Lincoln Telephone & Telegraph Company History
Lincoln, Nebraska 68501
Telephone: (402) 474-2211
Fax: (402) 436-4711
Sales: $156.3 million
SICs: 4813 Telephone Communications Except Radiotelephone
Lincoln Telephone & Telegraph Company is one of the largest telephone companies operating in a contiguous geographical location. The company's activities are concentrated throughout the entire state of Nebraska and reflect growing trends within the telecommunications industry, including the consolidation of resources and the development of the cellular phone service market. A subsidiary of Lincoln Telecommunications Company, Lincoln Telephone and Telegraph Company is at the forefront in the cellular technology revolution.
In 1903, Charles and Frank Bills traveled to Lincoln, Nebraska, for the specific reason of establishing a new, independent telephone company that would compete with Nebraska Bell Company. Charles, an investment banker, and Frank, a businessman, knew nothing about the burgeoning telephone industry, so they approached Frank Woods for legal advice. Woods was a member of a prominent legal firm at the time, and he began to help make the necessary arrangements for the two brothers to begin their telephone business. In March of 1903, the company was incorporated, and two months later the board of directors decided upon the name Western Union Independent Telephone Company. One year later, the company began processing calls for its customers. At the same time, the company name was changed to Lincoln Telephone Company.
In the first of many pioneering moves throughout its history, Lincoln began processing calls for its customers through the innovative but unproved Strowger Automatic Dial System. This was Nebraska's first dial installation system and one of the largest west of the Mississippi River. No one outside the company, including the managers at Bell Telephone and other independent companies, thought that the new system would work. After Lincoln proved it successful, however, a nationwide dial service was not far behind. Unfortunately, Lincoln Telephone Company seemed unable to take advantage of its success. The company's operations were in shambles: money was short, equipment was unproved or needing repair, and the company had no established procedures for maintenance or construction.
When Frank Woods assumed the position of president of the company in 1905, he immediately initiated a comprehensive reorganization plan. He revamped the accounting methods, hired personnel experienced in the telephone industry, and borrowed money to pay short-term debts. The most difficult problem facing the new company, however, was the competition for customers with Nebraska Bell Company. Bell and independent telephone companies competed intensely for customers within the same town, given the unregulated and uncoordinated nature of the industry at the time. A customer of one phone company was unable to call the customer of another phone company unless both customers subscribed to services at both telephone companies.
Lincoln Telephone Company grew rapidly during the following years, but competition among Nebraska Bell and independent phone companies reached a frenzied peak by 1910. Initially, everyone believed that competition within the telephone industry was healthy and that it would prevent a monopoly of services. But competition had grown so keen, and the strife among companies so intense, that the public was soon clamoring for government officials to regulate the industry and require the interchange of services among the many telephone companies, especially for such services as local and long distance calling and intra- and interstate calling.
The president of Lincoln Telephone Company, Frank Woods, recognized that the infant telephone industry could only be saved by restricting competition and implementing comprehensive services. After two years of lengthy negotiations in which he was one of the most important participants, Woods helped to forge a deal among 13 independent telephone companies, including his own and Nebraska Bell Telephone. The deal included the elimination of local competition through a division of operating territories and the establishment of networks of interconnecting toll lines. For his own company, Woods worked out an agreement that included the purchase of all Nebraska Bell Telephone holdings within a certain area and the sale of all properties not within that same prescribed area. The exchange of properties led to Bell paying Lincoln $2,293,000, certainly the largest check Lincoln Telephone Company had received up to that date.
By 1912, the company had adopted a new name, Lincoln Telephone & Telegraph Company, and had also added over 40 Bell telephone exchanges. The firm was now well financed, with assets over $4 million, and was servicing over 46,000 telephones. Customer billings were delivered by mail rather than in person, and a stock purchasing plan was initiated for all the company's employees. By 1915, Lincoln Telephone & Telegraph was part of the telephone service that extended from the American east to the west coast, commonly known as the transcontinental bridge.
When the American Congress declared war on Germany in April of 1917, however, the company's fortunes took a turn for the worse. Many Lincoln employees volunteered for the war effort, while others jumped to companies that offered higher wages. In 1918, the company was hit hard by a devastating flu epidemic that killed thousands of people across the United States. Finally, during the same year, the U.S. Postmaster General issued a proclamation that placed all wire communications under the control of the federal government for the remainder of the war. For Lincoln Telephone & Telegraph, this change severely restricted all of the company's business for reasons of national security.
When World War I ended, the company started upon an era of growth and prosperity. Although management was faced with a labor shortage and higher taxes, Lincoln expanded its telephone service subscription rate more than 50 percent. The company introduced pay telephones in 1923, and by 1925 Lincoln Telephone & Telegraph reported that it had the highest telephone saturation rate in the entire United States with 28 stations for every 100 people. In 1929, before the stock market crash, the company introduced the Model-T Ford as part of its telephone service repair and maintenance fleet. During the 25th anniversary dinner celebration of the company's founding, Frank Woods, still serving as president, received a telephone call over transatlantic cable from London. Charles G. Dawes, the American ambassador to England and a close friend of Woods, wanted to congratulate the founder on the success of Lincoln Telephone & Telegraph Company.
The prosperity of the 1920s came to a startling halt on Black Friday in the fall of 1929. The stock market crash on Wall Street ushered in a new era of economic hardship. Lincoln Telephone & Telegraph's high of more than 83,000 phones in service at the end year dropped precipitously to just over 62,000 by the beginning of 1933. Due to the drought and dust storms in the plains states that exacerbated the economic difficulties, telephone service for many families became a luxury too expensive to afford. Farmers who had fallen on hard times and who lacked the money to pay for phone bills made arrangements with Lincoln Telephone employees to trade eggs, corn, or chickens for an additional month's telephone service. Employee wages at the company were drastically reduced, and those workers that left were not replaced. Lincoln Telephone & Telegraph survived the worst years of the Great Depression, but the company had a long road to travel to regain the former prosperity it had lost.
By the end of the 1930s, the company was well on the way to a full recovery. Telephones in service increased to 64,000 and the firm's assets amounted to $15 million. In 1941, Lincoln Telephone & Telegraph collaborated with the Bell System in constructing a transcontinental toll cable through the company's portion of Nebraska. This cable was finished just in time to accommodate the huge increase in demand for telephone services that was brought on by the start of World War II.
Not surprisingly, the company's experience during the Second World War paralleled its experience during World War I. The U.S. government placed restrictions on all forms of telephone installations, especially for individual residences, and any requests for conversions to dial were summarily rejected. Paper shortages during the war meant that no directories could be published, and additional shortages of such items as gasoline and rubber created problems for the company's motor vehicle repair and maintenance fleet. As in World War I, many young men left the company to serve in the armed forces, thus drastically reducing the number of employees and the firm's overall productivity. Although Lincoln Telephone & Telegraph added 2,235 new telephone stations during this time, the gains of the late 1930s seemed stalled by the war.
Yet when World War II finally ended in 1945, the company bounced back rapidly. In 1946, Frank Woods retired from his position as president of the firm and was replaced by his son, Thomas C. Woods, who had served in different capacities with Lincoln Telephone since 1923. Thomas Woods immediately implemented an aggressive modernization program that included expanding the company's facilities and hiring new personnel. By 1950, Lincoln Telephone & Telegraph installed its 100,000th telephone. When Frank Woods died in 1952, he knew that the firm would perform well under the leadership of his son. His confidence was borne out in just a few years. In 1958, when Thomas C. Woods died, the company's assets and profits were higher than ever before.
Throughout the 1960s and 1970s, leadership for Lincoln Telephone & Telegraph Company were provided by Thomas Woods, Jr., who succeeded his father as president, and Frank H. Woods, Jr., who was elected to fill the position of chairman of the board of directors, a seat his father, the founder of the company, had vacated upon his death in 1952. These two men guided the company during the revolutionary years within the telecommunications industry. During the late 1950s and early 1960s, the firm installed Nebraska's first direct distance dialing system and the first direct distance dialing system in the state that provided coast-to-coast telephone service. In 1968, under the direction of the grandson and son of the founder, the company installed the state's first 911 emergency number. In 1971, Lincoln Telephone & Telegraph Company started operation of Nebraska's first telephone exchange that was electronically controlled. One year later, the company implemented a plan to improve and upgrade all its services for customers living in rural areas. By the end of the decade, the firm had installed and was operating a long-distance digital switching system and was in the process of installing a state-of-the-art computerized directory assistance system, one of the first such systems used by a telephone company in the United States.
In the mid-1980s, Lincoln Telephone & Telegraph Lincoln management decided to create a holding company, Lincoln Telecommunications, in order to subsume all the expanding telephone operations under centralized control. The company also formed a long distance company, Lincoln Telephone Long Distance, and began to establish itself as a full-service communications firm.
In the mid-1990s, management at Lincoln Telecommunications, following the growing trend of consolidation within the industry, purchased Nebraska Cellular Telephone Company to augment the services already provided by Lincoln Telecommunications. The acquisition cost over $130 million and increased the company's cellular service area to cover the whole state of Nebraska. Management wanted to capitalize on the growing number of cellular customers. The purchase was also a response to a strategy already being carried out by America's three largest long-distance telephone companies, AT&T, MCI, and Sprint, to enter the cellular telephone market. Seeming to return to the local phone business, these three long-distance carriers threatened one of the most lucrative markets open to local telephone companies, such as Lincoln Telephone & Telegraph.
In the mid-1990s, Lincoln Telephone & Telegraph Company, under the auspices of its parent company, Lincoln Telecommunications, provided long-distance voice and data services, as well as cellular and paging services. The company's position within the regional cellular market was very strong, an advantage the company hoped to use against the competition from long-distance carriers entering the cellular telephone industry.
- "Accord Reached to Buy Rest of Nebraska Cellular Firm," The Wall Street Journal, March 23, 1995, p. 6B.
- "Lincoln Telecom to Buy Nebraska Cellular," The New York Times, March 23, 1995, p. 4D.
- Woods, Thomas C., Lincoln Telephone & Telegraph Company, Newcomen Society: New York, 1979.
Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.