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C. L. 146]

In re PETITION OF INDIANA BELL TELEPHONE COMPANY AND SOUTHERN INDIANA TELEPHONE AND TELEGRAPH COмPANY FOR APPROVAL OF PURCHASE AND SALE OF PROPERTY. No. 7403.

Decided December 7, 1923.

Sale and Purchase of Property Approved.

ORDER.

On November 19, 1923, the Indiana Bell Telephone Company and the Southern Indiana Telephone and Telegraph Company filed with the Commission the following joint petition :

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Come now Indiana Bell Telephone Company and Southern Indiana Telephone and Telegraph Company and respectfully represent and show: (1) That each of the petitioners is a corporation organized and doing business under the laws of the State of Indiana.

(2) That petitioners operate competing telephone plants in and about the city of Salem, Indiana.

(3) That petitioners have entered into an agreement whereby, subject to the approval of this Commission, the Indiana Bell Telephone Company has agreed to sell and the Southern Indiana Telephone and Telegraph Company has agreed to purchase for the sum of $7,500 the following described property, to wit:

(a) All of the outside exchange telephone property of the Indiana Bell Telephone Company located in and about the city of Salem, Indiana, including exchange poles, wires, cables and fixtures within the corporation limits of Salem, Indiana, and the rural poles, wires and fixtures outside said city, including all cross-arms and wires used for exchange purposes, but located on toll poles.

(b) The poles, cross-arms and wire of a certain line extending from Salem, Indiana, to Canton, Indiana.

(c) The poles, cross-arms, fixtures and wires of a certain line extending from Salem, Indiana, to Campbellsburg, Indiana.

(4) That a copy of the agreement entered into between the parties is attached hereto, made a part hereof, and marked Exhibit A.

(5) That the purchase and sale of the property at Salem, Indiana, in accordance with the agreement entered by the parties, will result in the elimination of wasteful duplication and competition in the telephone

business at Salem, Indiana; will provide a complete and unified service to all telephone subscribers in and about the city of Salem, Indiana, and that such purchase, sale and unification will be advantageous to the public and the petitioners.

Wherefore, your petitioners pray that after investigation, the Public Service Commission make an order approving said purchase and sale. Respectfully submitted,

Indiana Bell Telephone Company

By (signed) C. H. Rottger, president.

Southern Indiana Telephone and Telegraph Company
By (signed) L. C. Griffitts, president.

(Signed) B. G. Halstead,

Attorney for petitioners."

After due notice, a hearing was held at the offices of the Commission on December 5, 1923.

The evidence shows that each petitioner operates a telephone exchange in the town of Salem with wires radiating into the adjoining country, and that only 17 telephones in the town of Salem are not duplicated.

The evidence further shows that the Indiana Bell Telephone Company has 80 subscribers and 265 switching stations in the town of Salem; and that the Southern Indiana Telephone and Telegraph Company has approximately 1,000 subscribers in and adjoining the town of Salem.

The evidence further shows that the Indiana Bell Telephone Company has approximately 300 subscribers in the northern part of Washington County and the Southern Indiana Telephone and Telegraph Company has approximately 300 subscribers in the southern part of Washington County, making a total of 600 subscribers who do not enjoy free telephone service with each other.

The evidence further shows that the consolidation of the two exchanges in Salem, Indiana, will provide free telephone service between the 600 subscribers above-mentioned.

The evidence further shows that the rates now charged by the Southern Indiana Telephone and Telegraph Company are slightly less than those charged by the Indiana

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Bell Telephone Company, and that in the purchase of the
Salem exchange, the Southern Indiana Telephone and
Telegraph Company desires to apply its present rates.

After due consideration, the Commission believes that the consolidation of the two exchanges will result in the elimination of wasteful duplication and provide unified service to all telephone subscribers in and about the town of Salem, Indiana.

It is the opinion of the Commission that the prayer of petitioners should be granted, and it will be so ordered.

It is, therefore, ordered by the Public Service Commission of Indiana, That the Indiana Bell Telephone Company be, and it is, authorized to sell, and the Southern Indiana Telephone and Telegraph Company be, and it is, authorized to purchase, the following telephone property in and about the town of Salem, Indiana, for the sum of $7,500:

All of the exchange telephone property of the Indiana Bell Telephone Company located in and about the town of Salem, Indiana, including exchange poles, wires, cables and fixtures within the corporate limits of Salem, and the rural poles, wires and fixtures outside said town, including all cross-arms and wires used for exchange purposes, but located on toll poles; also the poles, cross-arms and wire of a certain line extending from Salem, Indiana, to Canton, Indiana; also the poles, cross-arms, fixtures and wires of a certain line extending from Salem, Indiana, to Campbellsburg, Indiana.

It is further ordered, That the present rates, tolls and charges of the Southern Indiana Telephone and Telegraph Company, a schedule of which is on file with the Commission, shall be applied to all subscribers affected by this purchase and sale.

It is further ordered, That the Southern Indiana Telephone and Telegraph Company shall file with the Commission a new schedule of its rates, tolls and charges now in force in the town of Salem, making the same applicable to those subscribers affected by this purchase and sale.

It is further ordered, That this purchase price of $7,500 shall in no wise be considered as a finding or indication by

the Commission of the value of the property for ratemaking purposes. The purchase price is separate and a part from and entirely independent of rate-making values, and the Commission stipulates that any finding of a fair value of the property of the Southern Indiana Telephone and Telegraph Company for the purpose of rates which it may make in the future, will be made and determined entirely independent of and unaffected by its finding herein.

December 7, 1923.

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In re PETITION OF THE PORTAGE HOME TELEPHONE COMPANY FOR AUTHORITY TO INCREASE RATES.

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Charges

No. 7378.

Decided December 15, 1923.

Amount Ordered Set Aside for Depreciation
-Increase in Rates Authorized.

OPINION AND ORDER.

On October 15, 1923, the Portage Home Telephone Company filed with the Commission a petition alleging in substance:

That petitioner is a utility engaged in the management and operation of a telephone system in Porter County, Indiana, with its principal place of business in the town of Crisman, Indiana;

That said company is now operating at a loss and is unable to pay a return upon its investment, to provide for depreciation and to provide adequately for necessary operating expenses;

Petitioner asks that after due hearing and investigation the Commission make an order granting and establishing such rates of charge as it may find to be equitable in the premises.

After due notice to interested parties, a hearing was held at Chesterton, Indiana, on December 5, 1923.

The evidence shows that the petitioner, the Portage Home Telephone Company, was organized in 1902, and that its organization was effected in response to a demand of

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the residents of a large rural territory who required telephone service and who could not in any other way procure such service. The company has an authorized capital stock of $50,000, of which $28,800 has actually been issued. For a number of years subsequent to its organization, the company paid dividends to its stockholders but for the last ten years no dividends have been paid. For the last five or six years no officer of the company has received a salary.

The present rates of the petitioner are $1.35 gross, or $1.25 net for residence party line service, and $1.60 gross or $1.50 net for business service. The company has no monopoly in the towns of Chesterton and Porter, these towns also being served by the Northwestern Indiana Telephone Company. The number of the petitioner's subscribers has not shown an increase, but on the contrary it appears that petitioner on October 1, 1923, had only 347 subscribers' stations as compared with 437 in December, 1921.

An audit of the records of the petitioner for the period ending December 31, 1922, prepared by the accounting department of the Commission was placed in evidence. From this audit it appears that petitioner for the year 1921 had a gross income of $301, and for 1922, a gross income of $210. It also appears from the audit that in 1921 petitioner paid $301 interest on notes and in 1922, $210 for the same purpose. The explanation for this coincidence lies in the fact that the depreciation set aside during the years in question has been the amount of the net income remaining at the close of the year. In 1921, $66.47 was charged to operating expenses on this account, and in 1922, $54.86.

According to the audit, the book value of petitioner's property was $29,133.11 on December 31, 1922. Petitioner, however, asserts that the property has a value of only $26,000, or $27,000.

It is apparent that petitioner is operating its telephone exchanges with the most rigid economy and that its income is totally inadequate to permit it to pay operating expenses and to set aside a fair amount for depreciation, to say

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