CABLE COMPETITION

Evening Star, Issue 19891, 13 June 1928, Page 4

CABLE COMPETITION

1 THE BIG MERGER [Special, to the ‘ Star.’] WELLINGTON, June 12. Though the approval of the Imperial and Wireless Cables Conference has not yet been given to the provisional agreement for a merger hetweeir'tlic Eastern Associated Telegraph Companies, and the Marconi Company, advices point to the conference not standing in the way. The merger is really dictated by the increasing international cable competition, and in the United States it has already had considerable effect, the first result being an amalgamation of the Western Union Telegraph Coinpay and the Commercial Pacific Company, which have been bitter competitors’ for the past thirty years, and which have conducted a war so extreme that if Western Union were ever entrusted with the transmission of matter for the Commercial Pacific they have refused to deliver it. The capital of this Americaii combine is sot at about £55.000,000, and its avowed objects arc th<’ circling of the world with cables. The recent laying of a new line across the Atlantic marked one step in the effort to “Organise the resources of radio, cable, and telephone so as to develop a system of world communication which will place the United States first among all nations 1 incapacity and reasonable rates, and it has been plainly stated that the Mar-coni-Eastern combination has been formed solely to fight the American cable organisation. Thus there arc two great combines ranged against each other, the American merger with a capital of £55,000,000, the Marconi-Eastern concern with a “ holding ” capital of £53.000,000. The arrangement between the Marconi and Eastern Companies, however, is only a partial solution of their difficulties. Tlic Marconi Company controls foreign, but not Empire, wireless services, and now the associated companies desire to take over the cable svstem, -which is operated by the Pacific Cable Board and the “Beam ” stations as well. _ . It is known that the British Government is willing to sell its unprofitable cable service, but not its profitable “ Beam.” The Marconi-Ensicrn combine, naturally enough, will not take over the one without the ether. Whatever the outcome of the present negotiations, it appears that New Zealand io vitally concerned. The dominion holds one-ninth share in the Pacific cable, which was originally financed by a loan of £2,000,000 from the Imperial Treasury during the years of construction in 1901-03, provision being made for the repayment of this loan, with 3 per cent, interest, during a period of fifty years from 1903. The British and Canadian Governments each guaranteed 5-lSths of the principal and interest, and the Australian Government 6-18ths. The latest financial returns show that the Pacific Cable Board has paid to the National Debt Commission of Great Britain the. sum of £770,000. leaving duo £1,230.000 in the proportions given above. If tho Pacific Cable Board decides to hand over its service to the Marconi-Eastern combine, the virtual monopoly of Australian and New Zealand traffic will ho restored, though the position of tho beam service is not clear. At present the Australian Government holds 50 1-10 per cent, of the total £1,000,000 shares in the beam service in the Commonwealth, tho other 49 9-10 per cent, being the property of Amalgamated Wireless, which is Marconi’s. Tho Australian Government thus retains a controlling interest in the Australian end of the beam service, and seems unlikely to. sacrifice it. In addition, tho Pacific Cable Board now has a working agreement with tho Commercial Pacific Company, which has amalgamated with the Western Union Telegraph Company to moot competition, and it is understood that the board rents land lines across Canada, ami receives concessions for transmission of messages across the Atlantic. Those concessions are hardly likely to be extended to a competing company such as the Marconi-Eastern, if it gains control of the trans-Pacifie lines.

The position, as it appears from New Zealand, is that tho new British merger is willing to take over tho cable lines really for the purpose of obtaining the “ Beam.” How the beam is cutting into services i.s evidenced by a report from Montreal that tho beam has more than doubled the previous business between Nova Scotia and England, and has made a big cut in the; ordinary cable traffic.