Month: May 2010
opex per phone fell 4% per year, 1880 to 1916
On March 10, 1876, telephone inventor and entrepreneur Alexander Graham Bell made his first telephone call. The Bell Telephone Company was formed in the U.S. in July of 1877. By the end of 1877, three thousand telephones were in service.[1] The first commercial telephone exchange began operation in New Haven, Connecticut, on January 28, 1878. By mid-1878, about 10,000 telephones were in service. The U.S. Census of 1880 noted:
the census year 1879-’80 was the year in which the [U.S.] telephone business passed through the stages of an unprecedented development. At the beginning of that year this business amounted to little or nothing; at the end of the year it represented one of the great interests of the country.[2]
The Census of 1880 reported income statement, balance sheet, and operating figures for 148 telephone companies. These data thus provide a snapshot of the telephone business less than three years after its commercial beginning.
The early U.S. telephone business reduced its operating expenses per telephone relatively rapidly. Comparing telephone companies serving between 500 and 2000 telephones in 1880 and 1916, operating expenses per telephone fell on an inflation-adjusted basis about 4% per year from 1880 to 1916.[3] That cost trend compares favorably to the 1.7% inflation-adjusted cost reduction in a broad measure of telephone company operating expenses from 1988 to 2007. The relatively good cost performance from 1880 to 1916 isn’t attributable to a shift from manual switching to automatic switching. Only about 4% of U.S. telephones were automatically switched in 1915.[4]
The Internet is associated with extraordinarily rapid technological change. At least in terms of cost efficiency, the telephone business seems to be changing more slowly in recent decades than it did about a century ago.
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Data: cost trend calculation and selected summary telephone statistics for 1880 (Excel version); full telephone company returns in the Census of 1880
Notes:
[1] See the Telephony Museum’s Telephone History. The telephone counts are for telephones in the U.S. The figures from that source differ slightly from those given in U.S. Historical Statistics, Series R-1. The former seems to me more plausible. Gardiner Greene Hubbard and Thomas Sanders formed the Bell Company on July 9, 1877, with these two men established as company president and treasurer, respectively. Renamed the National Bell Telephone Company in March 1879, it became the American Bell Telephone Company in March 1880. As these name changes indicate, the Bell Company rapidly internationalized.
[2] Census of 1880, v. 4, Telephones, Remarks, p. 787. The enumeration date for the Census was June 1, 1880. In its appropriating act for the 1880 census (March 3, 1879), Congress explicitly included telegraph companies but not telephone companies. The Census Office went ahead and included telephone companies. See Census of Electrical Industries, Telephones, 1902, p. 3. The above statement probably reflects in part a Census Office attempt to justify its coverage of telephone companies in the context of its authorizing legislation.
[3] Excluding smaller telephone companies from consideration provides better comparability with 1916 and probably lessens errors from capital investments included in expenses.
[4] In 1915, the Bell System had no automatically switched telephones. Independent companies had 400,000 automatically switched lines, which totaled about 10% of independent telephones. On the number of (independent companies’) automatically switched lines, see Lipartito, Kenneth James, “When Women Were Switches: Technology, Work and Gender in the Telephone Industry, 1890-1920,” American Historical Review, October, 1994, p. 1095. The earliest telephone operators were boys. Shifting from male to female operators may have reduced labor costs and increased operating efficiency.
the Wall Street Journal's box
Recently a Wall Street Journal newspaper box showed up at the Independence Avenue exit of the Smithsonian metro stop in Washington, DC. Unlike the traditional front-loader, this box is a large, thick-walled top-loader. It sells copies for $2. It even offers the option of paying by credit card.
A street vendor about 10 yards away sells bottles of cold water for $2. Under a labor theory of value, the fully allocated cost of a copy of the Wall Street Journal surely is much higher than a bottle of cold water. But the bottle of cold water probably provides more pleasure.
In the Internet age, literally trying to sell information on the street doesn’t seem like an alluring proposition. Some persons on the street may desire an emotional connection. However, emotional connections tend to be idiosyncratic, and emotional connections are difficult to provide commercially, at volume. Providing dynamic sensory stimuli, in contrast, has a long business history of success.
COB-46: bureaucratic participation
Nothing is more important in a bureaucracy than allowing everyone to have their voice heard. If you just talk to yourself in your cubicle, everyone else in your department won’t hear your voice. That’s especially true if your company’s space is equipped with plush, sound-absorbing cubicle dividers. If you have your own office, then talking to yourself in your office surely won’t give you a chance to have your voice heard. The answer is meetings.
Suppose that the Senior Deputy Associate Vice President for Planning needs to decide whether to submit the Interdivisional Coordination Planning Statement for interdivisional review. All stakeholders need to be given the opportunity to have their voices heard before this decision can be made. The Planning Policy Task Force — five Assistant Deputy Vices and one Administrative Professional — attends the meeting, along with a courier, two children taken to work in lieu of missed daycare, a homeless person who sleeps on the back side of the building, and two department managers deluded with the false promise of donuts. After about a half hour of team-building pleasantries, the Deputy Vice President for Planning asks whether anyone is uncomfortable with submitting the Planning Statement for interdivisional review. The Senior Assistant Vice for Strategy begins to speak.
The key issue is how our SWOT analysis affects the ROI of the review function, he says. It’s just like the faucet in the break room, which keeps leaking. That wastes water. I’ve called Administrative Services every day for the past week about the problem, and nothing is being done. Planning is a strategic function for our organization and key to our competitive advantage. I don’t think anyone here will deny that. [looks around the room at blank faces] We’ve got to work harder, not smarter. But we can’t do that until we get our timecard system fixed. I took a half-day of vacation two weeks ago, but my pay stub a week later showed a full day of vacation. I filled the VJ-61 to amend the time card, but the time keeper rejected the amendment. What am I supposed to do? [no response] I just think that we’ve got to improve our planning and coordination functions, but I don’t see how we can do it with our current timekeeping system, and that faucet is still leaking, too. [stops talking]
Thank you very much for making your voice heard, says the Senior Deputy Associate Vice. Would anyone else like to make their voice heard? Six other persons give similar speeches. The children start to cry during the second of these. Their parents quickly pick them up and leave the room. Seven persons subsequently leave the room at discrete intervals. The remaining speaker finishes and excuses herself to run to another meeting. That leaves the Senior Deputy Associate Vice in the meeting by herself. The decision to postpone submitting the Planning Statement for interdivisional review is thus made unanimously.
There’s no more powerful demonstration than this of bureaucratic participation.
In other bureaucratic reporting this month…
Zimbabwe’s Finance Minister Tendai Biti says that bureaucrats running the Central Statistical Office are incompetent. Bureaucrats loyally follow their leaders. These bureaucrats are highly competent. They should be honored, not condemned.
Los Angeles Mayor Antonio Villaraigosa has recognized the importance of bureaucrats. So too should all political leaders.
In the preface to The Screwtape Letters (1961), C.S. Lewis declares:
I like bats much better than bureaucrats. I live in the Managerial Age, in a world of “Admin.” The greatest evil is not now done in those sordid “dens of crime” that Dickens loved to paint. It is not done even in concentration camps and labour camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice.
Dated nonsense. Batty professors should be ignored. Ignored!
Luisa at Lasse, Get Help complains about the careful and dedicated work of bureaucrats. Some people think that you can tell a dog by its looks. Bureaucrats are more thorough. They will study the dog for several months.
Autonomous Mind complains about French bureaucrats concern for boat-passenger safety. Desperate people will get into any boat, even one that will sink. Bureaucrats ensure that your boat will float.
Terry Telco offers Laws of Terry. Remember this one:
#15: Any meeting is worth having again. Any great meeting is worth a recurring Outlook invite.
Just like any other skill, meetings improve with repetition.
Tasha the Triathlon Goddess at The Thighmaster Route to Kona is surprised by her experience making a claim at her County Board of Appeals:
Bu….bu……you…..I…….can I just tell you how great you all are? Seriously! You know, with this health care reform, people keep talking about how inefficient and horrible government is, but you’re all wonderful, and then compare that to the idiots I talk to at BCBS about the bills for The Cancer!
We don’t find this experience surprising at all.
That’s all for this month’s Carnival of Bureaucrats. Enjoy previous bureaucratic carnivals here. Nominations of posts to be considered for inclusion in next month’s carnival should be submitted using Form 376: Application for Bureaucratic Recognition.