subscribers and population of each community affected. In rate adjustments, therefore, we are working toward that end; we have attempted no artificial segregation based on municipal boundaries, but as revisions become necessary, the adjustments are made with reference to the community's relation to the system as a whole. This policy is essential to the character of telephone service which the public now demands, and, to our minds, represents the only course that will permit its development to the highest possible degree." [Mont And In re Rates for Telephone Service in the City of Havre, Informal Docket No. 1548, 15 Montana U. R. 503, at page 504, we said: "It is impossible to isolate any particular telephone exchange, and on the basis of such local segregation, prescribe reasonable rates for the service rendered. In order to avoid discrimination in the prescription of reasonable telephone rates, some standard theory must be adopted in the treatment of the problem, and to date this Commission, in conformity with the decision of the Interstate Commerce Commission and of the leading public service commissions of the country who have had occasion to make a diligent study of the problem, has determined that the Statewide basis of making telephone rates is the only feasible and sensible basis to proceed upon." In re The Mountain States Telephone and Telegraph Company,* Colorado P. U. C., the Colorado Commission said, at page 322: "Telephone service to Denver subscribers is not rendered exclusively through that portion of the telephone company's plant located in Denver, but is also furnished by means of the toll system, and by the plant established in other cities and towns in the State. It is true of Denver that its commercial activities and industrial importance depend upon the existence of a large tributary or supporting territory, containing smaller cities and rural, manufacturing, mining and other industries, and the maintenance of relations permitting the development and growth of Denver depends upon the existence of rapid, direct and convenient means of transportation and communication between Denver, and the rest of the State. The user of toll service is benefited by the establishment of a State-wide telephone system, and the residents of Denver derive directly and indirectly substantial benefits from the operation of the telephone system throughout the State. It follows that the revenue from the telephone service rendered in Denver must be considered in the light of neces sities of the system as a whole." See Commission Leaflet No. 80, p. 335, C. L. 148] In re New York Telephone Company, P. U. R. 1922-A, 497, the New York Public Service Commission said: 6 "If return be based solely upon local investment, no company can develop unprofitable territory or extend telephone service to smaller communities. The measure of value of telephone service to a subscriber is based upon the most complete extension of telephone service. Under the company wide' theory, however, it would seem that nearly all of these difficulties are obviated. Every fact relative to the conduct of the company's entire business is investigated including the determination, once and for all, of the value of the company's entire property, as well as expenses required for the operation and maintenance of proper service. The amount of revenue necessary can then be obtained by rates which are uniform, under like circumstances and conditions, instead of through hundreds of separate rates and classifications for the same character of service, with the consequent discrimination and undue preference. Both toll and exchange rates can be so fixed and toll service costs and returns determined on a proper and sound basis. (Italics are ours.) "The burden of such investigation is assumed by the Commission under this method, and instead of duplicating the expenses many times, through the trial of hundreds of detailed and long drawn out rate cases, with years of delay and litigation, the one investigation and determination is conclusive. "The facts found and valuation so made should furnish a sound and settled basis for the use of a community, or the Commission, in any future investigations. Any community, feeling itself aggrieved, may then, with comparatively little cost, present its evidence to the Commission as to unreasonable or discriminatory rates, having practically all the essential facts ready for its use and established of record. The unreasonableness or discriminatory character of rates can be shown by rates in other communities similarly situated, and the adequacy of service easily determined. (Italics are ours.) "This is no novel or untried idea. It has been successfully adopted and followed by New Jersey, Pennsylvania, Maryland, Georgia, Wisconsin, Colorado, and other states. (Italics are ours.) 66 After careful study and consideration of the entire matter, it seems necessary that some form of the company wide' or 'State-wide' investigation and determination of telephone rate cases should be adopted." Also, at page 501, the Commission said: "In the Syracuse and Buffalo cases these matters have been so forcibly brought to our attention that it is felt that the local area theory fails to get at the real facts, is unduly expensive, obviously productive of protracted litigation, impractical and inadequate." In the case of Walter R. Stone, as Mayor of City of Syracuse et al. v. New York Telephone Company,* P. U. R. 1921-D, 736, at page 757, it was held: "The Commission believes that the value of the company's property used and useful in the public service, its rates charged, and its regulation, so far as regulation can go in the matter of policies and practice, should be considered on the basis of its State-wide activities; that the forced and artificial segregations attempted in this case do not afford a satisfactory basis for the proper determination of either valuations or rates; and that the availability of service and its development to the highest possible degree, irrespective of municipal boundaries, are essential to that character of telephone service which the public demands. "Having the appraised value of the entire property of this company, and having investigated its reasonable operating and other expenses, the Commission should be able to decide what amount of revenue is required to pay those expenses and yield a fair return on the value of the property, together with a reasonable allowance for surplus and contingencies. The distribution of the burden of payment of this revenue should then be made on the basis of population, the class of service desired and furnished, and on the physical, business and other characteristics of localities from a telephone standpoint." (Italics are ours.) In the case of Borough of Clearfield et al. v. Huntingdon and Clearfield Telephone Company, before The Pennsylvania Public Service Commission, decided August 24, 1920, 108 C. L. 1010, it was held: "It was also alleged that there was discrimination in the schedules complained of for the reason that the rates, in the larger centers of population where the company had the greater number of telephones, were higher than in the smaller places. It is uniform practice for telephone companies in promulgating rates to charge a higher rate in larger communities in which a great number of patrons are served. This is justified, not only on account of the extended service permitted, but also on account of the cost to the company in maintaining its larger exchanges." In City of New Castle v. The Bell Telephone Company of Pennsylvania,† P. U. R. 1921-B, 378, at page 380, the Commission said: "As to the second reason advanced, the Commission is unable to agree, either from any reasonable interpretation or application of the law, or See Commission Leaflet No. 118, p. 920. [Mont. C. L. 148] from its own experience and that of other commissions, that it would be possible to segregate parts of a State-wide utility such as a telephone system, and value them as units for rate-making purposes. Nothing but chaos would result. On such a theory, there would be nearly 400 valuations, and, therefore, 400 different telephone rates on the Bell System in Pennsylvania alone, based upon the number of exchanges in the State. The inevitable result would be dislocation and disruption of telephone service. It is well known that the present theory of telephone rate-making is based upon making the cost of service to subscribers correspond to the amount of service which is at their command. Thus the rates in this State are greatest in Philadelphia and Pittsburgh, in which large centers subscribers have the advantage of service embracing many thousands of subscribers, and the rates gradually reduce to the lowest charges, which are applied to exchanges having the fewest subscribers and, therefore, the most limited service. "It is entirely conceivable that if a theory such as that for which the city of New Castle contends in its petition should prevail, a great many of the smaller communities of the State, and possibly all of the rural districts, would be cut off entirely from telephone service by prohibitive rates. It is even possible that the application of such a theory for telephone rate-making in the city of New Castle would have a different result from that which appears to be in the minds of the petitioners. "This Commission, in its first decision upon Bell Telephone Company rates, in 1917 (In re Uniform Telephone Rates, P. U. R. 1917–D, 259),* held that the system throughout the State should be dealt with as a whole, and has consistently followed that course since that time. In its decision in that year, the Commission said: 'The telephone companies affected by this proceeding operate in all parts of this Commonwealth and supply a general and comprehensive telephone service. These companies supply general telephone service within this Commonwealth, and reach with their lines practically all places within the Commonwealth, and connect with other companies which reach all points, and thereby bring the people within the range of telephonic communication, as far as it can be obtained. 'These telephone companies are incorporated to do a general telephone business throughout the State, and one of the important questions presented is whether the revenue expenses and operation of these companies should be treated from a local or from a State-wide standpoint. If we are to have a comprehensive telephone service in the Commonwealth, it is advantageous that such service should be rendered by companies under one control, and that such companies should receive the benefits of being treated as to revenue and expenses from a State-wide, and not from a segregated or local, standpoint. If the segregated theory is to be adopted, there will necessarily result a constriction of telephone development in the State by reason of the companies refusing to develop the unprofitable places. In order to provide for a comprehensive development, it seems necessary to have the companies' operations as to service and rates considered from the standpoint of their revenue and expenses as a whole; and, if they are found to be reasonable, then an equitable distribution of the burden of the charges can be made between the various communities.' "In taking such a position at that time, and in reaffirming it now, the Commission is convinced that it is the only practical and workable manner of dealing with the rates of such a State-wide utility." Other cases illustrative of and proceeding upon the theory that telephone service must be considered from a State-wide standpoint, are cited in the foot note.* THE METHOD AND WORK OF INVENTORY AND APPRAISAL. Owing to the fact that parts of the telephone plant are scattered promiscuously over a large area where conditions are constantly changing, it is difficult to keep an accurate record from which there can be made up at any time a count or inventory of all the units of plant used or useful in giving service. This results at the time of the inventory in the necessity of going into the field and making an actual count of a large part of the outside plant, while with the equipment the records which are kept up to date at all times are checked in the office. Following service of the order, the company organized its inventory City of Texarkana v. Southwestern Telegraph and Telephone Company, 106 S. W. 915; Iowa Telephone Company v. City of Keokuk, 226 Fed. 82; Sunset Telephone and Telegraph Company v. City of Pomona et al., 172 Fed. 829; Cumberland Telephone and Telegraph Company v. City of Memphis et al., 200 Fed. 657; Gately and Hurley et al. v. The Delaware and Atlantic Telegraph and Telephone Company, 1 New Jersey P. U. R. 519; that every portion of the system may not be paying, and that the revenues obtainable should be looked at from the standpoint of the whole system. See Marlborough Electric Petitions, P. U. R. 1915-C, 665; St. Louis and San Francisco Railway Company v. Gill, 156 U. S. 649; Willcox et al. v. Consolidated Gas Company of New York, 212 U. S. 19; Cumberland Telephone and Telegraph Company V. City of Louisville, 187 Fed. 637; Beloit Water, Gas and Electric Com. pany v. City of Beloit, 5 Wisconsin B. C. R. $17. [Mont. |