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The licences were for 31 years, expiring in 1922, without any provision for purchase or compensation, and were subject to the payment of a minimum royalty to the Post Office of 10 per cent.
The Post Office at the same time established several telephone exchanges in provincial towns so as to enable the PostmasterGeneral " to negotiate with the telephone companies in a satisfactory manner for licences."
The Postmaster-General (Mr Fawcett) declared that he would issue no more licences unless the licensees agreed to sell telephones to the Post Office.
As a result only eight companies out of over seventy that had applied obtained or accepted licences.
The licences within restricted areas having proved unsuitable for the growing business, public opinion appealed to the Post Office to issue new licences applicable to the whole country.