TELEPHONE RATES.

Star (Christchurch), Issue 16985, 8 March 1923, Page 7

TELEPHONE RATES.

INCREASES NOT WARRANTED.

PROGRESS LEAGUE’S REPORT. The report of a committee appointed by the Canterbury Progress League to enquire into the Government’s proposal to increase telephone charges was received at a meeting of the executive of the League last night. The committee, on the words of its chairman, considered “ that the Department had not substantiated its case.'’ The report covers extensively the scope of the committee’s investigations stating that in dealing with such a question there were certain general considerations affecting Now Zealand finance that ought to be borne in mind. Reference is thou made to the general increase in the public debt and the burden of taxation. Goods and services hail soared above all prices of the Dominion. Nevertheless there was a general tendency towards gradual recovery of such tendency was not interfered with by bad management and by artificial means taken to keep up The committee recalls that subscripfrom the end ot November 1920, by amounts which represented an average increase of 25 per cent for every direct connection. The. rates for business telephones in the chief centres bore the greatest percentage ot increase, viz.. 35Jt per cent. The Postmaster-General now asked subscribers to increased charges yielding him .£200.000 addition ■ al revenue on tlie grounds that accounts of the Telephone Branch of the Post and Telegraph Department for the year ended 31st March. 1922. and previous years, although showing a margin of profit.after paying J per cent interest on capital employed, were incorrectly piepared in so far that no depreciation of tlie undertaking was allowed for. and that the salaries of certain workmen whose services should have been charg eJ against the Telephone Branch were, in fact, charged against the Telegraph Branch. Commenting on the proposals the report states.:—Tlie new scale of Telephone smbscribtions is designed to produce £ISO,(XX) per annum additional revenue from business telephone subscribers, and £50.000 per annum from private telephone subscribers. Of the total tolei phones in New Zealand. practical'y j half are business telephones and j half private telephones (the actual

j proportions being: business 52 per cent l private 48 per cent) so that the iucreased charges for business telephones as a whole would be three times the increased charges for private telephones as n whole. The Committee agrees, as it believes the pnblic does, with the general principle that a service such as the telephone Service should not be carried on at a loss to the general taxpayers, and that enough should at least be charged to provide for operating expenses, interest on capital employed in the service, and for maintenance of the under, taking against depreciation. Tlie Post and Telegraph Department, through its Chief Telegraph Engineer, has assured the Committee- that the increased revenue is not designed to recoup past losses, to provide funds for the physical improvements, or extension of the service. The Committee, in its inquiry into the Minister’* proposals for increased revenue, has therefore set before itself , these two main questions : i 1 To what extent, if any, is it necesF sary that the Telephone subscripi lion revenue of the Telephone i Branch of the Post and Telegraph Department be increased to provide operating expenses, interest on capital. and maintenance _ 1 2 How should an increase in such

revenue, if necessary, be apportioned among the various subscribers counting the claim of the Department that its Telephone Branch cannot lie carried on without loss except with a largely increased revenue from subscribers the committee notes the fol lowing:— 1. The year of expenditure selected by the Department as a basis for ‘ its estimate of loss was that ended March 31, 1922, a year in which it was shown to us that the cost of labour was at the peak, as also was the cost of material as charged to

the Department. j 2. Since then the Department’s officers inform us that the cost of salaries and wages is less than that of L the year ended March 31, 1922, by 10 per cent, and they have shown J us that though some classes of materials have not yet decreased, yet j important classes, such as bronze wire and cables, have considerably decreased in cost. 3. The officers of the Department admit that the coming extensive installation of automatic telephones will reduce operating expenses within the next three years, though they are at present unable to say to wliat extent ; but. it is obvious that if the change is .-justified, the annual saving funded will pay off the cost of such change. We therefore consider, on the information available, to us, that it should be quite practiable for the Department. while paying interest on capital and providing against depreciation. to profitably carry on its telephone business on its revenue based on the already substantially increased charges of the last two years, without asking more from telephone subscribers us a whole than thev at present pav. The second question addressed by the committee to itself with reference to the fair apportionment of increased charges between various subscribers needs no answer as such, as the Committee at present considers no increased charges necessary, but various information has come to the Committee which leads it to the conclusion that without increasing the total charges to subscribers as a whole, good work may J done by the Telephone Branch in- - Ascertaining some reallv distinctive classification between ‘ business and private telephones. 2. Classification of all telephones into a few distinctive grades according to manifest grade of use. ond 3. Extension of flat rote areas, as already proposed by the Department. Tlie method of charging measured rates for telephone service involving the necessity of keeping account of the number of calls on each telephone throughout the year has been frequently referred to during the sittings of tlie Committee. On this question the Committee unqualifiedly agrees with the Chief Telegraph Engineer that the advantages of measured rates are enor- • Piously outweighed by the. disadvaut ages of heavy additional cost of oner-

ating and accounting which they must involve. The members of the committee were Messrs J. A. Flesher (chairman), A. G. Henderson. \Y. M. Tyers. E. H. Wvles. C. J. H Williams. W. H. Nicholson. W. W. Mil I holla ml and P. R Climie. ‘ ! In presenting the report- Mr Fleshev I said that the committee’s position bad | proached the question with open minds, without regard to what anybody or the I public might say. The committee had | been met cordially by the Department’s j officers, but the report was not as comi plete as it, wished. It needed further I information, and would have to draw up a supplemental v report, which j would not be ready before tlie end of j this month. The committee had come I to tlie conclusion that depreciation had i been sufficiently met by charges for renewals and repairs. The conclusion of the report was particularly important. The committee felt that the Department. had not substantiated its rase that £200,000 should be provided by the public for the telephone services. The report was adopted, and a motion was passed expressing appreciation of the committee’s work. The organiser was instructed to send copies to Chambers of Commerce. Progress ’ Leagues and members of Parliament.