Bell System response to automatic telephony

Early in the year 1900, local authorities in Springfield, Massachusetts, held a hearing on Hampden Automatic Telephone Company’s application to provide automatic telephone service in Springfield.  The Bell System at that time provided operator-switched telephone service in Springfield. The hearing produced an early battle of experts.  It also displayed general argumentative strategies quite common in modern regulatory proceedings.

Testifying against granting the application for the competing automatic service was Isaiah H. Farnham, “the well-known Bell telephone expert.”  Mr. Farnham’s arguments:

1. He has studied the 300 relevant patents and has concluded that automatic telephony is not practical.
2. He personally made 100 telephone calls on an automatic telephone system, and he found that more than half the calls were failures (no response or failure to connect to the right customer).
3. The automatic telephone system operating in Aiken, South Carolina, had an even higher rate of failure.
4. The automatic telephone system operating in Augusta, Georgia, had many stations out of order.
5. A person standing on a damp floor would receive an electrical shock from the dial of an automatic telephone.
6. The automatic telephone had no protection against electrical currents from lightning or from telephone wires crossing electric light wires.
7. He found that the automatic telephone system took 11 seconds to make a connection, while the Bell system in Springfield made connections in about 4 seconds.
8. An ordinary person would have difficulty using an automatic telephone in the dark.
9. Because the apparatus is more complicated, a subscriber is more likely to make mistakes with an automatic telephone.
10. It takes longer to correct a mistake with an automatic telephone.
11. The automatic telephone system provides a greater opportunity for central office personnel to eavesdrop on telephone conversations, because, with an automatic system, central office personnel have less work to do.
12. An automatic telephone system costs more to construct, requires more expert knowledge, and has higher depreciation costs, and hence has a greater total cost than an operator-switched telephone service.
13. The “central office of a modern telephone company” (meaning here one that employs operators) serves as a bureau of information. Automatic telephone service cannot provide information services.
14. Automatic telephones have created public harms: “The fire department have been called out on false alarms over the automatic telephone.  The police have been sent on fruitless errands, and newspapers misled by people, who maliciously used the automatic telephone, knowing that there was no way in which to trace out their identity.  In one place, he said, the fire department has a standing rule not to answer any calls which come over the automatic telephone.”

S.L. Powers, an attorney for the New England (Bell) Telephone & Telegraph Company, added other arguments against granting the application:

1. Only 20 companies have installed automatic switching equipment, and the largest automatically switched exchange has only 500 subscribers.
2. New England Telephone pays $3.63 per year per telephone royalties, while the Automatic Company pays $5 per year in royalties.
3. New England Telephone’s Springfield service has in the past reduced rates $4 per telephone, and the company has pledged to reduce rates as fast as possible.

E.A. Keith, an “electrical expert” from Chicago, offered testimony on behalf of the Automatic Company.  According to a news report, “Mr. Keith’s testimony differed materially from that offered by Mr. Farnham, and in certain points appeared to be exactly contradictory.”  Mr. Keith declared:

1. An automatic telephone required, from an experienced user, one second per number dialed.  Hence only three seconds were required to call anyone in an exchange of 999 lines or less.
2. An automatic systems was being implemented in Chicago.
3. All the automatic exchanges in operation have been installed within the past three years and have better equipment than the automatic telephone system patented in 1891.
4. Automatic telephone switches can serve party lines, but the company does not plan to implement party lines because they provide inferior service.
5. The Bell System has experts in the central offices.  Their opportunity to overhear telephone conversations is as great as that of any automatic company personnel.
6. Secret service is practically assured with an automatic system where metallic circuits are used.
7. There’s little chance of wires getting crossed.
8. Both the Bell System and the automatic system can be abusively used.[1]

The Bell System implemented automatic switching slowly compared to other telephone companies.  By 1920, two decades after this hearing, only 2% of telephones in the Bell System were automatically switched.[2]  Public hearings in which Bell System leaders argued against potential automatic-switching competitors probably helped to convince Bell System leaders’ of the inferiority of automatic switching long past when that inferiority was otherwise plausible.[3]

Just as liars risk becoming confused about true and false, those battling with arguments before regulators may lose the capacity to discern their real interests.

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Notes:

[1] The quotations and the argument points are from “Arguments For and Against Automatic Telephony,” Electrical World and Engineer (New York), v. 35, n. 10 (Mar. 10, 1900).

[2] In 1929, 26% of Bell System telephones were automatically switched,  while the automatic shares in Austria, Netherlands, and Germany were 71%, 52%, and 40%, respectively.  Sweden, a early leader in teledensity, also lagged in implementing automatic switching.  Sweden’s share of automatically switched telephones was only 6% at the end of the 1920s.  For the non-U.S. figures (and mis-statement of the U.S. figure), see Lipartito, Kenneth (1994) “Component Innovation: The Case of Automatic Telephone Switching, 1891–1920,” Industrial and Corporate Change, v. 3, n. 2, pp. 327, 351.

[3] Id., p. 328, states that in 1910 in large U.S. cities, automatic switching would have cut Bell System costs $5 to $8 per line out of a total cost per line of $22.  On other reasons for the Bell System’s slow adoption of automatic switching, see id.  Here are statistics on U.S. telephone network technology from 1915 to 1987.