Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1914-03-19

from it's territory to great extent
for the reason that the independents
were unable to get toll service without
IL contract with the New England com
pany for this service II an indepen-
dent company desired toll connection,
1t was required to enter into a written
contract entitled Connecting Contract
Traffic Agreement" This contract
provided for the furnishing of toll
service by the New England company
for compensation advantageous to
the New England company and further
defined limits of territory beyond
which the independent company was
not permitted to operate. At this
hearing, nearly every independent
company, having toll connection with
the New Egland company. represented
that 1t had been limited territorially
by these contracts.
The New England company. when
these contracts began to expire in
1910 offered a more advantageous
contract to the Independent compan-
les, which WAS adopted by n majority
of them. But by this time conditions
were such that any competition with
be undertaken with any chance of
success. The old form of contract
was deprecated by the New England
company at the hearing. One Of its
officials testifying in that regard said
Eve believe that the new contract is
n better contract from all points OF
view than the old contract. Tho old
contract wo don't stand for"
In the early days, the New England
company absorbed other licensed com.
panies operating in the larger places.
The absorption of the Brattleboro
plant in 1890 ane OF the st. Adams and
St. Johnsbury plants at later date
are examples of this. Some indepen-
den. companies. after the expiration
of the patents. did not execute Con
meeting Company Contract Agree
ments' and commenced to compete
with the New England company in the
latters territory. The New England
company also extended its plants into
territory of certain Independent com
panies not operating under this contract
In each instance where this COMPETE
tion existed. 1t was vigorously main
tained by the New England company
The usual result was tho absorption of
the competing plants by the New Eng
land company or it's subsidia ries
Some examples of this competition
and the results are set forth elsewhere
in this report.
The Western Electric company is n
manufacturer of telephone supplies and
the American Telephone & Telegraph
company owns the majority of It's stock.
The New England company Is under con-
tract to the Western Electric company
to purchase all telephone supplies, except
poles and some minor articles, from that
company. a large number Of connecting
independent companies are under contract
to the New England company to pur-
chase telephone equipment exclusively of
the New England company at Western
Electric company prices, to the New Eng
land company, plus two per cent
During the life of the patents upon tele-
phone instruments. these We're not sold
by the Bell company to the licensed
companies but were rented at very con.
siderable rentals and, although the
patents expired In 1898. this practice has
continued until the present time. Or
->oNtlHDtI ltVL, the american bel
company and the New England company
contracted by letter and answer thereto
for rental of said instruments by the New
England company.
This contract In effect provides for
charge Of AZ per cent of the gross earn
ings Of the New England company az
rental of all telephone Instruments actual
ly used by the New England company
and an additional number of instrument,
not to exceed three per cent. of the In
struments actually in use. The actual cos
of these instruments is contract in re
gard to rent of property or in regard t.
service furnished by the American com
pany to the New England company othe
than the letter above rected. The actua
cost of these instruments is s3.O1 in tn
open market. The amount paid as annua
rental under this written contract amount
to about 10 cents per instrument Thi
amount was seriously questioned at thu
nearing and Mr.. Haganah, telephon,
statistician, testified that c. cents pc
instrument was fair price and was tn
price he established as result of an in
vestisation which he conducted at Chi
justification at the payment of a. pc
cent. of it's total gross earnings upon tn
ground that the American company fur
nished the New England company Will
engineering data, advertising material
loans of money and use OF patented ar
tlcles. In that regard, It appeared tina
the New England company furnished tn
American company in turn with engineer
ing data for which no compensation wa
received. The only loan between the com
panies, that was testified to, consisted o
a. loan OF $4,000, 600. 90 by the New England
company to the American. The advertis
Ing material furnished by tho American
company to the New England company
which was put into evidence, consisted o
plate matter for newspapers and period
calls and printed circulars for distr1bu
ton by mail All of this matter adver
tised the American company fully a
much as the New England company an,
the cos. of publication and mailing, whicl
must have oeen largely In excess OF tn
cost OF the plate matter and circulars
was borne wholly by the New England
company.
Much stress was laid upon the invention
controlled by the American company
known as the Pupin Coil, which the New
England company uses upon its toll lines
as justification for this 1-2 per cent
charge. Tho evidence dsc!oses, however
that the New England company pur
chased these coils from the Western Elec
trio company and pays sums therefore
which are fully commensurate with tn,
value of the coil as patented article Th'
commission is satisfied that no other writ
ten contract EXISTS betWeen the Amer