The next development was the recommendation by a Select Committee of the House of Commons that there should be active competition with the N.T.C. both by the Post Office and by Municipalities, and under the Telegraph Act, 1899, local authorities were empowered to defray the cost of local telephone services from the rates. Although several Municipalities wanted to establish local systems in competition with the company, local areas were already too small for efficiency and only one Municipal service, that at Hull, still survives. Eventually, in 1911, the Government took over the property of the N.T.C. for an arbitrated price of about £12,500,000.

Sir Evelyn Murray, former Secretary to the Post Office, states in his book The Post Office, that up to 1900 at any rate the Government’s whole policy regarding the telephones was to keep out of having to operate a State service, yet at the same time they realised from the experience with the telegraphs, that nationalisation was probably inevitable in the long run. They therefore followed the policy in the intervening period of preventing the companies from becoming too lucrative so that when they did have to purchase it would not be at the exorbitant terms such as those exacted by the telegraph companies. Murray also points out how the technical conditions of telephones largely dictate policy. If there are competing systems intercommunication between them is essential if the service is to be of any use to subscribers, and this means agreement to establish uniformity of operating methods, standardisation of plant, etc., and thus competition virtually disappears. “Competition, however salutary in other spheres is fatal to an efficient telephone service” (p. 126).

American experience has led to the same trend as regards unification, though there the monopoly is a private one. Holcombe in his Public Ownership of Telephones on the Continent of Europe wrote : “Competition in the telephone business has existed for nearly a score of years in a large part of the United States. By the expiration of the active telephone competition was removed, and to the American public at that time competition seemed the promptest and most effective method of regulating the then existing telephone monopoly. Until the general economic crisis of 1907 the contest was hotly waged between the ‘Bell’ and the ‘Independents.’ Since then a tendency has developed towards monopoly conditions in the telephone industry. To-day (i.e., in 1911), in view of the altered conditions, the public is reconsidering the policy of competition as applied to telephones.

“The alternative to competition is legal monopoly, either public or private.”

The high degree of concentration under the control of the “Bell” system is shown by the number of telephones inside and outside the system. In 1938, out of 19,953,000 telephones in U.S.A., 15,761,096 were in the Bell system, while the number of Bell-owned and Bell connecting systems was 19,885,000. (Statesman’s Year Book, 1940, p. 521.)

Although the demand for nationalisation is apparently not strong in the United States, there is a considerable movement towards bringing the private monopoly under closer regulation.

It may be mentioned that telegraphs in the U.S.A. have likewise moved steadily towards amalgamation. Although, until recently, there were 11 companies, nine of them were very small and the telegraphs were largely in the hands of the Western Union Telegraph Co.

In 1943 the only other company of considerable size, Postal Telegraph, was compulsorily amalgamated with Western Union.