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History of Rural Telecommunications

Image: a grandmotherThe independent telephone industry began to develop throughout rural America early in the 1890s, as both manufacturing and service organizations turned to the rural market. After the publication of a manual that explained to farmers how they could develop their own telephone systems on a mutual or cooperative basis, many farmer mutual systems emerged throughout rural America. By 1912, the number of rural telephone systems had grown to more than 3,200, and the U.S. telephone industry included several manufacturers that specialized in the production of so-called "rural phones."

The number of farmer lines continued to increase after World War I. At its high point in 1927, the rural telephone industry included some 6,000 mutual systems and other organizations. But during the same period, these systems were deteriorating: Many failed to keep adequate accounts; subscribers were lax about paying bills; and there were few maintenance people and little regular upkeep of the facilities. Poor service became the standard in rural America.

The 1930s brought about the New Deal and the establishment of the "alphabet agencies," including the Federal Communications Commission (FCC), which was created by the Communications Act of 1934. The act also made the concept of universal service the law of the land. This cornerstone of telecommunications policy called for "making available, so far as possible, to all the people of the United States a rapid, efficient, nationwide and worldwide wire and radio communication service with adequate facilities at reasonable charges..."

The goal of universal service was -- and remains today -- to ensure that all Americans, regardless of where they live, receive quality telephone service at reasonable rates. Congress reaffirmed the nation's commitment to the policy and social value of universal service in passing the landmark Telecommunications Act of 1996. 

Image: WW II rural telephone celebrationBy World War II, it was clear that rural telephone systems had reached an impasse. The farmer systems continued to deteriorate. Rates were low, and capital was inadequate to upgrade the networks. As a result, fewer farmers had telephones in 1940 than had them in 1920.

In late 1944, a bill was introduced in the U.S. Senate to establish a Rural Telephone Administration modeled after the already successful Rural Electrification Administration (REA). Action finally came in 1949 on bills to amend the Rural Electrification Act, making long-term, low interest loans available to rural telephone systems. The availability of low-interest loans sparked a new era of growth for rural telephony, which continues today. More importantly, the availability of high-quality telephone service at reasonable rates improved the quality of life for millions of rural Americans.

Historical Background of NTCA

After the establishment of the REA telephone loan program in 1949, the National Rural Electric Cooperative Association (NRECA) formed a telephone committee, composed of representatives of emerging joint electric-telephone cooperative organizations. In 1954, the committee decided that the time had come to form a separate naImage: Old time wiring being done by hand!tional organization to represent telephone cooperatives. NTCA was incorporated on June 1, 1954, and eight rural telephone systems in seven states became the original members. 

At its birth, NTCA concentrated on promoting additional memberships and testifying in annual congressional REA appropriations hearings. In NTCA's first fiscal year, ending June 30, 1955, the association saw a total income of $1,680, with expenditures consisting chiefly of printing bylaws, membership applications, and promotional letters. All work was undertaken either by the individual members of the NTCA Board of Directors or by NRECA staff.

By the end of 1956, NTCA's membership had increased to 60. That year witnessed considerable concern for the future of the REA telephone loan program, as the Eisenhower Administration made several attempts to terminate the program. Through NTCA's efforts, the program not only survived, but annual appropriations levels were gradually increased from approximately $50 million to $75 million by the end of the decade. Strong support in Congress from a number of senators, including Lyndon Johnson and Hubert Humphrey, contributed to NTCA's success in strengthening the rural telephone program.

As 1960 approached, NTCA began to add to its member services. The board of directors entered into an arrangement with NRECA to make the rural electric insurance and benefit programs available to employees of NTCA-member telephone cooperatives. In 1958, NTCA hired its first full-time staff member. During NTCA's third year of existence, REA Administrator Dave Hamil lauded the cooperatives on their record of progress.

With a membership of about 100 rural telephone cooperatives, NTCA continued to grow and develop during the 1960s. NTCA's lobbying efforts led to more favorable treatment for telephone cooperatives by REA under the Kennedy Administration. An amendment to the Rural Electrification Act was passed in 1962, broadening the purposes for which REA loans could be made, including the provision of educational television. Image: Hubert Humphrey

In 1962, NTCA's budget approached $22,000. The major emphasis of the association was to ensure that telephone cooperatives had sufficient financing available for progress and growth. During the remainder of the 1960s, however, NTCA focused on offering an increasing variety of services to its members. New staff was added, providing the association with expertise in management, finance, industry matters, FCC affairs, and education, including director and manager training.

The principal concern of the association continued to be the availability of adequate REA loan funds to meet the needs of rural telephone systems. With inflation and the increasing demand for upgraded service, loan applications exceeded REA's ability to handle them. The telephone loan program expanded from $75 million to $125 million, but the backlog of loan applications continued to grow until the program had a half-billion dollar backlog by the end of the decade.

NTCA also took the lead in helping to develop supplemental sources of financing to meet the needs of rural telco borrowers. At its 12th Annual Meeting in February 1966, the association went on record in support of a supplemental bank for rural telephone systems. In 1971, Congress established the Rural Telephone Bank. Image: Richard Nixon

The 1970s was a decade of change and tremendous growth for the association. NTCA members voted in 1970 to allow locally owned and controlled commercial telcos to join the association as nonvoting affiliate members. The association held its first Legislative Conference in 1971, a significant milestone given the association’s increased presence on Capitol Hill and at the FCC. During this decade, NTCA also moved the administration of its benefits program in-house. By the end of the decade, the association’s membership had reached nearly 300, representing telephone companies, member affiliates and associate members.

The 1980s ushered in a new era for the industry, following the landmark court ruling in 1982 that required AT&T to divest itself of the 22 Bell operating companies. Competition became the name of the game, and NTCA members responded, delving into new product lines such as cellular, cable TV and satellite that would position them for the future.

New opportunities continued to emerge throughout the 1990s, none more significant than the Internet. NTCA members also acquired PCS licenses and launched DBS, fiber, wireless and long-distance services. As the industry evolved, the association remained a vocal advocate for rural carriers on Capitol Hill and at the FCC. The association was very involved in advocacy efforts leading up to—and following—the passage of the 1996 Telecommunications Act, a rewrite of the nation’s communications act.  

The 2000s brought with it increased competition and even more products and services. As a sign of the changing times, the association officially changed its name in 2002 to the National Telecommunications Cooperative Association. NTCA celebrated its 50-year anniversary in 2004. Universal service, access reform, separations, intercarrier compensation and video were the key issues of concern for NTCA members and staff. The association launched a grassroots advocacy campaign, Supporting Policy Initiatives for Rural Independent Telecommunications, to encourage members to more proactively build relationships with their members of Congress.

When 2010 rolled in, NTCA saw it as an opportunity to redefine rural telecom. The association launched a strategic outreach effort to partner with third-party organizations that have an interest in ensuring rural communities are not left behind. Social media and video became increasingly more useful ways of communicating. NTCA and its rural allies launched a comprehensive Save Rural Broadband campaign to tout the critical need for broadband access for all Americans.

In February 2013, NTCA and the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO), a separate organization dedicated to representation of small telcos since 1963, agreed to unify, creating NTCA–The Rural Broadband Association.

Today, NTCA has approximately 1,300 members, divided into the following membership categories:

ILEC Member: An incumbent local exchange carrier (ILEC) is a local exchange carrier providing fixed voice and/or broadband Internet access services to fewer than 50,000 customers. The ILEC may be structured as a commercial, cooperative or international company.

Association: A local, state or regional association of communications companies.

Associate: A supplier of goods and services to the communications industry. Suppliers include entities such as insurance companies, manufacturers, other rural utilities, statewide providers of equal access, and consultants such as accounting, engineering and law firms.

Non-ILEC Subsidiary: An entity affiliated with an ILEC member that was created to provide telecommunications services, including Internet access and direct broadcast satellite.

 NTCA members are quite diverse, varying tremendously in size and offerings.They have evolved beyond “telephone companies” to become one-stop tech service providers, offering everything from video to wireless services, home security, computer repair and data storage. NTCA members often partner with local schools, hospitals and other civic entities to provide affordable, high-quality services that improve the lives of rural residents. Despite enormous challenges, NTCA members have made tremendous strides in deploying high-capacity networks to nearly all of their rural customers, enabling our nation’s ongoing evolution to broadband-based communications.

 

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