The letters enclosed will readily reveal the varied makeup of these telephone systems. It is difficult to describe the typical cooperative telephone system. You will find that they vary in size (with a few exceptions) from approximately 185 to 6,500 subscriber stations and serve on the average less than 3 subscribers per mile. They employ from 2 to 28 persons with the overall average being about 10. Some cooperatives operate joint electric power and telephone systems. In these cases, they generally consider themselves electric power systems and, although they also furnish telephone service, these latter operations are a secondary-type business. Approximately two-thirds of rural telephone cooperatives have some form of rate information on file with State commissions; however, in most cases these submissions are an advisory or informational gesture since many State commissions do not exercise jurisdiction over their services and rates. The rates of a cooperative are determined by the individual system's board of directors on the recommendations of REA. Subscribers exercise an indirect control over these rates by virtue of their power to elect from among themselves the telephone system board of directors. In relation to S. 1284, our members are opposed to filing tariffs with the FCC because they feel the creation of such an obligation is not in the public interest for the following reasons: 1. Many systems could not and would not want to render interstate service that would enmesh them in costly tariff and regulatory problems (note the experience related by the Panhandle Telephone Cooperative, Inc., at Guymon, Okla.; this cooperative serves subscribers in five States via subscriber lines). The rural areas would suffer if cooperatives were not free to furnish requested services wherever needed-services which could not be obtained otherwise. The difficulty with the proposed amendment is that service to a single subscriber would most often occasion the necessity for the interstate tariff filing. 2. The minutes of subscriber usage on telephone systems generally follow a similar pattern which is approximately: Exchange usage_ Interstate toll usage__. Percent 92 6 2 If many State commissions in their task of protecting subscriber interests see no need for tariffs from cooperatives for the greater exchange and intrastate toll usage, it is not realistic that the FCC would have any need for a tariff on the small portion of the remaining 2 percent of the interstate service that cooperatives happen to be engaging in without participation by Bell companies or other fully subject companies. 3. The FCC argues a general regulatory need for the formulation of tariffs in order to protect the public, and we quote their language to this effect: "Rate regulation envisions the publishing of rates through filed tariffs so that the public may be informed of the rate to be charged." However, the FCC has full knowledge of the fact that the vast majority of cooperatives and independent telephone companies are not now furnished copies of the various A.T. & T. tariffs under which interstate services rendered in conjunction with Bell are furnished. Therefore, the customers of connecting carriers which do not operate toll centers (and relatively few operate toll centers) do not now have opportunity to inspect the tariffs under which their present interstate service is rendered. If there were a genuine need for tariffs, the FCC would not permit the present violation of this very same section 203 (a) of the Communications Act: "*** and such common carrier shall furnish such schedules to each of its connecting carriers, and such connecting carriers shall keep such schedules open for inspection in such public places as the Commission may require." 4. The experience of the FCC reveals no rate problems with cooperative telephone systems that would be corrected by removing the present exemption from tariff filings contained in section 203 (a). Moreover, we feel sure that the FCC will produce no interstate regulatory problem of any kind arising out of the operations of telephone cooperatives. The rates of our member cooperatives, all of whom are REA borrowers, are reviewed and approved by REA and the subscribers themselves through the boards of directors. The public interest does not dictate that further formal and costly filings, made pursuant to rules and regulations which tend to grow and expand, be enacted into law. We can assure this subcommittee that individual cooperatives would be most willing to justify any of their rates and practices in the informal expression of their managers or boards of directors upon any request by the FCC. We appreciate the opportunity you have given us to be heard in behalf of more than 225 cooperative telephone systems which are doing their upmost to insure that this Nation continues to enjoy the best communications system in the world at reasonable rates and charges. Most sincerely, DAVID C. FULLARTON, Executive Manager. HALSTAD TELEPHONE CO., Subject: Senate bill S. 1284. NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, GENTLEMEN: We understand that this bill is a proposed amendment of section 203 (a) of the Communications Act of 1934; and that this amendment would require small cooperative and commercial telephone systems to file tariffs with the FCC for all their interstate service subject to FCC jurisdiction when such service is provided solely over facilities owned by these connecting carriers. Our company objects to this amendment because it will require the costly preparation of such a tariff for a very small amount of interstate service. The geographic nature of the area served by our company is such that four of our central offices are within 3 miles of the North Dakota boundary. It therefore developed that our company was able to provide telephone service to farmers located in North Dakota who otherwise would not have been able to get telephone service from North Dakota companies until a much later date. The North Dakota Public Service Commission was very appreciative of the fact that our company was willing and able to provide service to these scattered farms. Our company has obtained all the required authorizations from the North Dakota Public Service Commission who accepted our schedule of rates as approved by the Minnesota Railroad & Warehouse Commission. At the present time, our company is serving approximately 67 farms and 15 mobile customers who are located in North Dakota. In 1964 our gross receipts from North Dakota customers were $9,257. Our company doesn't have any toll lines. We are completely dependent on the Bell Telephone System for toll connections. Our company is a small cooperative corporation serving approximately 1,175 customers. It has an average of 2.9 main stations per route mile. The company has five full-time employees-three plant men, one office lady, the manager. This small staff is inexperienced in filing tariffs. It would be necessary to hire the assistance of an attorney, an accountant, and a consulting engineer to prepare an acceptable tariff for FCC as proposed. The cost of preparing such a tariff is estimated as follows: (1) Attorney costs for legal assistance in studying part 61 of the FCC's rules and regulations on tariff filings plus the drafting of regulations concerning obligations, liabilities, use, and abuse under which which we would provide service. Estimate, 20 hours, at $25----- $500 (2) Engineering assistance to establish cost studies for determining revenue requirements associated with the particular interstate service. Estimate, 40 hours, at $9_-_. 360 (3) Manager's salary for time involved in research, preparation and publishing the tariff. 400 This cost is excessive for the small amount of revenue involved in our interstate operations. It would be an unreasonable burden for our small company. It is hereby requested that due consideration be given to the problems of telephone cooperatives which in most cases are serving low-density rural areas which would not have been served as etxensively by larger privately owned companies. It is further requested that the cooperatives continue to have the specific exemption from tariff filing provided to connecting carriers in the present wording of section 203(a). Sincerely yours, CARROLL G. SNUSTAD, Manager. DAKOTA CO-OPERATIVE TELEPHONE CO., INC., NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, DEAR MR. LEIGH: This letter is in regard to Senate bill S. 1284, which would amend section 203(a) of the Communications Act, which would require cooperative's such as ours to file a tariff with the FCC for all interstate service subject to FCC jurisdiction. The costs involved in preparing and filing such a tariff are estimated as follows: 1. Legal assistance: It is our opinion that at least 4 days legal time would be spent in reviewing the FCC's rules and regulations on tariff filings, plus the drafting of the necessary papers and forms. This cost to the cooperative would be $200. 2. Engineering and rate-fixing assistance to establish a feasible and nondiscriminatory rate structure: In reviewing this matter with our consulting engineer, it is our opinion that at least 4 to 5 weeks would be involved to determine a feasible rate structure. In this case, the estimated expense involved would be $2,500. 3. Miscellaneous items, such as telephone calls, printing costs, management, and management staff hours would be an additional 80 hours of labor, with a total cost involved of $475. 4. It is our estimation that to file a tariff such as would be required by the FCC, a total cost of $3,175 would be required. At the present time, we do not derive any of our revenues from interstate services; however, as telephony changes, the future could demand that we participate in interstate services. At present, we serve 3.965 subscribers at a density of 2.4 per mile. We employ 19 employees as of this date. Our gross revenues for the year 1964 were $304,000, with net margins close to $13,000. It is the feeling of our cooperative that the present wording of section 203 (a) will eliminate an unreasonable burden of filing a Federal tariff. Sincerely yours, ROBERT A. MCARTON, Manager. E. N. M. R. TELEPHONE COOPERATIVE, NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, GENTLEMEN: The enactment of Senate bill No. 1284, a bill to amend section 203 (a) of the Communications Act of 1934 with respect to the filing of schedules of charges by connecting carriers, would be extremely burdensome on this cooperative. While we have had no experience in filing tariffs with the FCC, we estimate that our cost for the initial filing would be as follows: 1. Legal services____. 2. Engineering assistance_ 3. Rate-fixing assistance_. 4. Office expense-. Total_____. $3,000 1.500 1,500 1,000 7.000 We presume that additional expense would be incurred in keeping our tariffs current, after the initial filings had been made. This cooperative has, since its inception, had an operating deficit every year. In 1964 total income from all sources was $112,540. Expenses amounted to $112.679.05, leaving an operating deficit of $138.94. During 1964 we served approximately 695 stations over 1,036 pole line-miles of plant. Our density was 0.67 subscriber per mile of line. We employed four outside servicemen, which is all or more than we can afford. Our rates for multiparty telephone service are already high, and additional expense in relation to FCC filing would add additional expense which the subscriber would have to bear. We strongly urge that cooperatives continue to have the exemption from tariff filing provided to connecting carriers in the present wording of section 203(a). Or barring this, that the burden of filing all tariffs with the FCC be placed on the fully subject companies. Very truly yours, JAMES L. BARROWS, Manager. SOUTHEASTERN INDIANA RURAL TELEPHONE CO-OP., INC., Dillsboro, Ind., July 13, 1965. Subject: Senate bill, S. 1284. NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, Washington, D.C. GENTLEMEN: We object to the subject bill because of the unnecessary and discriminatory costs. Our density is only 3.8 subscribers per mile. We employ six people and cannot support the added financial burden imposed by S. 1284. We believe that compliance with the subject bill would cost us— Since we have no direct connections crossing State lines, we believe an interstate tariff to be completely unnecessary as well as a burden on our company. Respectfully yours, ROBERT G. ELDER, Manager. GRAND RIVER MUTUAL TELEPHONE CORP., NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, GENTLEMEN: With reference to Senate bill 1284: Under this proposed legislation our company apparently would be required to file with the FCC a tariff covering interstate service not of a local exchange type. FCC claimed jurisdiction over our company when it was organized because some of our exchanges had customers in both Iowa and Missouri and Iowa had no regulatory commission. Less than 10 years earlier FCC had released the predecessor company operating these same exchanges when they had discontinued interstate toll transportation. Although the claim of jurisdiction over our company was considered far fetched, we submitted without protest. It took us nearly 2 years to develop and file tariffs with the Missouri Public Service Commission. FCC was kind enough not to require a second printing for filing with them. They accepted a copy of our Missouri tariff. This tariff is prepared in four sections with section IV covering toll or nonlocal services. It contains very little. We owned no toll line facilities at that time and did not believe our members had need for much other than straight toll teletype, private line, and the like. Owning no interexchange facilities for these purposes we merely filed a concurrence with Northwestern and Southwestern Bell Telephone Co.s' filings. Now, 10 years later, the thought of preparing a tariff to cover these facilities is horrifying. The services offered have increased and continue to do so at a rapid pace. We would need an engineer, a specialist in this field, to provide information on all of these services and provide estimates of the cost of providing the facilities so that proper rates could be established. Such an engineer does not work cheaply. I cannot see how we could get off for less than $1,000. If it takes the engineer 10 days to prepare basic information, it would require a month for me, or someone else equally familiar with tariff writing, to determine the rates and draft the tariff. A minimum of another $1,000. The draft should then be studied by an attorney to see that all legal requirements are satisfied. Not too expensive. Probably $200. I can conceive of a tariff section equivalent in size to our present complete tariff. It took a typist, working full time at it alone, over 2 months to type our present tariff. Under our pay scale and including payroll taxes, etc., this 346.66 hours at $1.75 would amount to $506.65. Reproduction by Gestefax and Gestetner of 50 copies of 100 different pages would run about $30 for material and about $75 for labor. Costing some $2,500 to $3,000, this tariff would be an expensive and unnecessary luxury. Bell system toll lines come into our offices except for six. From these six offices we own the toll facilities for a short distance, meeting Bell facilities within the State. We serve no radio or television stations, having on rare occasions a request for a local loop for a pickup for a foreign station. The interexchange facilities are then provided either wholly by Bell or jointly by Bell and Grand River. We operate a dial radiotelephone system at Princeton. All customers, now and in the past, have been landline users at Princeton. Our report to FCC covering the year 1964 indicates no revenues of a toll nature other than message tolls. These calls all went over facilities provided either in whole by Bell companies or jointly by them and Grand River. We serve a sparsely settled area, with 3.9 users per mile of line. Our operating revenues are only 14.47 cents for each dollar invested in plant. So you can see we must watch our expenses. We trust the association will exert every effort to maintain our exemption from filing such a tariff. Yours very truly, C. W. CHASTAIN, General Manager. FOOTHILLS RURAL TELEPHONE COOPERATIVE CORP., INC., NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, Staff Counsel, Washington, D.C. DEAR SIR: We would like to state the position of this cooperative regarding passage of Senate bill S. 1284-a bill to amend section 203 (a) of the Communications Act of 1934. This legislation is opposed because of the cost of preparing and maintaining a tariff on file with the FCC. The amounts we would have to pay for services we cannot provide with our own personnel is as follows: Legal advice and interpretation of FCC rules---. Rate structure and feasibility Other miscellaneous items including printing, employee time, etc----- $500 750 400 625 This cooperative is serving approximately 3,300 subscribers with a density of 4 per mile. We employ 14 persons to operate this telephone system. None of our employees are experienced in filing tariff with State commissions. Due to the small size of our organization, such a tariff filing as is proposed would impose an unreasonable burden upon it. It is suggested that all cooperatives continue to be exempt from tariff filing with FCC. Very truly yours, DUELL WILLIAMS, Manager. HAMILTON COUNTY TELEPHONE CO-OP, NATIONAL TELEPHONE COOPERATIVE ASSOCIATION, GENTLEMEN: We are very much opposed to Senate bill S. 1284-a bill to amend section 203 (a) of the Communications Act of 1934 with respect to the filing of schedules of charges by connecting carriers. |