Our Industry

Rural Telephone Companies serve a small percentage of total U.S. Access Lines, 3.9 %, but their service territories cover over 39% of the U.S. land mass. This calculates to almost 1.3 million square miles served.

Rural Telecommunications History

Despite the invention of the telephone in 1876, telephone service did not begin to develop throughout rural America until the 1890’s. With the expansion of the manufacturing and service industries into rural America during this time period, a need for increased communication ability arose. Many of America’s rural farmers began to develop their own telephone service either on a mutual or cooperative basis and by 1912 there were over 3,200 rural telephone systems.

After World War I and into the 1920’s the number of rural telephone systems grew, reaching to over 6,000 telephone systems. However, many of these systems were plagued with poor service quality, few maintenance people, and irregular upkeep of the facilities. Unfortunately, inadequate service was the standard in rural America.

The New Deal and the Communications Act of 1934

In response to the Great Depression, the New Deal was enacted establishing several new government agencies including the Federal Communications Commission (FCC). The Communications Act of 1934 abolished the Federal Radio Commission and transferred over radio licensing to the new Federal Communications Commission, including in it the telecommunications jurisdiction which had previously been handled by the Interstate Commerce Commission. Title II of the Communications Act specifically focused on telecommunications and brought to life the term universal service. The goal of universal service was, and is, to ensure that all Americans, regardless of where they live, receive quality telephone service at reasonable rates.

Even with the enactment of the Communications Act, by the 1940’s rural telephone service quality remained poor. Farmer systems struggled to maintain or upgrade their networks and many of these telephone systems shut down. As a result, fewer rural Americans had telephone service in 1940 than in 1920. However, in 1949 Congress amended the Rural Electrification Act (REA) to include telecommunications. This change allowed for long term, low interest loans for rural telephone companies which sparked a new era of growth for rural telephony.

AT&T, “Baby Bells” and the Telecommunications Act of 1996

AT&T dominated the telephony landscape from 1934 until 1982. The FCC controlled the rates of AT&T to limit profits and ensure nondiscriminatory pricing. Rural independent local carriers provided local wiring to end users and purchased long distance calling from AT&T. A lawsuit in 1982 by the Justice Department lead to the break-up of AT&T and created seven regional carriers known as the “Baby Bells”. Demands for further deregulation continued until the Telecommunications Act of 1996 was enacted. The Telecommunications Act of 1996 was enacted in part to attempt to create more competition in local telephone service by requiring Incumbent Local Exchange Carriers (ILECs) to provide access to their facilities for Competitive Local Exchange Carriers (CLECs). The goal of the new act was to let anyone enter any communications business, and to let any communications business compete in any market against any other.

Facts and Figures

Telephone Companies in America

1912 ~ 3,200
1927 ~ 6,000
1998 ~ 1,350
2005 ~ 1,300
2008 ~ 1,120
2010 ~ 1,090

Percentage of Lines owned (as of 2008)

AT&T – 44.8%
Verizon – 29.99%
Qwest – 8.85%
CenturyLink (Embarq) – 4.53%
Windstream – 2.18%
Everyone else – 9.65%

Transition to Wireless (as of 2008)

% Homes w/ Telephones # Wirelines
Per 100 pop
# Wirelines
Per 100 pop
1990 94.8 54.7 1.8
2000 97.6 67.9 34.5
2005 94.8 60.1 65.8
2008 98.2 50.9 86.4