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Past is Prologue: The Great Telephone Strike of 1886, When Bell Tried to Eliminate Flat Rate Pricing

Phillip Dampier April 11, 2009 Frontier, Public Policy & Gov't, Time Warner Cable/Spectrum 8 Comments

Michelle wrote StoptheCap! to remind us that we’ve all been here before.  The Rochester Democrat & Chronicle takes us back:

About 75 of Rochester’s leading businessmen, merchants and bankers gathered at the mayor’s office on Oct. 28, 1886.

They were not happy. Not one bit.

The Bell telephone company had announced a rate increase. And many of the businessmen felt betrayed.

As F.J. Amsden put it, “the business men of Rochester had been encouraged to use the telephone so that it had become almost a necessity in the conduct of business. They (telephone company) have appropriated our streets and the roofs of our buildings (to string their telephone lines), and now when the system has become of general use they demand an entire change and the adoption of the toll system.”

To be sure, the rate change was substantial. Instead of paying a flat fee, as in the past, customers would pay according to actual usage. Those within a half mile of the downtown telephone exchange would pay $50 per year for 500 calls, and six cents for each call beyond that. Customers more than a half-mile from the exchange would pay an extra $20 per mile.

To angry customers, this was not only “unjust,” it was “extortionate.”

Hmmm… sounds sort of familiar, doesn’t it?  So what did people do?

J.H. Stedman, one of the angry businessmen who met in the mayor’s office that October day, urged telephone customers to unite and “refuse to use a phone.” And that’s just what they did. They went on strike.

“On November 20, 1886, they united in an action that is unparalleled in telephone history. At noon that day every subscriber removed his telephone receiver, with the understanding that it would not be replaced until the company came to terms,” according to The Great Contrivance.

The strike went on and on as customers simply canceled service, and in some cases formed their own cooperatives to provide alternative service in different areas.  Bell finally threw in the towel 18 months later and restored flat rate service to customers.

Rochester never entirely trusted Bell again, and by 1899, Rochester Telephone Company, an independent provider, was granted a license to serve the area and compete against Bell.  They promised and delivered flat rate service to customers, and maintained a reputation of excellence for decades, with one of the nation’s largest local calling areas at a cost of less than half charged by Bell in nearby Buffalo and Syracuse.

Bell eventually threw in the towel as more and more customers chose Rochester Telephone for their respect for customers and their delivery of an essential service at a fair and reasonable price.  Bell exited Rochester several years later altogether.

A lesson a certain cable company needs to remember, because consumer empowerment to cancel service is something not limited to Rochester.

Currently there are 8 comments on this Article:

  1. AC says:

    And yet, isn’t it ironic that Bell went on to become Verizon, and if Verizon were here, we’d have FIOS! And thus, competition in this town, and TWC wouldn’t be using us for guinea pigs.

    • It’s also ironic Rochester Telephone would become Frontier. I think comparisons between the Bell of yesterday and the Verizon of today don’t work for the same reason as RTC becoming Frontier.

      Verizon had a vision that 20 years from now, they’d be irrelevant unless they invested in the next generation platform to deliver not just phone service, but video and Internet. Investors were not pleased with the short term expense, but look at what customers are saying when they have a choice… they are happy and the resulting competition keeps these kinds of “experiments” from ever taking place in those communities.

  2. Danny Gibas says:

    Great article Phil! I love history lessons. Too bad Time Warner doesn’t.

    “Those who cannot learn from history are doomed to repeat it.”

    -George Santayana

  3. Mike says:

    Monopolies will never learn. It’s against their nature. Keep pushing the envelope, TWC, until one day our politicians slam your fingers in the door. Enjoy it while it lasts you stupid monopoly. Don’t restrain your appetite for absurdity… $150 unlimited?!? $300 sounds a whole lot jucier. Please make it easier for our elected officials to shoot you down.

  4. JamesM says:

    Such a great past analogy to the present.

    I don’t see how you can protest “against your broadband connection” in quite the same way, since TWC has your $ whether you make use of your connection, or not.

    Nevertheless the analogy to 1886 is very apt. Nice post.

  5. Chris Baker says:

    Monopolies do not learn. That’s why you shouldn’t let the government create them. Observe that Rochester Telephone had to get a license to compete against Bell. That means that they had to ask permission.

  6. Mike says:

    Amen, Chris Baker

  7. Time Warner maybe recognizing this bit of history by not including business accounts in their rate hike. Might they be attempting to take the business community out of the protest effort? We’re up against one savage beast here!

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