OKLAHOMA. Corporation Commission. BOARD OF EDUCATION OF THE CITY OF ARDMORE V. SOUTHWESTERN BELL TELEPHONE COMPANY. Cause No. 5555 Order No. 2407. Decided April 19, 1924. Telephones Located in Public Schools Classified as Business Service and Business Rates Applied Thereto. ORDER. On December 10, 1923, the board of education of Ardmore, Oklahoma, filed its petition seeking to restrain the Southwestern Bell Telephone Company from enforcing a business rate for the use of the telephones in the public schools of Ardmore, which has heretofore been supplied at the rate charged for residence service. This matter came on for hearing on January 4, 1924, after due notice to all interested parties. The complainant was represented by C. W. Richards, superintendent of schools, of Ardmore, and the defendant by S. H. Harris, general attorney for the Southwestern Bell Telephone Company. The case was heard and closed on the above date and on petition of the defendant was reopened and continued to March 14, 1924, to consider pertinent information developed since the date of the first hearing. Peg count tallies were introduced by both the complainant and the defendant. These tallies differed in comparison, and the peg count of the complainant and the defendant differed greatly on different days and on different weeks when arrived at by the same method of computation. To base a rate on traffic as would be justified by the daily call tallies as considered in this case, would be out of the question, for there were insufficient data introduced to enable the Commission to arrive at an equitable figure. L. 149] The main question before the Commission is one of classification of the Ardmore schools as to whether they should be assessed the business or the residence rate. In a case somewhat similar known as the Guthrie School Rate Case, in the Commission's Order No. 2224,* the Commission said: "It might be reasoned that a school is not a place of business in a strict sense of the word, but it certainly cannot be said that a telephone in a school house belongs to the residence classification, but that by reason of the greater use made of the service the business rate for such service would be more nearly applicable. "The Commission finds that generally the calls sent from and received at school telephones are more numerous than the calls incident to the average residence telephones and greater than the average number of calls per station for all telephones, and that the character of this service is more valuable than ordinary social or domestic conversations carried on over residence telephones. "The operation and upkeep of public schools is the business of the cities, towns and school districts of the State. The money for defraying the expense of conducting the schools is derived from taxes, from the people, including many who are not telephone subscribers. Only about 22 people out of every 100 of the population of the State of Oklahoma have telephones. Nevertheless, telephone service in schools is an advantage, and it is of value to those who have no telephones as well as those who are telephone subscribers. "The Commission finds that any deficiencies in revenues as a result of a privileged rate for school telephones are bound to be reflected in increased rates for telephone subscribers of other classes of service; that this is not a fair and just method of distributing the cost, considering that the service under consideration is for the good of all of the people of the entire community, and that many benefit thereby who are not contributing anything to the telephone system, and, therefore, bear no part of the cost of the service, and that the business rate rather than the residence, or any other special rate, more equitably distributes the cost of telephone service in schools to all of the people who make use of it." One phase of the school telephone question that has come to the attention of the Commission is that the schools do not wish to pay for telephone service through the summer vacation period, and it has been found that where the telephones were discontinued by the school board that the See Commission Leaflet No. 140, p. 265. telephone company has removed same, assigned the numbers to other concerns and that when the new term opened, it would sometimes be difficult to obtain service at the time wanted. To overcome this, the Southwestern Bell Telephone Company has agreed to discontinue service when ordered but to reserve the number and to reinstate service on the day asked for, provided a reasonable notice was given beforehand, each school to be assigned the number it carried at the close of the last school period. Wherefore, the Commission being advised and having given due consideration to representations made, It is ordered, That telephones located and used in school buildings in Ardmore, Oklahoma, shall be classified as business telephones and the regular authorized rates for this service shall be enforced, provided the school shall have the right to have service discontinued at end of school period and service and number restored upon five days' notice at next school period, and that the finding in this cause shall operate without prejudice, should the Commission be asked to conduct a general hearing and investigation of school rates to apply throughout the State. Done at Oklahoma City, Oklahoma, this nineteenth day of April, 1924. [OHA OREGON. Public Service Commission. In re RATES, RULES, CHARGES AND PRACTICES OF THE PACIFIC U-F-388-Order No. 1067. Decided March 21, 1924. Procedure in Determining Value Discussed (INVESTIGATION License Contract Referred to Exchanges Re-grouped for the Purpose of Establishing Rates Rate of Return Discussed. OPINION. This proceeding is before the Commission on its own. motion, having been instituted by order of the Commission under date of September 9, 1922, for the purpose of investigating and determining the reasonableness of the rates, rules, charges and practices of The Pacific Telephone and Telegraph Company in Oregon. After due notice to the company, the various cities and towns in the State and other interests, hearings were had before Commissioners Newton McCoy, H. H. Corey and T. M. Kerrigan, on October 2, 26 and 30, and December 4, 15, 1922. On October 30, 1922, this Commission issued its order herein No. 894,* signed by Commissioners McCoy and Kerrigan, Commissioner Corey dissenting, which order was taken before the District Court of the United States for the District of Oregon on a bill of complaint alleging confiscation and seeking a restraining order. A restraining order was issued in said proceeding and said order has been ineffective because of that proceeding. * See Commission Leaflet No. 137, p. 1036. In January, 1923, Commissioner T. M. Kerrigan was succeeded by Commissioner Thos. K. Campbell and further hearings were had on June 4, 5, 6, 7 and July 27, 1923. VALUATION. Owing to the numerous decisions recently rendered by the courts bearing upon this subject, and the marked fluctuation in material and labor prices during the past few years, the question of value has formed an important part of this proceeding. In entering upon a consideration of this question it will be well to review the past orders and determination of this Commission relative to the value of the properties of the Pacific company. Section 6038, Oregon Laws, provides that: "The Commission shall value all the property of every public utility actually used and useful for the convenience of the public. In making such valuation the Commission may avail itself of any information in possession of the board of state tax commissioners, or any other state officer or board." In accordance with the foregoing requirement of law and in connection with a general investigation of the rates, rules, regulations and practices of the Pacific company, the Commission, during the year 1914, proceeded to value the properties of that company in Oregon. An actual inventory of the property as of June 30, 1914, was made. Original cost figures were not available. Three appraisals were submitted two by the company and one by the Commission's engineers. The appraisal submitted by the Commission's engineers and one of those submitted by the company followed the reproduction cost method. The second appraisal of the company was on the actual performance basis, being an application of unit prices taken from the records of the company to the various items of property as shown by the inventory. In the case of land. studies were made to determine the cost of acquisition over and above the price paid to the seller, and this cost was added to the value of each parcel as determined by [Ore |