F.—l.

TOLL SERVICE. Reductions in charges and numerous innovations and improvements were effected in the telephone toll service during the year, these being in accordance with the policy of ensuring that departmental services to the public are carried out, as far as possible, with due regard to modern developments and improvements and at charges which are fair and reasonable. Early in 1934 a comprehensive investigation was instituted with a view to introducing into the New Zealand toll system the most suitable modern features of toll systems in other parts of the world ; and the principal changes made as a result of that investigation are summarized hereunder : — (1) The lengthening of the period of the day during which half toll rates are applicable. (2) The introduction of half-rates all day on Sundays and holidays (except when the lower " quarter " rates are applicable). (3) The introduction of " quarter " rates with certain maximum charges. (4) The reduction of the " no-reply" fee and the provision of greater service therefor. (5) The reduction of the inter-Island telephone cable fee. (6) The reduction of the charge for local toll calls. (7) The introduction of the following new classes of toll service : — Person-to-person. Appointment. Fixed-time. Contract. (8) The provision of alternative methods of payment of toll charges. Person-to-person toll service was introduced on the 18th June. The first extension of the half-rate charging period was effected on the Ist October, followed on the Ist December by the application of half-rates throughout Sundays and holidays and the reductions in the charges in other forms of existing services. On the Ist January the remaining new toll services (appointment, fixed-time, and contract) and the new alternative methods of payment of charges were introduced. The reduction of charges by the extension of the half-rate period and the introduction of " quarter " rates, together with the other variations in charges which have been mentioned, represent a concession to telephone-users of an estimated value of over £17,000 annually. There is every reason to hope, however, that the cumulative effect of the decreased charges and the increased facilities will be an expansion of toll business that will offset largely the prospective loss of revenue to the Department which the changes involve. While it is yet too early to gauge accurately the result of the innovations, it is gratifying to report that the returns indicate that toll traffic is increasing at a greater rate than formerly, and that there is good reason to expect that the estimated loss will be substantially reduced. Full particulars regarding the new charges and services appear on pages 24-26 of this report. The question of improving and popularizing the toll service has continued to receive consideration during the current financial year. From the 12th August the time from which " quarter" rates apply was altered from 11 p.m. to 10 p.m. From the Ist October the charge for a three-minute call up to 1\ miles was altered to 2d., and that for a call exceeding 7J but not exceeding 15 miles was altered to 3d. Up to the 30th September the minimum charge had been. 4d. for any distance up to 20 miles. Also, on the Ist October a new system of computing toll distances was introduced. Previously the chargeable distance for toll calls had been based upon the shortest practicable circuit distance; but, in order to eliminate the many anomalies caused by this method, the chargeable distances are now computed in accordance with the nearest practicable route by road or pole - line. The effect has been to reduce —in some cases appreciably — the chargeable distances between a large number of telephone exchanges and toll stations,

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