Broadcasting Telecasting (Oct-Dec 1963)

Independent Telephone Facts at a Glance Total Telephones . . . 13,315,000 Operating Companies . . . . . 2,645 Number of Exchanges . . . . . 10.660 Investment in Plant . . t£ Rnn nnn nnn Gross Revenues . . . $1,400,000,000 Number of Employees . . . . 100,000 Number of Stockholders . . . 600,000 serve any one given area, competition has resulted not only in much higher consumer costs but poorer service. Second, communications are so essential to public health, national welfare and the conduct of almost every business that any interruption of that service through failure of a telephone company cannot be permitted. Down through the years, regulatory commissions have come to recognize that no community can be stronger, economically or socially, than the utilities that serve it. They have adopted the concept of the "three-legged stool:" that there is a genuine community of interest among a utility's customers, employees and owners. Along with this has come an understanding that regulation should maintain the financial health of telephone companies in order that they may continue to provide good service at fair rates. To provide high standards for essential service, dedicated commissioners and their professional staffs study constantly, keeping abreast of new scientific developments in the fast-moving field of modern communications. Exciting new services such as communication by satellite, electronic exchanges, push-button phones, business data transmission, and closed-circuit television for schools and industry bring the telephone industry to the threshold of its greatest era of expansion. 'fc George R. Perrine was born in Hinckley. III., in 1907. After graduating from the University of Southern California and the University of Wisconsin Law School, he practiced law in Aurora and Chicago. Mr. Perrine was president of the Hinckley State Bank (1936-53) and has been a director of the Aurora National Bank since 1938. He joined the Illinois Commerce Commission in 1942, and was chairman from 1953 until his resignation in 1961. Mr. Perrine founded and was the first president (1954-55) of the Great Lakes Conference. National Association of Railroad and Utilities Commissioners. He is chairman of the Public Utility Section, American Bar Association, and a member of the Iowa State University Conference Advisory Committee. Public Utility Valuation and the Rate Making Process. He is currently president of the Midwestern Division of the Tennessee Gas Transmission Company. Mr. Perrine is a member of the American Bar Association, Illinois Bar Association. Chicago Bar Association, and the American Judicature Society. The Independent telephone companies are one of the nation's fastest growing industries because they serve the suburban areas where the greatest population and industrial expansion is taking place. Since 1950, Independent telephones have more than doubled (6,374,000 to 13,315,000), gross revenues have increased more than four times ($316,820,000 to $1,400,000,000), and plant investment has gone up more than five times ($1,096,000,000 to $5,500,000,000). Adequate Profits Are Vital American private enterprise with its builtin regulators of competition and the hope of profit has transformed a thin fringe of colonial settlements along the Atlantic seaboard into a mighty nation with the highest standard of living in the world. In the very beginning, our country characteristically chose to permit private, regulated ownership of the telephone industry. Most of the rest of the world, then or later, chose government ownership. Today the results of that choice are everywhere around us. Nowhere else is there a country with a communications system the equal of ours. With only six per cent of the world's population, the U. S. has 52 per cent of all the world's telephones. Independents Serve Over Half of U.S. The nation's network of some 82 million telephones is operated by the Bell System and 2,800 Independent (non-Bell) telephone operating companies. The Independents, ranging in size from a very large corporation with 4.7 million telephones in the U. S. to modest companies with a few phones, cover more than half the nation's geographic service area. Altogether they serve more than 13 million telephones— exceeding the total in Britain and France combined. In 1962, Independents had more than $5 billion in assets, an annual gross of $1.2 billion, 100,000 employees, and 600,000 stockholders. Until recently, the public generally did not know of the varied, complex structure of the telephone industry. There was no need to know, for wherever you place a call — in Independent or Bell territory— it goes through speedily to any place in the world. All telephone equipment is compatible, with instant interconnection of Independent and Bell lines on all long distance calls. More than one billion long distance calls are handled jointly each year by the two systems. Now, however, there is a need for the public to know more about Independents. Investment requirements of telephone operating companies are increasing each year because of growing demand for modern telephone equipment. This year, for example, Independents are investing $635 million in expansion of their network of wires, cables, microwave circuits and central office equipment. Competition For Investment Capital The competition for money— investment money— is the toughest kind of competition. Independent telephone companies must have more than local reputations if they are to compete effectively for increasingly larger funds in the nation's private capital markets. Investment dollars in the competitive capital markets always flow to companies known for stability, growth and the potential for profit. Thus the role of an adequate profit is especially important because expansion to meet the communications needs of our burgeoning economy depends almost entirely on the willingness of private investors to supply funds for the regulated companies to grow on. REGULATION Forty-nine states, the District of Columbia, and Puerto Rico have public service commissions with jurisdiction over telephone companies. Each board is composed of commissioners serving three to ten year terms. Of the 174 commissioners, most are appointed by their governor with legislative approval. Most commissions have three to five members, but size varies from one to seven. Each commission usually has an executive secretary and a general counsel. In addition, 272 engineers and accountants are employed by commissions across the nation. In Texas regulation is at the local level. It is my personal conviction after 18 years in the regulatory field, that our current system of regulation of the telephone industry yields the most benefits to the greatest number of people. To be effective, regulation must remain fair, flexible and, above all, it should be accorded the recognition and confidence of the public it protects. At stake is our national welfare and security and the future of the private enterprise system itself. This message was prepared for the United States Independent Telephone Association by Mr. Perrine. It is part of a four-point USITA program to focus the attention of the business and financial community, and the general public on: 1) the dynamic growth and stability of the Independent telephone industry 2) the importance of maintaining adequate earnings in order to attract new investment capital 3) career opportunities in the telephone industry 4) the contributions of the Independent telephone industry to the philosophy of private enterprise in a free economy. For further information, please communicate with USITA, 438 Pennsylvania Bldg., Washington 4, D.C. Telephone: Area code 202 628 6512. BROADCASTING, November 4, 1963 75