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In the year 1909, the Tri-State Telephone and Telegraph Company was formed to extend the telephone service in southern New Mexico, eastern Arizona and western Texas. On July 17, 1911, this company and the old Colorado Telephone Company were consolidated and a new company incorporated under the name of The Mountain States Telephone and Telegraph Company. At the same time the properties and franchises of the Rocky Mountain Bell Telephone Company operating in Utah, Montana, Idaho and Wyoming, were purchased. In this merger there was an exchange of stock to the stockholders of the Colorado Telephone Company and the Tri-State Telephone and Telegraph Company, and a payment to the Rocky Mountain Bell Telephone Company for its properties and stock, of 14,217 shares at the ratio of $60.00 to $100 of holdings in the Rocky Mountain company. The Mountain States company assumed the debt of the Rocky Mountain company represented by demand notes in the sum of $8,302,500.87 held by the American Telephone and Telegraph Company. The latter company scaled this debt so that it received stock at the rate of $79.75 for each $100 of debt owed to it by the Rocky Mountain Bell Telephone Company.

The authorized capital stock of The Mountain States Telephone and Telegraph Company is $50,000,000, divided into 500,000 shares of the par value of $100 each. Of this amount, we find that by June 30, 1923, the capital stock issued and outstanding amounted to $38,439,700, and all of this stock has been issued for the purpose of effecting the consolidation of July 17, 1911, and for cash and for the purchase of telephone properties. The capital stock of defendant company was distributed, on June 30, 1923, to 3,773 stockholders, while the American Telephone and Telegraph Company had a total of 248,925 stockholders, as of December 31, 1922. The defendant company has invariably paid a dividend from 1911 to date at the rate of 1.75 per cent. per quarter.

Montana was developed by the old Rocky Mountain Bell Telephone Company which operated a considerable number

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of exchanges and a fair development of toll lines after taking over the small beginning which had been made in this State before 1883. Its principal exchanges were in Helena, Butte, Missoula, Great Falls, Livingston, Bozeman and Billings. Scattered around the State, however, were many independent and opposition companies, some of which operated toll lines parallel to and in direct competition with the lines of the Rocky Mountain Bell Telephone Company. At exchanges thousands of duplicate instruments were in service, and in spite of "fighting rates" in effect the public was bearing a heavy burden of excess cost, miserable service and enduring the trouble and annoyance of two systems in one town.

The defendant company early addressed itself to this situation and commenced to buy in and unify with the properties of the old Rocky Mountain company these independent plants. In the year 1914, the most notable additions were accomplished when what was known as the "Lane properties" composed of the Billings Automatic Telephone Company, Great Falls Automatic Telephone Company, Helena Automatic Telephone Company, Montana Independent Telephone Company and State Telephone and Telegraph Company were purchased. The process of unification is best evidenced by the following summary:

Western Montana Telephone Company, December, 1911 — exchange at Thompson Falls, Montana, and toll lines; Shields River Telephone Company, June, 1912-exchange at Clyde Park, Montana, and toll lines; Lewistown Telephone Company, September, 1912-exchanges near Lewistown, Montana, and toll lines; Lewistown-Billings Mutual Telephone Company, October, 1912-exchange at Lewistown, Montana, and toll lines; Montana Eastern Telephone Company, November, 1912- toll lines from Billings east to Miles City, Glendive and other points; North Montana Telephone Company, November, 1912-exchange at Choteau, Montana, exchange and toll lines in Teton and Cascade Counties, Montana; Forsyth Telephone Company, December, 1912-exchange at Forsyth, Montana; Stanford-Empire Telephone Company, February, 1913exchange at Stanford, Montana; Billings-Musselshell Telephone Company, July, 1914-exchanges at Roundup and Musselshell, Montana, and some toll lines; Great Falls Automatic Telephone Company, September, 1914

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exchange at Great Falls, Montana, also Cascade, Conrad, Choteau, and Valier, Montana, and toll lines; Helena Automatic Telephone Company, September, 1914-exchange at Helena, Montana; State Telephone and Telegraph Company, September, 1914-exchanges at Bozeman, Belgrade, Livingston, Manhattan, and Salesville, Montana, also toll lines; Billings Automatic Telephone Company, October, 1914-exchanges at Billings, Bear Creek, Columbus, Fromberg, Joliet, Laurel, and Red Lodge, also toll lines; Montana Independent Telephone Company, December, 1914exchanges at Butte, Anaconda, Missoula, Three Forks, Deer Lodge, Logan, Drummond, Boulder, Hamilton, Whitehall, Victor, Dixon, Ronan, and several sub-exchanges, also toll lines; Wright Telephone System, October, 1915-exchange at Terry, Montana; Montana Power Company, November, 1915 toll lines, Helena to Wolf Creek, Montana; Big Horn Telephone Company, January, 1916-exchange at Hardin, Montana; Glendive Heat, Light and Power Company, January, 1916-exchange at Glendive, Montana; Northern Montana Telephone Company, September, 1916-toll line Havre to Shelby, and telephone exchanges at Shelby and Joplin, Montana; The Four Valleys Telephone Company, March, 1917 exchanges at Glasgow, Sidney, Wolf Point, and sub-exchanges, also toll lines; Central Montana Telephone Company, April, 1917exchange at Ryegate, Montana; Dakota-Western Telephone Company, March, 1918-exchanges at Culbertson and Plentywood and subexchanges, also toll lines in eastern Montana; Meagher County Telephone Company, March, 1918-exchange at Harlowton, Montana; Montana Power Company, November, 1919-exchange at Havre, Montana; Richard Scott, April, 1920-exchange at Cut Bank, Montana, and toll line from Cut Bank to Sweetgrass, Montana; Anaconda Copper Mining Company, August, 1921-private branch exchange at Butte, Montana; Havre Commercial Company, September, 1921 - additional exchange plant at Havre, Montana.

At the present time the defendant company operates 77 exchanges in the following Montana communities:

Nineteen of these exchanges have common battery equipment and two have automatic, these including all exchanges

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having more than 350 subscribers. The number of subscribers in the State on April 30, 1923, was 44,395. There are 1,649 miles of exchange pole line and 3,912 miles of toll pole line in place. The total length of wire used for exchange service in the outside plant, including that in cables, is 78,141 miles, while there are 22,059 miles of toll wire.

The work done in the State during the past few years has resulted in plants being largely rebuilt and extended along the most modern lines. Cable is in general use wherever the size of the leads will justify. The main long distance lines are of copper. The system is connected with all of the adjoining states and Canada. Telephone repeaters are installed at certain exchanges in order to build up transmission, so that service may be given from any of the company's telephones in the State to any telephones in the Bell System in any other state in the country.

SCOPE OF THE INQUIRY.

The physical unity of defendant's properties in Montana compels State-wide survey and consideration. Indeed, our constitutional and statutory law treat the telephone industry as a matter of sovereign importance instead of local concern, and all the reservations of power to the State simply recognize that the telephone is an instrument, the principal value of which rests in its connection with a multitude of other instruments and the system of communication that diminishes the force of space and of time. Indeed, the State-wide method of treatment is now so universally adopted by courts and commissions that argument for it, as an original proposition, is unnecessary. We have heretofore accepted the principle. In a review of the industry's condition in 14 Montana U. R. at page 540, we said:

"Public telephone service, particularly toll service, in this State is rendered by one priminal utility. The Commission believes that the value of this utility's property used in the public service, its rates charged and its regulation should be considered on a State-wide basis. The distribution of the burden of payment of the necessary revenue should then be made on the basis of the class of service furnished, number of