Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1902-02-06
Cooperative Telephone Service: A Local
Experiment in Wisconsin.
rhe American Monthly Review of Reviews.

Experiment III sslSCOHSiH-
The American Monthly Review of Reviews.
No one who is al all familiar with
social and business conditions in the
middle West can have failed to notice
the recent progress Of what is known as
"the independent telephone move
ment," by which the advantages Of
cheap and efficient telephone service
have been extended to hundreds OF
cities, villages, and even farming
communities, which until very few
years ago were deprived OF them by
the extortionate tariffs eXacted by
the great corporation in control Of the
business. Many of the stock companies
through which this rapid expansion Of
the telephone service has been pro-
NOTED were organized on the SO-called
mutual plan, having genuine
cooperative features: but ia one way
or another, whether by accident or
design, these companies have been
brought under the control of small
groups Of stockholders, and have thus
become to all intentS and purposes,
ordinary private corporations managed
for the profit of individuals. In many
cases this has probably been anything
but a calamity to the patrons Of the
L
NAMED in the hands Of local residents
who have looked well after the com
mon interests. and in he absence of an
alert public spirit on the part of the
citizenship it may we'll be that such
private ownership and control of a
public utility is the most practicable
solution.
But it is not always the most desir-
able solution Putting aside, for the
present, the proposition OF municipal
ownership (Which is apparently sue
ceSsful in many European cities, but
which has not yet been tried in this
country, there is much to be said for
cooperative telephone system, Oper-
ated, not for profit, but with view
single to the best service of the COM
munity. Such cooperative undertake
ingS have actually been begun in GER
tain American towns, and some have
succeeded. In this article, one such
experiment will be described.
Grand Rapids, Wis, is one of SER
les of enterpriSing urban centerS which
within little more than third of a
century have been developed along the
Wisconsin River, quite transforming
the valley of the wild, rushing river, :"
as the Indians called if, into the peace
full abode Of industry wealth, and gen
eral prosperity. The history Of these
Wisconsin Valley communities was
not unlike that Of hundreds Of other
settlements in the middle West. The
railroad and the telegraph pioneered
for civilization, and in their wake
came the daily newspaper and, some
years later, the telephone.
The Wisconsin Valley people receiv-
eel the telephone, just as most Amer
leans received it, at the hands Of a
great monopoly. They welcomed the
product of American inventive genius,
and for some years they paid tribute
in the form of rentals which made the
telephone monopoly an exceedingly
profitable business. Ten years ago,
the customary rates for telephone
service in this country, for the smaller
cities and villages, were S4S year for
stores and offices and $50 for private
houses. These are still the prevailing
rates in many places. These were the
rates maintained for the Grand Rapids
exchange, which included only about
seventy instruments In 1894, some
OF the Grand Rapids subscribers, be-
lieving that the charges were exor-
bitent in view of the service rendered
petitioned for reduction. Their re-
quest was denied. The subscribers in
vestigated the subject of telephone
service, and decided that an exchange
could be operated with profit at
materially lower rates The next step
was the forming of cooperative
company to set up an independent
telephone company exchange for
Grand Rapids and vicinity.
RIO orun n cp-nnnrntiyo 70
exchange did not prove to be SO
difficult task; the thing has been
done more than once, In the case of
Grand Rapids, the real tests of the
anti-mOnopOlists came after the new
company was in full operation, Offering
service to its membership at lower
rates than had ever before been
thought practicable. The company
was organized on this basis: capital
izatiou of $1,000, divided into 100
shares, each representing the cost of
installation of single telephone 1850,
each stakeholder to be permitted ito
hold one share Of stock for each tele-
phone rented by him, and no more;
ownership Of the stock to be absolutely
confined to the renters Of telephones;
dividends of at least | per cent. per
month to be paid on the stock.
RATES BASED ON ACTUAL COST OF
SERVICE.
The estimates of expenses made by
the promoters of the new exchange
were verified by experience: for all the
monthly rates eStabiiShed-S22 % for
stores and offices and 81 for residences
the company was not only able to
give good service, but increased It's
dividends from per cent, a month
required by its charter to II per cent,
so that in time the members had to
pay only $3.50 a month for business
service latter deducting the dividend J
while for residence service the
extremely low rate of % cents month
was paid. Ut will be remembered that
for the same service the monopoly had
demanded 81 and So, respectively
IMPoSsIBILITY OF COMPETITION.
The new company found that it's
operating expenses would be, APP
proXimately, So 4 year for each
instrument. Adding $3.50 to cover
interest and depreciation of plant. it
is clear that an income Of % per cent
on the investment was required. The
rates were adjusted to secure this
income and at the same time to
maintain a small sinking fund to
provide for improvements in the
service. Starting with an exchange Of
So phones, the business steadily
increasing from year to year. until at
the present time there are about 300
,s,t,,