VOL. XXIV.

No. 154.

Any system for handling tolls must take into consideration compensation of station originating business, the establishment of uniform rates, routings, division of mileage among different companies, method of settlement and a multitude of minor details. Such a system must possess three qualifications: It must be elastic, simple and equitable. Elasticity means the ability of the system to adapt itself to any territory, any combination of toll lines and exchanges, one which will not be interfered with by special routings or by other conditions. peculiar to some particular locality, in other words, the method must be sufficiently flexible to provide means to properly account for and handle a toll message from any point in New York State to any point in New York State, and by the same means, must take care of business between points in New York State and points in other States, and this must be accomplished without departing from the general policy adopted.

As to the second qualification, a system to be simple must be one which can be easily understood by the manager of any exchange or any toll line company whose business is settled in accordance with its provisions, and must be free from unnecessary detail. The charges and credits for each company must be easily understood and so made that each company receiving a statement may read ily check the statement, the mileage division must be so plain that any one with a standard map can be assured of the accuracy of the statement rendered, or can detect errors if such exist. A simple system is one which accomplished a max

imum of results with a minimum of labor.

Any successful system covering division of toll revenue must provide for a fair and equitable distribution of receipts, not only between connecting toll line companies, but between the toll line company and exchanges with which it connects. A system designed for the particular benefit of the toll line companies has a tendency to reduce interest in the development in this important branch of the business by the exchange, and leaves small inducement for the local companies to provide prompt and efficient tol! line service. A division of revenue which is unprofitable for the toll line company gives no incentive to the toll line company to extend and perfect its system. Local exchange companies and toll line. companies are mutually dependable, each upon the other. The exchange must

have the toll line business to meet the demands of its patrons. The toll line company must have the local exchange to produce the business which it handles, all of which demonstrates the necessity for an equitable plan of revenue division.

Following the general qualifications are a number of specific problems which must be considered and definitely decided, such as rates, mileage, time limit of messages, night rates, method of dividing revenue between exchanges and toll line companies, method of tariff division between groups of companies, method of reporting toll business, method of transmitting toll messages, franked business, accounting, forms to be used, etc.

To arrive at a uniform and equitable schedule of tariff rates, many toll line companies have found found the so-called

"block system" of great assistance. The application of the block system is as fol

lows:

A map of the territory to be covered is sub-divided into squares of five or ten miles and each square numbered. This gives every station and exchange in the entire territory a block number whether station is connected or not. As the mileage between any two given points must determine the toll rate between said points, an easy way of arriving at the mileage is to consider the air-line mileage between any two given stations as being the distance represented by the air-line mileage between any two given stations as being the distance represented by the air-line between the centers of the respective blocks in which said stations are located. In this way the airline mileage between the center of each block to the center of all other blocks is ascertained at the start, and, having determined upon the rate per air-line mile, which is to govern the tariff, the rate between any station and all other points covered by the block system is immediately ascertained by referring to the rate governing the block in which the station is located. As soon as a new station is connected, it is only necessary to notify all other stations of the connection, together with the number of the block, and all stations by this means are informed as to the rate to the new connection.

The advisability of determining rates by the old method formerly used by the Bell Company, based on pole line mileage, is so obsolete as to call for no discussion as to its applicability to a general system of handling toll business. Without competition, the plan of basing rates on pole line mileage is doubtless practicable, but with two competing interests in any field, an attempt to meet competition and base rates on pole line mileage would result in a schedule of rates which would be unsatisfactory to the public and which would not represent intelligent competition. Between two points, one company might have a pole line mileage of 200 miles, and a competing company a pole line of only 100 miles. The company basing its rates on the air-line distance would be more liable to be right from a competitive point of

view than would the company adopting pole line mileage. On extremely long hauls between large centers, for instance, between Buffalo and Philadelphia, it might be advisable to modify the airline mileage basis on account of extraordinary pole line mileage as compared with the air-line mileage, and in fact any rates based on the above mentioned plan can be easily regulated by issuing special rates to meet extraordinary conditions.

As to the amount of tariff to be charged per air-line mile, there is a wide difference of opinion. Some operating companies claim that a revenue of one-half cent per mile leaves a margin of profit. Others advocate a minimum charge of six-tenths cent per mile. A schedule of tariff rates, based on air-line mileage, should conform as far as possible to a charge of two-thirds cents per air-line mileage with a minimum of six-tenths of a cent per mile, and no rate should be made of less than 10 cents between any two toll points.

The question of time limit for toll messages is one which merits careful consideration. The Bell Companies long ago discarded the five minute rate, and many of them are to-day making a low rate. for a one minute service. The making of five minute rates by the model plants, from an engineering point of view, with the very start, the theory being that the Independent companies in offering a five minute rate at the price their competitors were charging for three minute service would be a great argument in favor of Independent toll line service as against other toll line service. This theory is wrong, for the following reasons:

The great majority of toll users are business men, who regard promptness as an essential feature of good toll service, and especially valuable. In the majority of cases the business man can complete his conversation in three minutes if he knows that three minutes is the limit, and he would rather reach his party quickly on a three minute basis than to have the privilege of talking five. minutes and experience long delays.

In meeting competition, toll line service is considered chiefly from two points of view, promptness, and clear transmission, and of the two, prompt service

In

counts for more, if anything, than the other, although both are essential. the keen competition now under way between the two opposing telephone interests, the toll line company which handles calls without delay will have all of the business that it can handle. In brief, the toll user prefers a three minute service which he gets to a five minute service for which he waits. It has been argued that "the five minute time limit is good advertising for the Independent company, and that the toll user does not consume any more time than if limited to three minutes." This is false reasoning. If the advertisement does not make a sufficient impression on the toll user to cause him to make use of his full time limit, it has no value from an advertising point of view, and on the other hand, toll users time their conversations and make use of the extra two minutes simply because it cost nothing, thereby unnecessarily blocking the service.

The toll situation of the Independent companies to-day is as follows:

The toll lines of every Independent company are crowded to their utmost capacity, and so rapid is the increase of business that although hundreds of workmen are employed in installing additional toll circuits in all parts of New York State, the increase in business is constantly ahead of the capacity, and it is not only by carefully watching operating conditions and keeping down the imit on messages that toll line companies can hope to take care of the voluine of business which is being given to them. Under present operating conditions, a line between two stations working on a three minute schedule should be able to handle not less than sixty messages daily. In localities where the five minute rate is in force then the number of messages handled daily when the lines are worked to their utmost capacity is scarcely more than half of this number. In many exchanges in western New York the original limit on toll messages was five minutes, and although the change was made to three minutes with considerable doubt as to the result, the complaints against this change have been so few as to scarcely warrant attention, and no company which has adopted the

three minute schedule will advocate a return to the five minute schedule.

Experience his demonstrated that less than 25 per cent. of the calls made under the three minute limit plan use overtime. For instance, during the month of April one exchange originated 3,663 messages and received 4,488, a total of 8,151 messages, and out of these calls only 306 messages were over-time messages. The Union Telephone & Telegraph Company, of Western Pennsylvania and the United States Telephone Company of Ohio, have successfully used the three minute schedule for some years, and express themselves as satisfied with the results.

A uniform scale of reduced night rates is desirable to apply between the hours of 6 p. m. and 6 a. m., when toll lines are comparatively idle unless an inducement is made for this period. A reduction in rates exceeding 25 cents can be made to profitable advantage, the minimum reduction being 50 per cent. No night rate on messages exceeding 25 cents to be less than 25 cents.

A simple and easily understood method of dividing revenue between connect

ing toll line companies is as follows:

Deduct from the total revenue represented by interchanged business the originating commissions due each company, the remainder of the toll tariff to be divided between the connecting companies in proportion to the ratio existing between the air-line distance from the point of origin to point of transfer and the air-line distance from point of transfer to the point of destination. For example, let "A" represent a toll station on one company's lines, "C" a toll station on another company's lines, and "B" the meeting point of the lines of the two companies. companies. Suppose that the air-line. distance from "A" to "B" is 20 miles and the air-line distance from "B" to "C" is 10 miles, and the number of messages during one month between "B" and "C" one hundred. The total mileage represented by the line from "A" to "B" will then be one hundred times 20 miles or 2,000 miles. The total mileage represented between "B" and "C" will be one hundred times 10 miles or 1.000 miles. The total mileage of the two companies for business between "A" and "C" will