The Logan Republican. [volume] (Logan, Utah) 1902-1924, 1911-07-11
Telephone Systems
And Their Cost

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the matter of telephone systems:
Gentlemen:
The writer ventures to address the
Utah Development League upon the
question Of telephone rates, for the
purpose of making few suggestions
and presenting few figures that
ations:
1t will be represented to you that |
the two principle factors entering in
to charges for telephone services
are:
FIRST---Cost of installing the plant.
Second-Cost of operating and
maintaining the plant. You will be
told that sufficient revenue must be
provided to cover the expense of the
second item and that the first item
must be taken care of by providing a
fund sufficient to meet the deprecia-
ton expenditures and to, further, fur
nish a seven per cent return upon
the original cost of the plant.
In arriving at the real cost of the
plant, upon which a seven per cent
profit is required, we should take as
a basis, not the arbitrary book costs
that will be submitted to you by the
Bell company, which are impossible
Of notification and would be useless
even II verified. The proper basis
should be the cost Of installing now,
a first class, modern exchange, suit
able for giving the best service to the
subscribed now served by the exist
ing system.
In a city the size of Salt Lake this
cost should rot exceed $3.50 per tel.
ephone, including all construction
costs, exchange building, real estate
and all expenditures whatsoever, in
fact this figure is in excess of the
real requirement of the case.
Outside of Salt Lake City there
are not more than two localities cog
den and Provo) where the total cos
per telephone should exceed $4,000
BY multiplying the number of teie
phones by these very ample cost es
Inmates, we get the total cost upoI
which profits and depreciation SHOULD
be figured
Again the basis for estimating thu
operating and maintenance cost
should not be the arbitrary figure
presented by the interested partie
in the controversy, prepared for tn
express purpose of securing to them
selves greater profits, arising fror
an increase of rates. The true basi
will be the operating and maintenance
cost of a well and economically mar
aged plant, using uptodate apparatu
and which is earning seven per cen
interest in its properly figured cost.
The Bell system of management
VIGOROUSLY complex, elaborate, e.
pensive and cumbersome-being moe
eled after the highly organized plant
required in the large eastern Bell e
changes, such as those in New Yor
City and Chicago, but quite unnece
sary and burdensome in their small'
western exchanges.
There Is no instance In an aut
matte telephone plant where the co
of operation f1d maintenance, inclu
ing taxes and all charges up to int
est and depreciation, is as high
$12.OO per year per telephone. Ho'
ever, placing it at $l4.oo for your e
Inmates and adding to this $500 a
nual depreciation charge per tel
phone, the balance of the income
then available for interest and di'
dends-at a cost of $3.50 per telephol
and a seven per cent interest raj
$3.50 should be added for interest
investment, making $3.50 as the
tai revenue required in order to p
all charges and'a seven per Gel
profit on the cost of the plant, or