Telephone Charges.

Press, Volume LIX, Issue 17707, 8 March 1923, Page 6

Telephone Charges.

The roporfc of the special committee set up "by tbe Progress League to consider the proposed increases in the telephone oharges gives evidence of careful investigation of the subject, and whether the Postmaster-General and liis departmental advisers approve of the commit- i toe'a conclusions, of not, the document is a, useful contribution to the sum of pttblio opinion on his proposal, that Mr Coates invited. To the- chief reason adduced by the Minister for the suggested increase in rates—the necessity that tho telephone service should pay its way, no objection can be raised by any intelligent person; the committee agrees that the service should not be a burden on the general tax-payer, but should pay working expenses, interost on capital expended-, and depreciation. According to the Minister, this is what the service las not done in the past. The telephone branoh, after paying interest, has been shown to return a profit, but only, it is claimed, because for. the past twentysix years no depreciation has been allowed for, and because certain working expenses, tho pay of some workmen, have been charged against the telegraph branch. Mr Coates claims that if these two items had been charged, as they should have been, to the telephone branch, the latter's expenditure for last year would have been increased by £207,900, which would have meant a loss to the branch of £175.000 instead of the indicated profit of £33,300. It is to make up for this loss that tho Minister proposes to raise an additional £150.000 from business telephone subscribers, and £50,000 from private subscribers. On this matter the League's committee joins issue with the T>epartmeiit. First, in Tcgard to depreciation, it argues that the capital expenditure on the telephone service from its initiation in 1382, to March last year, was £2,995,183. The buildings and equipment of the telephone service were shown in the Department's balance-sheet last March as being worth £3,141,057, and tho committee understands from Departmental officers whom they consulted, that this amount approximates to a valuation lately made of tho service's asscta?JjFrom the sura mentioned must bo deducted £200.000. value of buildings which cannot be debited against the telephone service's capital account. This leaves £2,941,067 as the present value of the service's assets, and when this is subtracted from tho capital cost, £2,99fi,183 ; only £54,123 is left to represent the depreciation of forty-one years for which allowance has not been made, and agninst this there must bo set the £60,000 depreciation provided for between 1882 and 1897. and the net profits of £466.000 previously mentioned. Tho

I committee, therefore, arrives at the conclusion that "the Department's 'claim that the working expenses of I ■' past years have been understated by ■'' omission of provision for depreciation " cannot be sustained." With reference to the workmen's salaries, amounting last year to some £IOO.OOO, alleged to have been wrongly charged to tho telegraph branch instead of the telephone branch, the committee makes a very good point. It made the remarkable discovery, by enquiries among Departmental officers, that the subscriptions of telephone subscribers and the takings of slot machines constitute the only revenue credited to the telephone branch. The receipts for toll communications, whether by telephone subscribers or the general public, between one exchange and another, which last year amounted to the respectable sum of. £268.753, are credited wholly to the telegraph branch. The latter is, no doubt, entitled to a share of this revenue, for the use of its lines, but surely some considerable part of it is due to the telephone branch for the use of its plant and of the services of its employees. It rests with Mr Coates to explain how he can justly claim £IOO,OOO from the telephone branch for work done for it by telegraph workmen while at the same time the telegraph branch secures nearly three times that amount from nsers of the telephone. The latter amount might well offset the former. The report also points out that the Department's estimate of tho loss on the telephone service was framed on tho results of a, year when the cost of labour and materials was at the maximum and that it has now fallen in both directions, while the installation of automatic telephones will further reduce operating expenses. The public will not make up its mind concerning the proposed increase in the telephone charges, but it will agree with the committee unless the Department can show that the committee has misunderstood and misinterpreted the facts and figures upon which it based its report.