The 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.
By 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.
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 national 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.
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.
In 1970, NTCA members voted to allow locally owned and controlled commercial telcos to join the association as non-voting affiliate members.
Today, NTCA has approximately 1,150 members, divided into the following membership categories:
- Telephone - includes operating companies that are organized on a cooperative, mutual aid, or nonprofit basis; locally owned and operated commercial telephone companies; and small and rural telcos located outside the United States.
- Association: - statewide or regional telephone associations made up of individual telephone systems within those geographical areas.
- Associate: - businesses that provide goods and services to the telecommunications industry. These include manufacturers, suppliers, cable TV systems, cellular systems, construction companies, engineering firms, consulting firms, insurance companies, accounting firms, law firms, and statewide providers of equal access service.
- Subsidiary - telecommunications organizations created to provide services to rural America such as wireless services, Internet access, cable television, direct broadcast satellite, and other telecommunications services.