Laurel outlook., 1947-12-10
TELEPHONE COMPANY
ASKS FOR RATE RAISE
TO OFFSET ITS COSTS

Announcement was made by R. B
Packard, Laurel manager, that the
Mountain States Telephone and Tel
egraph company has asked the pub.
lie service commission of Montana
for authority to revise certain ex.
change and toll rates in Montana
to enable the company to meet in
creased operating expenses and i'm
prove net earnings sufficiently to
attract the additional capital that
is required to continue its program
of expansion and improvement of its
service in the state. The company
state that although it is handling
the largest volume of business in
it's history of operations, its earn
ings in relation to its investment in
the state are lower than at any
time in the company's history ex-
cept during the depression years.
Earnings now are at an annual
rate of just slightly owe 8 per
cent.
The present low earnings situation
is brought about by expenses in
creasing faster than revenues. La
Dor costs which comprise 60 per
cent of total operating expenses
have been the largest source of in
creased costs of doing business.
Wage rates have increased substan-
italy during and since the war
due to adjustments comparable to
those made in other industries re-
curing similar skills. Labor costs
chargeable to expense are now con-
Stunning 81 cents of every revenue
dollar, compared to sc cents IN
1910. The cost of nearly everything
the company uses in constructing
and maintaining it's plant and serv-
ice is substantially higher. Some
of the items listed by the COM
pany We're poles which had increas-
ed Ga per cent, copper wire S3 per
cent and lead covered cable 104 per
cent.
The company states that during
the war the extension of its plant
was limited to projects that were
essential to the war effort and
public health and safety, and that
VI day the demand for serv-
ice has been so great that it has
not been able to restore margins ,
in its plant that are necessary
for efficient operation and salts
factory service. Despite the fact
that it has carried out the largest
construction program in the last two
years ever undertaken in the state
about $4,000, 000-and gained more
han 10000 telephones, a % per
cent increase, there were on Nov.
[, 1947, over 1900 orders which
could not be completed because of
.ack of facilities. The company's
engineers estimate that in order to
AXE ARE of present orders on hand
md to permit normal operations as
veil as provide for requirements
md offered business during a five
period ending in 1851 a gross
obstruction program in the order
# $17,1OO,O0O will be required in
Montana.
The company points out that the
lew capital required for this pro-
ram will not come from the in
reased revenue requested in the re-
-ision of rates. All of that will be
.eeded to maintain good service, to
neet operating expenses and in
and dividend requirements.
n order to attract the additional
apital that will be required, earn
ngs will have to be at a rate that
ill make investment in the bust
ess attractive.
The proposed new rates would in
rease the company's total revenue
l Montana by approximately $45,-
90 a month or about $545,000 a
ear. Since federal and other in
1me taxes would take 90 per cent
{ this amount, net earnings would
? improved bv about S27.250
onthly. The effect on individual
lstomers will vary considerably and
i'll depend on the type and the
mount of service they have and I