The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1905-02-01
COST OF DOUBLE
PHONE SERVICE
Means a Cash Loss To The
Community.
EXTRA SYSTEMS ARE EXPENSIVE
PEOPLE IN GENERAL ARE WORSE
OFF WITH TWO COMPANIES
THAN WITH ONE.

The Economist Of Chicago. one of the
great financial authorities of the
country, has been Analysing the cost
or competitive telephone companies in
cities where the facts permit fair com
parsons. and it has reached the con-
cluSion that two companies In one field
cost the community much more than
an individual company In other words
the community pays more for two
companies than il does for one. even
where the competing company offers a
temporary promise of rate reduction
In confirmation Of this conclusion.
the Economist says One fact is now
emerging with great distinctness. The
competition of two telephone compan-
les in one community is carried on at
the expense and to the financial detri-
IEent or the community as "A whole.
Mr. F. B. Ellicott, city electrician Of
Chicago, called attention TO this fea-
tuTe of competition in a report TO the
common council jan Is, 1902, in which
he showed that il cost the city Of
Cleveland as a whole $50. OQO more each
year to have two telephone companies
III the city than it would have cost if
every subscriber Of both companies had
tie telephone of the Bell company. at
its rates A very recent analysis has
shown that the telephone users Of
Cleveland are now paying an annual
premium of a bout $3.50 600 for the privi-
An address by a member of the city
government of East St Louis. Ill, re-
Gently presented to the convention Of
the League of American NIunicipali-
ties, showed that the Cleveland ex-
perience is duplicated in the smaller
community. After Analysing the stu
alton, he said
so, while competition may be said
to have saved one class OF users 81, 500
a year, II costs another class of users
S15,354 a year. The net cost Of compe-
tition TO the East St. Louis public,
therefore, may be said to be over So
600 a year"
From the standpoint of the commun-
ity as d whole, competition can only
he justified when new company
would furnish equal or better service
at a materially lower rate, and con-
tmUe to do so throughout the period OF
its operation The history of rate
making by the independent telephone
companies would seem TO indicate that
their initial rates have been established
without sufficient knowledge or pro-
per consideration Of the conditions and
requirements of the business Nearly
all of the independent companies after
a few years operation openly avOw a
necessity for Increasing their rates,
and do so when not prevented by Ordi-
nance restrictions, and sometimes even
in spite of such restrictions This is
true in places large and small, such as
Baltimore. Cleveland, St. Louis, Des
Moines, Galesburg, Grand Rapids and
very many other places
In other words. the Economist be-
Iieves that the independent companies
are an outright expense to the COM
munity. and their history shows that
they must inevitably raise the rates
at which they begin business TO a
higher rate in order to meet operating
, charges and depreciation of plants 1t
cites as evidence of this. the reports OF
the Minneapolis and Philadelphia indie
Iendents- which show on their face
that insufficient allowance has been
r1ade for maintenance and deprecia-
ton; and as soon as this is done, the
rate to the subscriber must be raised.