1914 for business telephone
per annum. Since the failure OF the To-
peka Telephone & Electrical Company, the
Bell rates have been advanced to $50 for
residence and $50 for business telephones.
While the two systems were in operation
the majority OF the business houses in town
had telephones from both, which made the
cost of their service S4S per annum as
against $36 now paid for the single service
from the Bell Company.
1.-THE $18 and 1924 rates were below the
cost of supplying service, and during the
eight months that the Topeka Telephone &
Electrical Company was operated by the
receiver, the expenses necessary to operate
the plant exhausted the total receipts and
left nothing for betterments, depreciation,
interest or profit.
"When our company was organized it
was expected that the exchange could be
built for about one-half the sum that was
ultimately invested. The estimates for
operating and maintaining the plant were
also very much below the figures ascer-
tanned from actual experience, and we soon
discovered that the plant was losing money.
| We then curtailed expenses wherever pos
| sible, and none of the officers, excepting
those who gave their time to the business,
were allowed any salary; but we continued
to run behind and, finally, were unable to
prevent the property from going into the
hands OF a receiver. The court ordered the
property sold to satisfy certain judgments.
But the proceeds of the sale paid only a
part OF the Indebtedness, leaving nothing
whatever for the bondholders or stock
+ holders
"This, in brief, is the result of our ex-
! perience in a business that we know moth
| ing about, and 1 don't believe that any of
those who invested in the enterprise cara TO
repeat the experiment. For the business is
justly classed as extra hazardous, as the
plant is more or less damaged by every
wind and lightning storm, and the circuits
are liable to be completely destroyed by
sleet storms or tornadoes. From Elec-
trical Engineering, Chicago, for January,
1897. Adv.l