NEW TELEPHONE COMPANY BILL (by Order.) (Hansard, 22 March 1892)

§ (2.5.) THE POSTMASTER GENERAL (Sir JAMES FERGUSSON,) Manchester, N.E.
I think that the House will allow me to state the course which the Government find it necessary to take in regard to this Bill, and incidentally the policy they intend to pursue in regard to the very important questions concerned in the telephone system. The Bill now before the House is one which in itself is moderate in character. It really seeks to obtain for the New Telephone Company statutory powers similar to those provided for the Post Office by the Act of 1863, except in one particular. I do not know that the powers asked for would be found excessive if it were desired by Parliament to place a private Telephone Company in possession of separate statutory powers. But those have never hitherto been given in telephonic business. That business is in a very different position to gas, electric lighting, and water undertakings, because none of these trench upon or touch the prerogative of the Crown. But it has been decided by a High Court of Justice that telephones are telegraphs, and are therefore a monopoly of the Post Office, and accordingly no separate power has ever been conferred upon Telephone Companies, but they have carried on their proceedings under licence from the Postmaster General. I need not trouble the House with the whole history of the proceedings in regard to the telephone system; the House is familiar with it, and only a few years ago the subject was inquired into by a Committee. But still I should like to remind the House that the policy pursued by my predecessors, of either Party, was to grant licences to commercial companies for the erection and maintenance of telephones, and these licences at first restricted were afterwards made universal all over the Kingdom, and in fact 13 companies were granted powers. It was intended by my predecessors that there should be thus commercial freedom, so that the public might be efficiently served by the competitive efforts of these companies. The result cannot be said to have been wholly satisfactory, for gradually these companies have nearly all been amalgamated or absorbed in one large company—the National Telephone Company, which has made greater advances than any other company in the country. But there are some that are not so absorbed—one small group headed by the New Telephone 1437 Company, by whom the present Bill is promoted. The result, as I have said, has not been wholly satisfactory. There have been many representations of late by Public Bodies of the inadequacy of the telephone system; and only yesterday I received a very large deputation from the London Chamber of Commerce, who represented that it was very desirable—in fact, that it was most important—that Her Majesty's Government should bring in a General Powers Bill to afford facilities for the development of the; telephone not only in the Metropolis, but in the towns throughout the country. In view of what we believe to be the general opinion, and in accordance with the constant policy of the Post Office, it will be my duty, on behalf of Her Majesty's Government, to oppose the Second Reading of this Bill, and à fortiori the Bill promoted by the National Telephone Company, not at this moment before the House, but which has been read a first time, and which asks powers much wider than were ever asked by the Post Office. The feet is, that owing to the failure of the intentions of the Government, the telephone system has made less progress here than it has in any country in Europe. In France and in Germany it has made very great strides, and a considerable percentage of the people use the telephone here. Only a very small fraction of our inhabitants are in the enjoyment of these facilities; and in London, the largest city in the world, there is not a quarter so much use of the telephone as in Berlin. Certainly the terms of the licences issued by the Post Office have had something to do with hindering the development of the system. The licences confine the companies' operations. They are very much restricted by the clause which forbids the writing down and delivery of messages, which process is allowed in France, where the telephone belongs to the Government. They cannot communicate with the Post Office except under considerable charges; they cannot carry their lines along railways, roads, or canals where the Post Office has the entire concession without paying very heavy way-leaves. In these ways the companies are very restricted in their operations. Not to weary the House, but to proceed to the point at which I desire to arrive, I may say that ever since I have occupied my present office I have given earnest attention to this subject 1438 with a view to providing a system which would facilitate instead of retard the development of the industry while sufficiently guarding the Post Office monopoly, which, though an ugly word, expresses a great interest of the country acquired at great cost. The two objects are not incompatible, and it is our desire that the Post Office should give the greatest encouragement, and be in alliance with Telephone Companies if means can be devised by which the Telephone Companies may develop their system. That there is a real danger of the valuable public property — the telegraph system—being injured by the extension of this telephone system, is proved by the fact that wherever the telephone system has been principally developed there the growth of the telegraph revenue has been checked. The telephone system has been more considerably developed in Lancashire and Yorkshire than elsewhere in this country, and there the growth of the telegraph revenue has been most checked. The concessions which might be made to the Telephone Companies are mainly these—that messages might be transmitted by telephone and communicated to the public telegraph wires so that there might be free communication between the two systems; that messages might be sent from any telephone subscriber to be delivered to his correspondent by the Post Office; that they might be sent by post as letters or by express messenger service; that no charge should be made by the Post Office for the work of taking down the telephonic messages and despatching them by telegraph or by post; that any way-leaves along railways and roads should be reduced from the present charge of 20s. per mile per annum to a nominal sum, and, lastly, that companies should be allowed to establish call offices, where practicable, at post offices. Other concessions might possibly be made so that the public interest in the telegraphs might be adequately secured; but these are matters of detail. We are prepared to facilitate legislation giving certain moderate powers for the construction of telegraphs by the licencees. These concessions, if granted without corresponding provisions for the protection of the public revenue, would be very dangerous. For if the Telephone Companies were in communication with all the large towns, 1439 and sent messages all over the country, undoubtedly the system would to a large extent supersede the use of the telegraph, and, consequently, largely diminish the telegraph revenue. Therefore, it is an essential feature in any scheme, if carried out, that the Government should have possession of the trunk wires. Of course, experts in these matters will readily understand me. Telephone exchanges consist of a comparatively small number of private wires leading to houses or offices, and these groups of wires are connected by main wires with other exchanges in the same town, and by means of trunk wires with other towns. It is our view that we ought not to interfere with the commercial business of the companies in establishing local exchange systems as widely as possible wherever their enterprise may lead them, but that the junction of those systems should be in the hands of the Government. The trunk wires should be in the hands of the Government, in order that the public may have their portion of the sum paid for the messages in the same way as for telegrams; but that would be fixed at a moderate rate, so as not to check the development of the telephone. As regards main lines in towns connected with several exchanges, it is desirable, although not necessary, that they should be in the hands of the Post Office, because if Telephone Companies become largely developed there will come to be an infinity of thick Cable wires connecting these exchanges; and, as in New York, the time may come when these might be inconveniently multiplied to the public danger, and the Local Authority, as in New York, might be compelled, at immense expense, to remove them from their airy height and place them underground. If the rival Telephone Companies were to be possessed of the power of operating in the same towns or area, or possessed powers to take up the public streets and lay down underground wires, there would be infinite confusion and disturbance of traffic, and private rights might be encroached upon. But if the Post Office has power to make the main connections, they could lay wires side by side to accommodate all the different exchanges — the exchanges renting separate wires for their own service; and so the work would be done with the 1440 least possible disturbance, and it would increase the accommodation to the public. But any such powers would be naturally viewed with great jealousy were they not exercised in strict harmony with the Local Authorities; and it is the intention of Her Majesty's Government, both in the additional powers they propose to confer and the additional powers which they propose to seek from the House, to carry the Local Authorities with them throughout. Local Authorities will be communicated with in the first place with reference to exchanges and street works, and in reference to connections with private houses the rights of owners must have consideration. Another question is, how far is this extension of licences to proceed? It is contrary to sound policy that licences should be given to men of straw, who merely acquire them for the purpose of selling them and for levying blackmail, in a sense, upon existing companies and solid organisations; and, therefore, the view of the Government is that fresh licences should not be given all over the country. That almost follows on the desire of Government to possess the trunk wires. Wherever the Local Authority are satisfied that a telephone exchange is desirable in their area, and the Government are satisfied that the licencees are in a position to carry out their undertaking, and that it is in the public interest desirable that they should have a licence, then they will be granted a licences for that area. Most of these things can be done under our existing powers; but it is my intention, on the part of the Government, to move in a few days for leave to bring in a Bill to confer additional powers on the Post Office in regard to telegraphs and telephones. It would be improper for me now to indicate what those powers will be. They will be very moderate, and will not infringe any private rights; and in every case we shall carry the Local Authority with us everywhere. There will be a slight extension of existing powers where they are insufficient for the development either of this new modern enterprise or of small extensions of telegraphs where public necessity requires. It is extraordinary how Local Authorities and private individuals can interrupt the making of most moderate extensions for months. I do not think I need go further into the matter just now, but I do not think the 1441 House will be prepared to establish private companies in so strong a position in opposition to Government telegraphs as would be created by this Bill. I move that the Bill be read a second time this day six months, though I have every reason to believe that the promoters do not intend to press it in view of the statements I have made.

§ MR. MATHER (Lancashire, S.E., Gorton)
May I ask the right hon. Gentleman to say whether the Local Authority will have to give special permission for the construction of a telephone system, or will it be sufficient if the Local Authority does not object when the application is made?

§ SIR J. FERGUSSON
It would be better not to go into detail of the proposed Bill just now; but, generally speaking, the hon. Gentleman will find that the interests of Local Authorities and individuals are strictly guarded.

§ MR. CALDWELL (Glasgow, St. Rollox)
The Government having intimated their intention to bring in a Bill on this subject, I beg now to move the adjournment of the Debate.

§ SIR J. FERGUSSON
I hope there will be no misunderstanding as to this Bill. The Government could not, under any circumstances, agree to the Second Reading of this Bill.

§ MR. PROVAND (, &c.) Glasgow, Blackfriars
The right hon. Gentleman has mentioned many particulars upon which he thinks concessions might be made to Telephone Companies; but I think it is only fair to postpone this Bill for a week, until we see what the Government proposals actually are.