Ottumwa semi-weekly courier. [volume] (Ottumwa, Iowa) 1899-1903, 1902-07-31
WHAT HELLOS COST.
Review OF Telephone Situation
Which Applies to ottumwa.
IMMENSE SUN OF MONEY REQUIRED
Takes SOS to Install Station Under
Ordinary Conditions-PIant With
500 Subscribers Has $s2, 500 Invested
in Apparatus Alone.

In hundreds of Ottumwa homes and
business houses there are telephones
but their users give scarcely thought
to the cost of constructing the system
and the amount necessary to maintain
the combination of wires, box, bell and
battery which saves an immense
amount Of time and labor
The following carefully written ar
ticle on the cost of construction and
maintenance of telephone plants, was
first published In the American Tele-
phone Journal OF New York city, on
Saturday, April 26, 1902. 1t has been
widely copied throughout the country
especially in publications interested in
electric and telephone business, and
has been commented upon as being
very accurate in all the estimates
which 1t furnishes as to the cost and
maintenance Of telephone plants. On
account of the very rapid and wide
development of telephone properties
in the state Of Iowa, this article is Of
Importance at this time and will be
read with much interest by the pub
&c generally.
Before the expiration of the princi-
pal patents on the telephone and pat
entees and those working under them
had monopoly of the telephone bust
ness, and, according to our way of
thinking, they unwisely took advant-
age of the situation and made exor-
bitant charges for telephone service.
In their anxiety to make large divi-
dends they forgot that great profits
In any line of business bring speedy
and effective competition; and that
with competition come lower prices.
The advantage derived from tele-
phone in business places and in the
home was so great that long before the
expiration Of the patents men We're
preparing to enter the telephone bust
ness as soon as the patent expired,
basing their calculations of profits
upon the rates charged by the old COM
pany. | fear many unwittingly under
estimated the cost of construction and
maintenance, and made their rates
much too low. A conservative rate
would have been about three.fifths of
the Bell rates, all other things being
in proportion.
~ iuihlou OOV VI 5tUU peODlG WIFI
telephone service at prices charged
before there was competition was easy
and also productive of very high divi-
dends. But to serve two and three
times as many at one-half or one
third the price is quite different
proposition. To make this palmer
consider town where there is an ex
change with 300 subscribers at SO per
month, the minimum price charged
by the old company. And then consid.
er an independent company building
an exchange in the same town charg.
ing rate of 81 per month and secur
ing 1000 subscribers, which is the real
condition with many of the independ.
ent telephone companies today. The
subscriber receives for 81 per month
the benefit of twelve hundred subscrib.
ers, which at the old rate of SO for
300 would cost him $12 a month.
This very low rate is all very good
for the subscriber, but, as / have said
the Independent people went into the
telephone business Understanding
the cost of construction and mainte
nance, believing that the more sub
scribers they secured the less the rate
for service should be. This still re
mains the impression among al
classes not versed in the financia
problems of the telephone business
They still believe that the more tele
| phones company can put out the less
the rate should be. 1t never occurred
to them that the reverse is true. thai
the greater the number'of subscrib
ers the more expense attached to the
transaction of the business.
The proper understanding by the
general public of the cost Of construc
ton and maintenance is almost as i'm
portant in the telephone situation O
today as it is that every telephone mar
4 should understand it for himself. Mel
| generally are willing to pay for wha
they get, when they know what the,
are getting. This knowledge general,
diffused among the people will be ;
safeguard against unwise Legislation
in telephone matters, or ill-advised in
reference by city or town councils
l consider this thesmost important pro
/ position before us today. The cost o
construction is continually advancing
it is fifty per cent higher than it wa.
six years ago. Telephone poles, wires
cross arms, and all material required
in toll-line construction have advanced
ten to fifteen per cent in the past year
and at the present rate of pole con
sumption in a few years ittwill be i'm
possible to buy poles at any reason
able price.
And since it has been demonstrate,
that it is practicable to place the wire.
in conduits along the principal thor
oughfares, it wilAbe required by al
towns in the near future, as at presen
in the larger cities. The cost is con
siderably above the ordinary pole, wir
and aerial cable construction. The dc
mand for telephone service is so grea
that to supply the demand in densel,
populated districts requires such net
work Of wires overhead that it will no
be permitted in well regulated towns
The only solution is the underground
cable.
How to Estimate the Cost.
i The cost of telephone plant can b.
estimated approximately at the pres
ent prices Of material and labor on
basis of the number of telephones in
stalled. For example, an exchange o
500, installed within radius of one O
4 o,,o opd oOa-ho1f ,,,iloe and u;tL -,