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Company the "sum of $2 per telephone per annum . . for two years, after which time the rate will be subject to revision, and grant the equal use to the party of the second part (Mt. Carmel Telephone Company) of all its (Wabash County Mutual Telephone Association) trunk lines."

It further appeared from the testimony presented at the hearings, that the petitioner had from time to time notified the objectors, Wabash County Mutual Telephone Association, that a readjustment of the rate should be made as provided in the contract, but nothing was done toward making such readjustment, and, accordingly, application was filed with the Commission for authority to establish the rates as set forth in the proposed schedule, or such rates as the Commission may find to be equitable in the premises.

In determining the reasonableness of a rate for switching ruralservice subscribers, a number of important elements must be taken into consideration. The value to rural subscribers of a connection affording communication with the subscribers of an exchange in a town or city in which the rural subscribers have a considerable community interest is related directly to the value of the town to the rural population, which value, obviously, cannot be expressed in terms comparable to telephone investments and revenues. However, the degree of reciprocal relation between rural subscribers and town subscribers is governed, primarily, in the amount and character of the intercommunication.

The rural-service subscribers switched by the petitioner being regarded as an integral part of its system, it would be difficult and impracticable to apportion that part of the total plant used solely in connection with the rural traffic. The rural-service subscribers, together with the local-exchange subscribers, constitute the exchange system, and all of the physical plant owned by or connected with the utility is at the service of any one of its subscribers, regardless of whether the subscriber's telephone and the line connecting the subscriber to the switch board is or is not owned by the utility. It appeared, therefore, that a study of the traffic and the expense of operation is, in this case, the only practicable manner in which an equitable rate for switching rural-service subscribers can be determined.

On January 29th and 30th a traffic record or "peg-count" was

made of all originating calls handled by the petitioner at the Mt. Carmel switch board. An hourly record was kept continuGusly from midnight of January 28th to midnight of January 30th. The results of this study are shown in the following tables:

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Total number of subscribers

Average number calls handled per day

Average number daily calls farmer to farmer on same line*

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725

2,427

369

2,796

3.86

525

2,106

4.02

200

690

*This number was indicated by the number of times the farmer drops had to be restored.

Average number of daily calls per rural subscriber

Ratio of city subscribers to total subscribers
Ratio of rural subscribers to total subscribers

Ratio of average city calls to average total calls per day
Ratio of average rural calls to average total calls per day

3.45

.724

.276

.754

.246

Ratio of average daily number of rural drops restored to the average daily number of rural calls

.535

Table "A" shows the average number of hourly calls completed during twenty-four hours, and is the average of the two days' study. The completed calls are classed as "rural to rural" (connection required through switch board), "rural to city," "city to rural," and "city to city." No record was kept of "busy" calls, inquiries for the time of day, and miscellaneous questions from subscribers. Such calls were found to be only a very small percentage of the total calls handled, and as the purpose of the study was to determine the relation between city and rural traffic, the record was limited to completed calls and the restoring of drops on rural lines.

Table "B" is an analysis of table "A," and outlines the relation between city and rural subscribers and city and rural traffic, and the proportion of city and rural traffic to total traffic.

The average daily traffic load handled through the Mt. Carmel switch board is distributed in about the same manner as the traffic in other similar exchanges, rising from approximately zero at 5 A. M. to a maximum of 261 calls per hour between 8 and 9 A. M., then falling during the noon hour and the early afternoon, but rising again at about 4 P. M. to 213 calls per hour.

9 A. M.

The number of rural calls handled every hour is distributed in about the same general manner as are the city calls, the maximum busy hour of both rural and city traffic occurring between 8 and This feature has an important bearing upon the rapidity and accuracy of the operators in handling city traffic, as all rural subscribers must be rung by code, and consequently rural calls require nearly twice as long to complete as do city calls.

The switch board of the petitioner is equipped with three operators' positions, with the rural lines terminating on the middle position. An operator is accustomed to handling not only the calls at her own position, but, when necessary, handles calls on either of the other two positions. This team work, which is essential to prompt service, is necessarily restricted on account of

the relatively longer period that the rural connections must remain up, as compared to city connections.

The average daily calling rate per rural subscriber of 3.45 is less than the average for all subscribers and considerably less than the average calling rate per city subscriber. Calling on rural lines at this time of the year, however, is limited almost solely to social calls and a few necessary calls to town. Obviously the rural calling rate will rise to a maximum during the spring and summer, when the real work of the farmer is carried on.

According to the statement of the petitioner filed as evidence at the hearing on January 20, 1915, central office expenses during the year 1914 amounted to $2,651.00 or $3.65 per subscriber. In addition to the central office equipment the petitioner claims to have invested in wire plant used exclusively for rural traffic $350, and that the interest and depreciation on this portion of the total plant, amounting to $59.50, would increase the total expense per rural subscriber to $3.94. However, in attempting to apportion central office expenses on the basis of the number of subscribers connected with the exchange, the petitioner has not taken into consideration the fact that operating expenses are largely governed by the amount of traffic, and not altogether by the number of subscribers served.

Out of a daily average of 2,427 total calls handled by the utility, only 321, or 13.2 per cent, were actually switched for the rural subscribers, but this percentage is not a true indication of the total operations chargeable to rural traffic. The study showed that an average of 369 calls was made daily by the rural subscribers to subscribers on the same line, and while such calls do not require the operator to connect the parties desiring to talk, it was found that as much time was required by the operator in supervising these calls as was usually required in making connections.

Nearly all of the rural lines switched by the utility are grounded, and, on account of the type of central office equipment required to handle grounded lines, the operator is signaled each time a rural subscriber rings on the line. Unless the operator is observing the line drop at the time the subscriber rings, she must "plug in" on the line and ask the subscriber whether or not he is calling "central."

As each of the operators at the Mt. Carmel switch board handle local as well as rural traffic, it was found that practically the same amount of work was performed for rural calls between subscribers on the same line as for rural calls requiring central office connections.

Considering the fact that all rural calls require about the same average amount of work on the part of the operator, about 25 per cent of the total traffic handled by the petitioner originated on the rural lines. It is not unreasonable to expect, however, that the ratio of rural to total traffic will increase materially during the spring and summer.

On the basis of 25 per cent rural traffic, and assuming that the total operating expenses of $2,710.50 reported by the petitioner are approximately correct, the operating expenses chargeable to rural traffic would amount to $678, or $3.40 per rural subscriber. At $2 per telephone, the annual revenue derived from 200 rural-service subscribers is $400, which is $278 less than the operating expenses properly chargeable to handling the rural traffic. It appears, therefore, that the present rate of $2 per year is inadequate. As indicated by the schedule filed with the Commission, such rate is considerably less than the average switching rate now in effect at exchanges of similar class, and considering the amount of work performed by the petitioner in handling and supervising the rural traffic, it is apparent that a considerable increase in the rate for switching rural-service subscribers is justified.

According to the agreement between the petitioner and the Wabash County Mutual Telephone Association, the latter owns and maintains certain trunk lines connected with the exchange of the petitioner. From the traffic study it appears that the pe titioner has the free use of these trunk lines for the handling of business between Mt. Carmel and Allendale, Orio, Lancaster, Gards Point, and Belmont. All business between the subscribers at Allendale, Orio, Lancaster, Gards Point, and Belmont, and the subscribers of the Wabash County Mutual Telephone Association, is handled over the trunk lines by the petitioner without charge. The city subscribers of the petitioner have "free service" over the trunk lines to points within Wabash county, but pay a toll charge on all messages to points outside the county that

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