RISKY BUSINESS; THE ED TEL STORY

By Eugene W. Plawiuk

1995 Labour News Article/Edmonton District Labour Council Newsletter

The current board of directors of Ed Tel and their supporters in City Hall would have you believe it is time to sell Ed Tel. They feel that Edmontonians don't want to take the 'risk', to up-grade the company, to be able to race on the information highway into the 21st Century.

The current rush to sell Ed Tel flies in the face of history. For 90 years this has been one of the most successful municipally owned telephone companies in North America. In fact it has been one of the most successful local telephone companies in the world.

Ed Tel was built by and supported by Edmontonians in spite of competition from more powerful monopolies like Bell Canada and AGT. And always there were risks, financial or technological.

Originally Ed Tel was privately owned as was the cities water and electrical utilities. In fact they were owned by the same man; Alex Taylor. Taylor was a founding father of Edmonton, and now is remembered by the school named after him on 95th Street. and Jasper Avenue. Telegraph in the early days of the city was the main form of communications. But it was unreliable. Taylor had the foresight to see that telephone would be the wave of the future. The main supplier of phones into Western Canada in the 1880's was Bell Telephones of Canada. While they had set up phones in Winnipeg Bell felt that "Edmonton was too small to warrant their interest". Undaunted Taylor and other community residents looked for ways to develop telephone as an alternative to telegraph. They would show Bell that they had lost a golden opportunity, one they wouldn't get ever again.

Edmonton had the first phones outside of Winnipeg by 1886. Taylor would expand his enterprise through the next twenty years until it had become a full fledged Telephone Company .

By 1893 Edmonton was officially declared a Town. One of its first acts was to pass Bylaw 52, which allowed Taylor’s companies to provide for the electricity for Edmonton as well as its Telephone system. By this time the Edmonton and District Telephone Company was supplying phone lines to St.Albert, Jasper Place, Fort Saskatchewan, Leduc as well as Edmonton. though privately owned by Taylor, much of the telephone wire had been provided by the Government at cost while the Telephone poles had been provided by the city.

In 1902 the idea of municipal ownership of utilities and phone companies was an idea whose time had come. Manitoba had already set up municipal ownership of both utilities and the Mayor of Toronto had written the Mayor of Edmonton voicing his concerns about Bell Telephones. It seemed that Bell was gobbling up local phone companies across Canada. Already having been insulted by Bell, Edmontonians were not going to allow this monopoly to take over their phone company. Bell had been talking possible purchase with Taylor which meant the town would have to act fast. the first thing the town did was to purchase the electric company, now Edmonton Power, from Taylor while making a bid for the phone company.

Bell threatened to open their own phone company in direct competition with Taylor’s. This didn't make them any friends in Edmonton. On the one hand it would thwart the towns ability to eventually buy the phone company and on the other it was a blatant attempt to wipe out a local business. Bell had the resources that neither the town nor Taylor had.

Undaunted Bell developed a monopoly arrangement for providing long distance service with the CPR. While the Edmonton Telephone system was growing in leaps in bounds it had no hope of competing with Bell which was allowed to run its phone lines exclusively with the railroad. In Edmonton’s case this meant that Bell would have a foothold in since the local phone company would be frozen out of supplying the new CPR station in Strathcona with phones.

Frank Oliver the publisher of the Bulletin, old friend of Taylor’s and now MP in Ottawa moved to amend the Railroad act giving Bell exclusivity for phone services. His amendment allowed the Railroad to deal with any phone company to provide service in the railroad stations. His reasoning was simple and as true today as it was in 1903; "Where there are already municipal telephone companies, these companies will be forced out of business. the Bell Company will have gained a monopoly just as the CPR. And what happens when you have a monopoly is high rates and bad service." Oliver told the House of Commons. His amendment to the railroad act passed.

The Edmonton Telephone Company 's contract with the city came up for renewal in the summer of 1903. The town began serious negotiations to buy the company from Taylor. It was a growing business, providing the even more phones than available in Manitoba.

In 1904 Edmonton became a city, and one that owned its own utilities, including the phone company. In order to buy the company it had cost tax payers $27,000. Not a small sum for a fledgling city. The purchase cost for the phone company had been $17,000 with an additional $10,000 invested to upgrade equipment, lines and poles. The city had no choice. Bell was still in the market trying to buy out Taylor.

The Edmonton Bulletin ran editorials arguing against Bell and in favour of municipal ownership. It is a familiar argument even today. Private ownership by a monopoly like Bell, the Bulletin argued, would insure higher prices and less quality service. And even if Bell only purchased stock in the phone company the situation would be the same; Edmontonians would see poorer quality service at increased prices. the only way to go was a city owned phone company.

Unlike today’s situation where the Chamber of Commerce favors the privatization of Ed Tel, its predecessor the Edmonton Board of Trade, lobbied the city for public ownership of the phone company. In a resolution sent to the city the Board of Trade said that council should "take into consideration the necessity of purchasing the present telephone system, as it could be worked very economically in connection with the town's electrical light service."

As Alberta became a province on its own, Edmonton had complete control of its utilities and phone company. And it was a booming business. Edmonton had more phones per person than any other city in Canada, a situation that still remains today.

The province now looked to expanding long distance services through its newly formed Alberta Government Telephones. And what had once been a competition between Bell and our own phone company now became a bone of contention between AGT and ED Tel; long distance rates.

Edmontonians would spend over seventy years trying to get a fair deal in long distance rates from AGT. AGT in turn billed the city for use of its lines in order to provide services to rural Alberta. During the 1930's and 1940's AGT was a money losing operation, having to supply phone lines across rural Alberta. The city of Calgary had no independent phone company, so they relied on AGT, which meant that they paid higher phone rates than Edmontonians in order to help AGT offset the expense of its rural phone system.

Ed Tel was expanding, and taxpayers were willing to pay for the latest in equipment in increased taxes. Mainly because we have and always have had the cheapest residential and business phone rates of any city in North America.

1919 saw the city spend over $500,000 to purchase new phone switching equipment and to build a new telephone building to house it. In just over 10 years the city again had to upgrade its equipment, this time moving to an automated system, and building yet another facility to house it. Still there were waiting lists for people who wanted telephones. Ed Tel could not keep up with the demand.

By the 1930's at the height of the depression, ED Tel was still expanding. It never lost money, though for three years during the worst period of the depression it made only $4000 in profits!! By the beginning of World War Two Ed . Tel had the industries cutting edge in technology. Using it's profits to purchase and expand the telephone company reduced the amount needed from taxpayers for new technology. But still residents of Edmonton were willing to pay to see the phone company expand, giving more people telephones at low costs.

During the depression AGT would raise their rates while Edmonton, even after buying a new telephone exchange still had lower phone rates. AGT would continually try to buy out Ed Tel in order to have another urban phone system to offset their loses to their rural customers, Ed Tel wouldn't sell. AGT's rate were increasing so much so that the Mayor of Calgary wrote to the Mayor of Edmonton complaining that the city should have followed Edmonton’s lead instead of allowing AGT to run its phone company!!!

Edmonton had the prestige of not only the lowest phone rates but some of the best and most advanced equipment in use in North America. Edmonton had more people hooked up to telephones than any other city in Canada. There was more than enough demand for the phone company to still maintain a waiting list of would be subscribers. And still AGT would not share the long distance profits with Ed Tel.

There is lots of talk of the information highway, of multi media and computer technology being accessed by both phone and cable companies. ED Tel was on the leading edge of these developments since the 1960's. The company is in the enviable situation of being not only the most successful municipal phone company but also one which is fully capable now of expanding into the 21 Century without needing to be privatized.