MONOPOLY PRACTISES BOOST RATES

How B.C. Tel rooks the public

By CAREY ROBSON
The Telecommunication Com-
mittee of the federal government’s
Canadian Transport Commission

Tuled fully in favor of Canada’s
Second largest telephone company,

and against the interests of the
people of B.C. on January 16, 1975.
In so deciding, the Committee
reiterated its position of 1971 that

B.C. Tel had acted in the public’s

interest by not implementing the
advanced technology being used by

the telephone industry in the rest of

the world.
- Basically, the three historical

developments in the telephone

industry have been: (1) manual

Switching; (2) step by step, which

1S based on a switch patented in
1891 and implemented generally
during the early 1900’s; (3) cross-
bar (X-bar), a common control

Switching which became practical
_ In the early 1950’s.

In 1958 B.C. Tel decided not to
buy an X-bar (SP-1) from Northern
Electric (an affiliate of Bell
Canada), nor from other European
manufacturers who made similar
X-bars systems available in the
hext few years. Instead, B.C. Tel

’ Waited until the 1970’s when its

General
Electronic

Parent

company,
Telephone

and .

‘Automatic Electric (Canada) Ltd.,, ~

‘Would provide an X-bar system,
(the #1EAX), and even then on a
very limited basis.

According to Northern Electric,

the SP 1 is never higher in cost and
Can be 15% to 30% lower in cost per
traffic office (main switching

Station.) The SP1 is slightly slower.

than the #1EAX but has a great
deal more versatility for present

_ and future applications than the

GT & E machine. By its decision

_ B.C. Telis now squandering money
-to incorporate an Automatic

Number Identification . (ANI)
System for direct dialed distance
Calls.

_. ANI is inherent in X-bar. The

SP1 is a 100% Canadian develop-
Ment while the #1EAX contains
less than 70% Canadian content. To
‘Justify their decision to remain
With an antiquated step-by-step
System, B.C. Tel commissioned the

_ Gama Study. This study reported
that B.C. Tel will have saved $114

million by the year 2000 through its
decision to remain with step-by-
step switching until the #1EAX
became available.

However, this study does not
take into consideration the time
value of money. If the time value of
money is taken into account the
earnings at an average com-
pounded interest of 7% from 1958,

including the cost of initial in-'

stallation of X-bar, would be $53
million in 1974 and $96.7 million in
1986. If discounted at 7% from
either 1974 or 1986 to the year 2000
this would not result in a debit of
$114 million, but in a credit of from
$8 million to $35 million.

At the Canadian Transport
Commission’s (CTC) hearings
between Oct. 17 and Nov. 1, 1974,
despite B.C. Tel’s evidence to
prove how much their service was
improving, the counsel for the B.C.
attorney general introduced the
following contrary evidence which
shows what happened to the
average person making a phone
call:

1,700 calls were made on Wed-
nesday, Oct. 16, 1974 between 8
a.m. and 5 p.m. by an independent
survey company with the aid of
weight station operators
throughout the province. Wed-
nesday is an average to low
average day for calls, and the 1,700
calls made did not make any
significant difference when you
take into account that ap-
proximately 127,000 calls per day
are made to directory assistance
alone. Of the calls made to

_ directory assistance, 24% were

incomplete after 6 rings; 4% and
23% unsuccessful in two tests to
reach the repair service; 14% and
17% failed to reach two of the long
distance operators; 17% were
unable to connect with the B.C. Tel
office; and 23% couldn’t get the
operator ‘‘O”; 12% of the calls

failed because of B.C. Tel’s.

equipment. .
* * *

B.C. Tel is a regulated public
utility and must apply to the
Canadian Transport Commission
for approval to revise its tariff.
B.C. Tel’s rates are set by the
Commission, theoretically based
onthe company’s costs. B.C. Tel is
regulated, but its integrated

OKANAGAN TEL.

1973

ioe
$ 193500" L CawabLAN ne
mee ton TELEPHONES 5
ah 4
Brrtrsh Cotumera TEL, sures c
Co
i rs :
: 8,3 80,000 ¥1,30%D00 Sock sen =
£58, 128000 poe Fk ra)
, Charge
F Ss leo ,OTHER ¥ #63000
3300 - T4E. Co.s
3, de $274,000 3 $4600 :
et
sccieal | (SEE AMAUTI corse. || 6.16. || ote. ||| DoMINION
CANADA L-$/02,000 AuToMATIC | |Service ||DATA DIRECTORY
itd. " $§,86/,000~{ |} | ELECTRIC Corp. ese Co. tte
; Ive. 3 %678,000~
Gil <E. Lt $824 000 date
AuTomMATIC $3,8800007-—4 Sale 5 /
G.T+E, [ita Srasabnoon” |} | £23.000009 ANGLO - CANADIAN
INTERNATIONAL Inc.@] TELEPHONE Co.

GENERAL TELEPHONE and ELEC

TRONICS CORP.

Chart prepared by Carey Robson shows financial transactions in B.C. Tel-G.T.E. monopoly during 1973. The
movement of huge amounts of money from one company to another covers up B.C. Tel’s profit and is the

reason for high rate structure.

corporate family is not! (See chart
of corporate set-up).

. Dominion Directory Co., Ltd.,
sells and does the advertising

design in the Yellow Pages of the

telephone book. B.C. Tel pays all of
the costs for paper, printing,
materials and. delivery through
Dominion Directory — which also
provides advice. For this they will
clear an estimated $390,000 in 1974,
the bulk of which will go to Anglo-
Canadian, their 100% owner. 90%
of Dominion Directory’s business
is from B.C. Tel.

In 1973, GTE Lenkurt Electric
(Canada) Ltd., applied a mark-up
of 38.5% to B.C. Tel’s purchases.
B.C. Tel accounts for’ 26% of
Lenkurt’s sales, yet Lenkurt’s

mark-up to non-GT & E affiliates
was 26.7% — 11.1% less then to
BGe rel:

GT&E Automatic

Electric

__ Reactionary, monopoly forces

ve launched a well-financed and

__ Well-orchestrated offensive aimed

t blocking democratic reforms in

_ this province and regaining power
In Victoria,”

Nigel Morgan,
Provincial leader of the Com-
Munist Party warned a full
Classroom attending a series of
Marxist lectures that began in
Douglas College Sunday night.

Opening the first in a series of
Seven weekly classes, Morgan,

although critical of the NDP

S0vernment for a number of areas
M which jit has fallen short of
People’s expectations, gave a

Careful review of its many positive .

achievements. Sy ps

“The extent of this ultra-
Conservative, anti-labor campaign
and the danger of a return to
Teactionary government that
Would reverse the generally
Progressive course this proyince
aS taken over the last two years,
Should not be underestimated,” he
declared.

“The continuous propaganda

rage from the mass media, the
So-called strikes by the insurance

_ ©oOmpanies and corporate lan-

Bad

Big business offensive
threat to B.C.-Morgan

dlords, the company-financed
demonstrations against the
government’s mining legislation —
these have all tended to confuse
and disorient a section of the
people,’ Morgan states. “And big
business interests are again
uniting arounda refurbished Social
Credit Party in an attempt to
recapture legislative power.” .
Concluding the class, Morgan
emphasized, ‘‘the monopolies and
their political representatives are
the main enemy of the people and
we — trade unionists, ratepayers,
tenants, farmers, teachers,
Communists and members of the
NDP — need to keep that in clear

perspective. Unity in action is

imperative to defeat the right-wing
offensive and keep this province
moving left.”

HAVE YOU

RENEWED YOUR
SUB YET?

YEARS AGO

During 1975 the PT will reprint
items of interest which appeared in
the columns of the ‘“‘B.C. Workers
News’’ 40 years ago.

B.C, COAL MINERS
WIN VICTORIES |

Princeton coal miners, who
belong to the Mine Workers Union
of Canada, have recently signed a’
new agreement with the Tulameen
Mining Company. The committee
to negotiate the new agreement
was composed of young’ miners,
and thus the company officials felt
that they could bamboozle them
into accepting a worse agreement
than they formerly had.

They found out, however, that
the miners were solidly behind the
committee and eventually the
company had to’sign an agreement
which was practically as presented
by the committee. The agreement
ee some of the miners increased

ages amounting to 15 and 20 cents
per day. It restricted the activities
of the company officials and

bettered the conditions for the

miners.

(Canada) Ltd., manufactures
telephone sets, switching equip-
ment and other telephone equip-
ment. They also act as a pur-
chasing agent. 62% of Automatic’s
sales are to B.C. Tel, and two-
thirds of B.C. Tel’s non-GT&E
products are for wire and cable.
Approximately 87% comes from
Philips Cables and 12% from
Canada Wireand Cable. Automatic
Electric is the sole distributor for
Philips and is of course B.C. Tel’s
purchasing agent for the others.

B.C. Tel trucks go to either ~

Philips Cables or Canada Wire and
Cable’s plant in Vancouver where
they load up pre-cut cable and take
it directly to the job where it is to
be- used. Automatic Electric
receives the invoices, pays them
and bills B.C. Tel. For this service
Automatic received, on an average
markup $2,806,000 between 1971
and 1973 from B.C. Tel.

During cross examination, G. F.
MacFarlane, vice _ president,
corporate development of B.C. Tel,
repeatedly denied he was subject
to purchasing policy directives
issued from GTE or its  sub-
sidiaries, even to the extent of
ignoring purchasing directives
from the equivalent of the con-
trolling shareholders of B.C. Tel.
Excluding wages and. salaries,
from total capital and operating
expenditures of $143,646,000, B.C.
Tel paid $59,485,000 in 1971 to
GT&E and affiliates. In 1972, of

$162,476,000, B.C. Tel paid
$71,454,000; and in 1973, of
$199,807 ,000, $88,730,000.

ee *

On a sliding scale from one mile
to 500 miles Saskatchewan pays
from 40% to 100% of what B.C.
pays for 3 minutes Direct Dialed
Distance (DDD). calls; Ontario
pays 75% to 85%; B.C. pays ap-
proximately 50% more than
Washington State. For people in
B.C. to make a 2 minute DDD call,
71 miles away, we pay 62c; in
Alberta, for the same distance, a 3
minute call costs 50c. Yet on Jan.
16 the CTC telecommunication
committee granted additional
increases!

W. Case, president of the U.S.
Independent Telecommunications
Association, of which General
Telephones and Electronics is a
member has stated: ‘‘Added toll

revenues come largely from more
intensive usage of existing
facilities, requiring very little
extra operating; expense, thus they
make a good contribution to net
earnings.”’ Has anyone been
wondering about all those televised
B.C. Tel long distance ad-
vertisements?

On Feb. 1 Extended Area Service
(EAS) will begin ‘to be im-
plemented. If you live in a com-
munity of 1000 population 30 miles
from Vancouver you are presently
in rate group 2, paying from $3.95
to $5 for a private line per month. If.
your community aequires toll-free
access to Vancouver you will move
to rate group 15 and pay up to $8.35
per month for the same private
line.

* * *

The major increase granted is to
residential phones. 285,000 will pay
between 9% and 14% higher rates.
169,000 will pay between 3% and 8%
more. 75,140 will pay from the
same to 2% more; all for no better
service than in the past. Some
209,000 will receive a decrease of
from 1% to 14%. This reduction will +
result from a reduction in cost or
service. In other words, B.C. Tel
has statistics on how many
telephone users are expected to go
from private lines to party lines. At
present there are about 5,000
homes on multi-party lines of 6
phones per line. -

B.C. Tel has found another way
to inerease its revenues. This is
called a Directory Assistance Toll.
At present there are 127,000 calls
per day to directory assistance.
B.C. Tel expects $700,000 per year
from a 25¢ charge per call. With a

‘little arithmetic one finds that
$700,000 divided by 365 days
divided by 25c equals 7,671 calls
per day to be charged. Is B.C. Tel
only going to charge 6% of the calls
it presently receives?

B.C. Tel controls virtually 99% of
all telephones in B.C. and yet when
they are in competition with other
companies, for example in the
lease and sales of mobile
telephones, there is no price in-
crease now, nor is any planned.

As it was put rather succinctly at.
the hearing: ‘‘B.C. Tel’s investors —
expect inflation, therefore
telephone consumers should be
required to pay increased rates.”

PACIFIC TRIBUNE—FRIDAY, JANUARY 24, 1975—Page 3 _