The authors first consider the changes that have already taken place and are now in progress among the telephone-using public and in the labour and manufacturing worlds. The bearing of these changes on the possibilities of improvement in telephone service, on the adjustment of tariffs, and on reductions in expense is then discussed.A proposal is made for the introduction of a “unit of telephone service” as the basis of the charge made to a subscriber. By taking the duration of the conversation into account, the charge would be scientifically proportioned to the expense incurred, yet without involving technicalities not easily understandable by the subscriber.The consideration of the trend of events points to the introduction of mechanical appliances to effect the switching operations for all but those special cases of call for which expert attention is essential. The authors discuss the engineering aspect of the application of mechanical operation in the shape of “full automatic” working to large cities, and deal with the technical problems which arise both with the ultimate arrangements and particularly during the transition stages, taking London as a case presenting the maximum difficulty.