Carolina Telephone and Telegraph Company History

720 Western Boulevard
Tarboro, North Carolina 27886

Telephone: (919) 823-9900
Fax: (919) 554-7474

Wholly Owned Subsidiary of Sprint Corporation
Incorporated: 1895 as the Tarboro Telephone Company
Employees: 3,500
Sales: $552.9 million
SICs: 4813 Telephone Communications Excluding Radiotelephone

Company History:

The Carolina Telephone and Telegraph Company (CT&T) is an independent telephone company serving large portions of North Carolina. The company was formed at the turn of the century and remained independent when most of the rest of the American telephone industry was consolidated. It continued to grow as the area it served was developed. At the end of the 1960s CT&T was purchased by a telecommunications holding company that eventually became the Sprint Corporation. With the advent of deregulation in the mid-1980s, CT&T expanded its services to include long distance calls.

CT&T got its start in the autumn of 1894 when a traveling salesman named G. A. Holderness united a group of businessmen to establish a telephone exchange in Tarboro, North Carolina. The group raised $2,500 and sold stock to nine additional citizens of Tarboro to gain further funding. In October, 1895, the exchange became operational. Its switchboard was located on the second floor of a building on Tarboro's main street. It had a capacity of about 50 lines, which served an initial pool of 30 subscribers. The new service quickly proved to be a success, and Holderness and his partners soon expanded operations to the nearby towns of Washington and Kinston. In addition, they purchased the previously existing exchange in Fayetteville.

During this time, an additional telephone exchange was set up independently in the town of Scotland Neck. In 1900 the five exchanges of Tarboro, Washington, Kinston, Fayetteville, and Scotland Neck were merged into one company, which was given the name Carolina Telephone and Telegraph Company. Over the next few years, this company purchased additional exchanges in Maxton, Red Springs, Smithfield, Dunn, and Wilson. By 1905, the company had ten different operations in North Carolina and 1,645 customers.

CT&T's growth continued at the end of the decade, as three more properties in LaGrange, Benson, and Lillinton were added by 1912. The company's expansion was hampered somewhat by the American entry into World War I in 1916. Because of shortages of manpower and materials, the company was unable to provide service to all the customers who desired it. Citizens of several small towns who wished to be wired were required to wait until further materials became available at the war's end.

In the wake of the war, CT&T resumed its expansion. In 1919 the company bought six automatic dialing mechanisms, and the first of these was installed in the town of Pinetops in 1920. With the addition of this equipment, CT&T was better able to serve the small communities in its area. By the end of 1920, CT&T boasted 20 exchanges with a total of 7,775 telephones on line.

In the 1920s CT&T continued to grow and consolidate its operations. The telephone industry at that time was extremely fragmented, as each small town had developed its own exchange. These small operations were unable to provide updated service, and they were also not able to turn a profit. Because the structure of the telephone business at this time was inefficient, leaders in the industry recognized that a major series of mergers would have to take place.

In 1926 CT&T embarked on this process when it merged with the Home Telephone and Telegraph Company, headquartered in Henderson, North Carolina. This company ran exchanges in 24 towns, and together, the company served 42 exchanges. The base for both companies' activities was moved to Tarboro. In the immediate aftermath of this merger, CT&T also added telephone exchanges in Ahoskie, Windsor, Aulander, Winton, Williamston, Plymouth, Murferesboro, and Lewiston. By the end of 1927, the company could boast that nearly every town in eastern North Carolina had been provided with telephone service.

With the coming of the Great Depression, CT&T's economic fortunes took a nosedive, and the company was forced to relinquish 18 percent of its telephone stations by 1933. By 1934, however, the company's business had bottomed out, and it began to grow slowly once again. By 1937, CT&T had returned to its post-Depression size. And with the entry of the United States into World War II in 1941, CT&T experienced significant increases in demand for its services. Several major U.S. military installations were located within its service area, and the company was forced to make large additions to its central office staff and to its outside plant facilities in order to provide adequate telephone coverage to the military personnel in the area.

CT&T's rapid expansion continued at an even greater pace after the war. The cities and towns of the company's area experienced strong growth in population, and this new public clamored for phone service. In addition, the population of rural areas in North Carolina grew, as farmers were able to make a profit on their crops for the first time in many years. With this greater prosperity, many rural areas demanded to be wired for phones. During the five years after the war, CT&T worked to provide service to its rural customers, and by 1950, the company had extended its network to include 13,088 customers in outlying areas.

Throughout the late 1940s, CT&T struggled to meet the new demand for its services. The company experienced rising prices for its materials and was forced to ask for increases in telephone rates from the public utilities regulators on several occasions. With higher revenues, CT&T was able to finance further expansion, and by 1952, the company had installed its 100,000th phone. By the end of the year, CT&T had expanded to include 103 exchanges and 106,382 subscribers. At this time the company also began to computerize its operations, installing a rudimentary IBM accounting system for the tabulation of long-distance bills.

Further updating of company technology took place in the late 1950s. In 1957 CT&T installed a microwave system for communication between two towns. Later that year CT&T made direct distance dialing available to its subscribers in the town of Washington. With this advance, customers no longer had to go through an operator in order to reach customers in areas outside their local exchange. In 1958 a second direct distance dialing system was installed in Kinston, and 18 more towns received this service by the end of that year.

Also in 1958 CT&T introduced the first color telephones, which were installed in a motel in Kinston. This move signalled the advent of an era in which the telephone would become less a utilitarian device, and more a consumer object, with a wide variety of choices in styles and colors available. By marketing this wider range of products, CT&T was able to increase its earnings on its basic service.

By September, 1960, with the conversion of Maxton's exchange, all of CT&T's customers had received direct distance dialing, capping the greatest period of capital development in CT&T's history. The manually operated switchboard in Maxton was used for the last time on September 18, 1960.

Having completed phase one of this conversion, CT&T turned to the next technological innovation and began to alter its old five digit telephone numbers. First, the company announced that it would convert to 'two-five' numbering, in which the name of an exchange's central office would be taken as the number's prefix, and its first two letters dialed. This system incorporated a word and five digits, such as 'Plaza 6-5000.' In February, 1960, however, just as this process was getting under way, CT&T called it off after realizing that there were not enough central office names available for use. Instead, the company moved to a new national seven-digit all-number standard. By the end of 1960, members of 83 exchanges had been given their new codes.

In addition to these changes in its operations, CT&T suffered two major natural disasters in 1960 when an ice storm in February downed large numbers of telephone poles, and then Hurricane Donna struck in September. Both of these events required extensive clean-up operations on the company's part.

The next year CT&T took the next step in automating its billing procedures when the company installed an IBM 1401 electronic data processing center. With this machine, CT&T was able to prepare 8,000 bills a day and rate 50,000 toll calls. In July, 1962, CT&T entered the satellite age, when the company arranged a symbolic call from New Bern, North Carolina, to Bern, Switzerland, by way of Telstar, a new communications satellite. In the following year, CT&T customers in the town of Rocky Mount, North Carolina, also gained the option of making person-to-person, collect, and special calls by dial.

By the end of 1963, CT&T had about 8,000 stockholders. The owner of one of the largest shares of the company was the Southern Bell company, an arm of American Telephone & Telegraph Company (AT&T). In December, 1963, Southern Bell sold its 18 percent holding in CT&T to the public, ending its involvement with the independent company. Five months later CT&T made its debut on the New York Stock Exchange.

In the following year CT&T introduced Improved Mobile Telephone Service, which allowed two-way dialing, and in the following year the company marked the completion of its seven-number conversion process. CT&T also installed a company-owned private automatic branch exchange at the Pope Air Force Base, which used the newest Centrex technology.

In 1968 CT&T broke ground for a new six-story headquarters building on St. James Street in Tarboro. Later that year the company signed a plan of merger with United Utilities, Inc., a holding company based in Kansas City. After a vote of the company's shareholders, CT&T became a wholly owned subsidiary of this company on March 28, 1969. Three years later CT&T's corporate parent changed its name to United Telecommunications, Inc., and 20 years after that it was transformed again, becoming the Sprint Corporation. Two months after its purchase, CT&T signed a contract with the Communications Workers of America, which covered employees in the company's Traffic and Plant departments. This move ushered in a period of new growth in the company's operations both internally and externally.

During the 1970s CT&T continued to modernize and upgrade its operations. In November, 1970, the company ended rural ten-party service, converting all party lines to groups of no more than four. In addition, the company continued to upgrade its long-distance equipment. In 1971 CT&T began the installation of a new electromechanical 4-A switching center in Fayetteville; this process was completed in the following year at a cost of $20.9 million. Two years later a second 4-A unit was installed in Rocky Mount for $14.8 million. Also in 1973, H. Dail Holderness, a descendent of CT&T's founder, was named the company's new chairman of the board.

In March, 1977, CT&T reached the 700,000 telephones installed mark, and the company also processed a record seven million long distance calls that month. In addition, the company began the move from the electronic to the digital age when it installed its first digital private automatic branch exchange for a mobile home manufacturer. Seven other clients signed up for this service by the end of the year. Also in the late 1970s CT&T merged with two other regional telephone companies, the United Telephone Company of the Carolinas, and the Norfolk Carolina Telephone Company. With this move, CT&T expanded its service area and added 50,000 new phones to its subscriber base.

In anticipation of greater competition in the telephone industry, CT&T opened a number of Phone Shops to sell telephone equipment in the late 1970s. This experiment did not flourish, however, and it was short-lived. In another move to prepare for greater competition, CT&T tried to shore up its bottom line by requesting rate increases from its regulatory agency. Beginning in 1978, the company requested three raises in three and a half years.

In the midst of its petitions to win higher rates, CT&T experienced a strike of its employees. In 1979 members of the Carolina Telephone union walked off their jobs for 60 days before an agreement was reached. Later that year, however, the company's employees joined together to move into CT&T's new headquarters building on Western Boulevard in Tarboro.

At the beginning of the 1980s, the telephone industry as a whole underwent widespread changes. Under court order, the longtime monopoly of AT&T was broken up, and wider competition was introduced to the industry. In addition, accompanying deregulation opened the door for telephone companies to compete in many areas in which they had previously been forbidden to act. To keep pace with these changes, CT&T expanded its services and products.

In 1983 the company began the installation of the next generation of telephone cables when fiber optic technology was introduced. On the first day of the following year, the new era in the telephone industry began. CT&T responded by consolidating its service centers into three and by establishing a new form of service, Carolina Business Services, which offered sophisticated products and systems to large business customers.

Three years later CT&T formed Carolina Telephone Long Distance. This subsidiary provided long-distance service to in-state areas that were outside the local calling area, and also hooked up callers to domestic and international long-distance services. The conversion of the company's exchanges to 'equal access,' which allowed customers to choose which long-distance service they preferred, also began in 1987.

In the following year CT&T established North Carolina Utility Services (NOCUTS). This division was responsible for locating and marking underground facilities for utilities, so that they would not be damaged in excavation. That year the company also installed new digital directory equipment, which meshed well with its other digital operations, after selling its previous operator directory assistance facility to AT&T. By 1989, CT&T's long distance operations had become profitable. In that year the company nearly doubled its number of access lines and its minutes of use, as its gross revenues more than tripled. By that time, CT&T was serving 145 exchanges with nearly 750,000 access lines.

With the advent of the 1990s, CT&T's corporate parent increased its visibility by changing its name to 'Sprint' in early 1992. Later that year, Sprint announced that it would merge with Centel, another major independent telephone company, at a cost of more than $4.7 billion. After the merger was completed in 1993, operations of the two companies were combined into Sprint/Mid-Atlantic Telecom, which served four states and was headquartered in CT&T's old Franklin Street building.

On July 31, 1993, CT&T completed the last phase of its newest technological re-tooling when, after taking out of service the last of its electromechanical switches, the company became 100 percent digital. With this move, CT&T prepared itself to offer further services as telecommunications technology advanced. Backed by a large corporate parent with a long history of successful effort behind it, CT&T seemed likely to thrive in the coming years.

Principal Subsidiaries: Carolina Telephone Long Distance.

Further Reading:

  • Mollenkamp, Carrick, 'Battle over Toll Calls Brewing in Raleigh,' The Business Journal-Charlotte, January 19, 1989.
  • Mukherjee, Sougata, Triange Business, 'CT&T's Plan,' June 28, 1993; 'CT&T to Issue $50M of Debt,' December 7, 1982.

Source: International Directory of Company Histories, Vol. 10. St. James Press, 1995.