Thriving Independents

Marching into the business office of the small (9,145 telephones) Harrisonville Telephone Co. in the farming community of Waterloo, ILL., recently, a visiting New Yorker demanded to see the president. A complaint, perhaps? Not at all. The visitor had just used one of the three sleek air-conditioned telephone booths outside the building; he merely wanted to pump President Henry W. Gentsch's hand and tell him that the big Bell System could not do better than that back home in New York

To many a telephone user, it comes as a surprise to learn that not all U.S. telephones belong to Mother Bell; others are startled to discover that even small independent companies like Gentsch's have modern equipment and first-rate service. The Bell System and its 23 subsidiary operating companies own 84% of the nation's 94 million telephones, but the percentage is dropping. The remaining phones belong to 2,423 independent companies, largely centered in the Midwest, Far West and South--along with all of Hawaii and Alaska. The independents last year had combined revenues of $1.7 billion and, building on a smaller base, outplussed mammoth Bell in three categories: their revenue growth was 47% greater, their rate of new-plant investment was 35% higher, and their increase in telephones installed was 27% greater.

Cities & Country. The independents are booming because the onetime farmland they serve is now becoming suburbanized as homeowners and businesses both spread out from the cities. Under a 1913 compact with the U.S. Attorney General, A. T. & T. agreed to acquire no more independents and to provide connecting service with those that remained; the effect was to concentrate Bell service in cities where telephone demands were bigger. The country was largely left to the independents, who sometimes strung their wire along fences and made the party line famous. Now the independents turn out to have good growth areas and their revenues have been increasing an average of 11% annually v. 7.6% for Bell.

The big five among the independents:

> General Telephone & Electronics (6,600,000 telephones) now controls 30 operating U.S. companies, and its Automatic Electric Co. is the largest supplier of equipment to independent companies. Telephone operations account for 45% of General's $2 billion revenues and 63% of its profit, and President Leslie H. Warner intends to broaden that end of the business even more.

> United Utilities (912,000 telephones), headed by Paul Henson, operates in 17 states, has added eleven companies in the past 18 months, ranging from the 150,000-phone Inter-Mountain Telephone Co. of Tennessee and Virginia to the East Enterprise Telephone Co., of Indiana, with 300 phones.

> Western Power & Gas (694,000 telephones) of Lincoln, Neb., headed by Chairman-President Judson Large, controls eleven operating companies scattered from Worthington, Minn., to Tallahassee.

> Continental Telephone Corp. (608,000 telephones) is the fastest-growing of the independents. Continental was organized five years ago by New York Stockbroker Charles Wohlstetter, who had bought a small Alaska company and needed somebody to straighten it out. Wohlstetter settled on Phillip Lucier, a Stromberg Carlson executive. Together they formed Continental. Now Lucier, as president, shrewdly supervises operations while Wohlstetter handles finance. The two in five years have acquired 91 companies.

> Rochester Telephone Corp. (409,000) operates in the largest U.S. city not served by the Bell System.

Friends & Fallouts. Bell and the independents generally work well together, split revenues from long-distance calls that move partly on independent lines and partly on A. T. & T. long lines. But they occasionally fall out, especially where population shifts cause overlaps in service. In Missouri City, Texas, where both Bell and General Telephone have subscribers, a call from one system to the other costs 35-c- person-to-person for three minutes even though the two phones may be only a block apart. Before a similar conflict was resolved at Kemah, Texas, a town near Houston where NASA personnel live, some homeowners could phone the fire department only by long distance.

This file is automatically generated by a robot program, so reader's discretion is required.