Early Last-Mile Telephones
Author: Nora Lewis
Suggested Citation:
Lewis, N. (2026). Early last-mile telephones. Technology Assessment Project Case Study Library, University of Michigan. https://stpp.fordschool.umich.edu/tap-case-study-library/early-last-mile-telephones
Early Last-Mile Telephones
Key Takeaways
- Government regulation of a technology (or public good) can help bolster its equitable distribution, particularly last-mile development in rural regions.
- Still, monopolies and other powerful private forces can overpower public regulation, and impact how equitably and quickly a technology is distributed.
- Local governance of a technology or good can give communities more autonomy and flexible service, but corporate profit motives may curtail this self-governance.
The History of Early Last-Mile Telephone Technology
The telephone was first commercially produced in the United States in the late 19th century, first taking root at railway stations, stock exchanges, major international corporations, and the homes of particularly wealthy individuals (Fischer, 1987). By the early 20th century, more independent companies were able to enter the industry after Alexander Graham Bell's telephone patents expired in 1894 (Wallsten, 2001). Though there was quick expansion of the telephone across major U.S. cities during this period, there was less reliable development occurring in the country's rural regions, or the "last mile" of telecommunications networks (Hadwiger & Cochran, 1984). There were no major grass-roots movements led by farmers for the widespread expansion of the telephone into their communities, but the broader idea that everyone in the country should have access to this connecting technology gained more popularity in political spheres (Hadwiger & Cochran, 1984).
In 1918, the federal government officially nationalized the entire telecommunications industry, which until then had been largely monopolized by the private company AT&T (Hanna, 2019). In doing so, they hoped to promote the expansion of phone services into rural areas, in particular on the grounds of "national security" and social connectedness (Hanna, 2019; MacDougall, 2006). This nationalized agreement ended a year later, but led to a market in which competition became more highly regulated or even prohibited in local markets (Janson & Yoo, 2013). AT&T continued to operate as a "natural" monopoly, but service quality and rates were under the purview of government entities.
By the 1930s, much of the telephone infrastructure that had been placed in rural communities pre-World War I was deteriorating in the wake of The Great Depression. In fact, 39 percent of all farms had telephones in 1920, but only 25 percent still did in 1940 (Hadwiger & Cochran, 1984). Still, New Deal policies such as the Communications Act of 1934 and creation of the Federal Communications Commission (FCC) reinforced older narratives of telephone systems as a right in the inter-war years. One line from the aforementioned Communications Act declared that a central goal of the federal government was to "make 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" (Communications Act of 1934). In the economic prosperity that followed World War II, the Rural Electrification Administration (REA) worked to enforce the 1949 Rural Telephone Act, an amendment to the Rural Electrification Act of 1936, which sought to expand telephone service infrastructure in rural areas (Hadwiger & Cochran, 1984). The REA had previously been working to expand electrification to rural communities through the Rural Electrification Act of 1936, which enabled the federal government to provide low-cost loans for greater electrical distribution systems in rural regions of the United States (Hadwiger & Cochran, 1984).
Some speculate that rural take-up of telephones may have dwindled around this period due to high costs associated with the service. But once the Rural Telephone Act began to take shape, the 1950s saw a greater expansion of telephones in rural communities because of the role of federal subsidies (Hadwiger & Cochran, 1984). Rural homes with telephones increased 13% to 2.4 million farms by 1959 (DeShong, 2022). The bill emphasized inclusivity of telephone services over profits, a shift which engendered a fair amount of pushback in Congress from those that favored free enterprise over government intervention (Hadwiger & Cochran, 1984). Private telephone corporations such as the Bell company spoke out against the bill at Congressional hearings, worrying that it would give smaller independent companies and rural telephone cooperatives more of a competitive edge. But it was clear that without this injection of federal aid and regulation, the last mile problem was not going to be ameliorated anytime soon, and major farm organizations such as the Grange, the Farm Bureau and the National Farmers Union provided supportive testimony for the 1949 bill (Davis, 2022). In the years that followed, the number of borrowers and funding given to telephone loans grew tremendously. Yet the playing field was not totally equitable between smaller independent companies, cooperatives, and telecommunications giants like the Bell company, with the latter providing loans to smaller firms and rehabilitating these local lines for a low price (Fischer, 1987; MacDougall, 2006). But there was still a shift toward universal provisions of the telephone rather than letting private market profits dictate alone, a decision which enabled a lasting expansion of the technology into rural spaces.
Cost Effectiveness and Efficiency Narratives
A key part of the expansion of last mile telecommunications was the cheap rates it provided for rural residents. In the early 20th century, about 54.4 percent of the total U.S. population lived in rural areas, with poverty rates highest in these communities (U.S. Census Bureau, 2016). The construction costs of telephone lines in rural areas were heightened, given that there was little pre-existing infrastructure to build off of, and materials and workers had to travel further distances to highly dispersed installation sites (Hadwiger & Cochran, 1984). In tandem with these costs, potential rates for rural customers were likely to be more expensive because of the lower-density of subscriptions. Thus, the federal government provided large subsidies to make this expansion happen without major cost burdens on rural communities (Malone, n.d.). Over time, costs were also cut through more innovative construction tactics and technological advances (Galambos, 1992). These advancements consisted of wires with increased electronic signal-carrying capabilities, as well as the construction of more underground lines that helped minimize the physical infrastructure needed with traditional above ground telephone lines (Vonage, 2023). This made connections less susceptible to the elements or tangles with other electrical lines, allowing telephone technology to be more resilient and reliable. Such advances often occurred within Bell Labs, a laboratory established by the Bell telephone company in 1925 to centralize technological and manufacturing advances around the telephone in one place (Galambos, 1992; Nokia, 2025; Tanenbaum, 1993).
In 1971, Congress created a rural telephone bank in order to fast-track a growing list of rural telephone loan applications, getting funding from debentures purchased by the Secretary of the Treasury rather than congressional appropriations (Hadwiger & Cochran, 1984). By the 1990s, and thanks to many of these cost-saving and efficient tactics discussed above, 81.6 percent of rural households had telephones, compared to 79.8 percent of households in central cities and 81.7 percent in urban areas (McConnaughey et al., 1995).
Efficiency was also emphasized in universal telecommunications narratives. The more the grid was built out, the more efficient information transfers became. Though crossing the initial hump of rural construction costs was challenging, many attribute improved rural telecommunications infrastructure and efficiency to government intervention coupled with the resources of telephone monopolies like Bell (Tanenbaum, 1993). At the same time, there is evidence that more localized firms, such as companies servicing single states instead of entire regions, were able to reach higher scale efficiencies (or the extent to which a firm is close to its most productive scale size) between 1975 and 1990 (Majumdar & Chang, 1996). Thus, the story of what mechanisms were responsible for more efficient telecommunication operations is not always clear, and the efficiency of firms was often dependent on prevailing regulatory policies and technological advancements over the years.
Monopoly, Nationalization, and Regulation Dynamics
Though the nationalization of telephone lines between June 1918 and July 1919 was not permanent, it was a key step in wrangling profit-centric monopolies like the Bell company. Nationalization of major American industries was not uncommon during World War I, seen most clearly with the railroad industry. Railroads were crucial for transporting goods during wartime, but by 1917, the nation's railway infrastructure was deteriorating and services were dwindling, with private companies doing little to ameliorate these concerns (Hanna, 2019). The federal government chose to nationalize the industry until 1920, providing much-needed repairs to tracks, cars, and stations, expanding and integrating routes, as well as improving rail worker wages and ensuring union protections (Hanna, 2019).
In the context of the telephone and telegraph industries, effective communication was deemed an issue of national security during World War I. The management of this newer technology proved more difficult than managing railroads, with Congress giving the Post Office initial control of the freshly nationalized communications industry (Hanna, 2019). The year proved disorganized, and transformative expansion was not possible with wartime financial and manpower constraints. Yet it was this period that allowed the federal government to establish itself as an industry regulator, leading to an array of legislation promoting universal telephone provisions in the decades after nationalization.
Public utility commissions were established to regulate telephone services in the context of states and local jurisdictions, while the FCC and federal government regulated services across state lines and set national regulations in place (Tanenbaum, 1993). Despite these regulations, the Bell company was still very much a monopoly within the industry. It often consolidated smaller local firms into its own giant system of satellites, frequently providing loans to smaller firms and rural cooperatives to rehabilitate their lines for a low price (Weber, 2008). These tactics led to an imbalance in power within the telephone industry, effectively diminishing the pull of localized firms within rural areas. But at the same time, the Bell company was able to use its massive resources to distribute the most cutting-edge telephone technology across the country at reasonable rates for customers under the guidance of outside regulatory bodies (Tanenbaum, 1993). It was not a perfect system by any means, but the government oversight granted by the brief nationalization period helped protect many customers from costly rates and opened the door to significant expansions of telephone technology into rural areas.
Utopian promises of universal telephone access did not happen in one fell swoop, but today around 98% of Americans own a cellphone of some kind (Pew Research Center, 2024). Despite this, universal telephone narratives did not quell other communication disparities, particularly in the form of broadband access. Though the vast majority of Americans own a phone, the disparity in stable internet connection to reap the maximum benefits of such technology affects people of color, rural communities, and low-income individuals most (Li et al., 2023). Connectivity still remains a key equity issue, but early last mile phone efforts show that treating technology as an essential good can help move the needle closer to equitable distribution of this technology.
Relevance to Advanced Nuclear Energy
We chose this case to look at a technology that was aimed at closing gaps in access to a public good/essential resource, particularly in rural communities. The brief nationalization of the telephone industry felt like a potentially positive analog for government intervention that has helped contribute to greater distributive justice of a tech. What we found was a more complicated story, where government intervention helped to briefly expand access to the telephone in rural communities, but failed to cancel out the power of industry monopolies. The power of monopolies often undermined the pull of more localized firms, which made the expansion of telephone access a slower and less sovereign process for rural communities. In the context of AN, this case shows how monopolies and corporations can disempower more localized resource control, even if the government has some framework for regulation. This may mean that despite "energy equalizing" narratives surrounding advanced nuclear rollout in rural communities, the profit incentives of corporate entities threatens to curtail just distribution of the tech.
Key Sources
Fischer, C. S. (1987). The revolution in rural telephony, 1900-1920. Journal of Social History, 21(1), 5-26.
Hadwiger, D. F., & Cochran, C. (1984). Rural telephones in the United States. Agricultural History, 58(3), 221-238.
Hanna, T. M. (2019). A history of nationalization in the United States: 1917-2009 (p. 53). The Next System Project.
Tanenbaum, M. (1993). The historical evolution of U.S. telecommunications. Technology in Society, 15(3), 263-272.
References
Communications Act of 1934, Pub. L. No. 73-416, 47 U.S.C. (1934). Communications Act of 1934.
Davis, J. (2022, May 29). Rural telephone administration. Prairie Public.
DeShong, T. (2022, January 31). Understanding the value of 3-D materials in archives: A look at Poage's REA materials. W. R. Poage Legislative Library.
Fischer, C. S. (1987). The revolution in rural telephony, 1900-1920. Journal of Social History, 21(1), 5-26.
Galambos, L. (1992). Theodore N. Vail and the role of innovation in the modern Bell System. The Business History Review, 66(1), 95-126.
Hadwiger, D. F., & Cochran, C. (1984). Rural telephones in the United States. Agricultural History, 58(3), 221-238.
Hanna, T. M. (2019). A history of nationalization in the United States: 1917-2009 (p. 53). The Next System Project.
Janson, M. A., & Yoo, C. S. (2013). The wires go to war: The U.S. experiment with government ownership of the telephone system during World War I. Texas Law Review, 91.
Li, Y., Spoer, B. R., Lampe, T. M., Hsieh, P. Y., Nelson, I. S., Vierse, A., Thorpe, L. E., & Gourevitch, M. N. (2023). Racial/ethnic and income disparities in neighborhood-level broadband access in 905 US cities, 2017-2021. Public Health, 217, 205-211.
MacDougall, R. (2006). Long lines: AT&T's long-distance network as an organizational and political strategy. The Business History Review, 80(2), 297-327.
Majumdar, S. K., & Chang, H. (1996). Scale efficiencies in US telecommunications: An empirical investigation. Managerial and Decision Economics, 17(3), 303-318.
Malone, L. J. (n.d.). Rural Electrification Administration. Economic History Association. Retrieved March 24, 2025.
McConnaughey, J., Nila, C. A., Sloan, T., Baxter, D., Alverez, R., & Francesconi, M. (1995). Falling through the net: A survey of the "have nots" in rural and urban America. National Telecommunications and Information Administration.
Nokia. (2025, February 6). Nokia Bell Labs celebrates 100 years of innovation and looks ahead to another century of discovery.
Pew Research Center. (2024, November 13). Mobile fact sheet.
Tanenbaum, M. (1993). The historical evolution of U.S. telecommunications. Technology in Society, 15(3), 263-272.
University of Wisconsin Center for Cooperatives. (n.d.). Rural telephone cooperatives: research on the economic impact of cooperatives. Retrieved March 25, 2025.
U.S. Census Bureau. (2016, December 8). Measuring America.
Vonage. (2023, December 28). The history of telecommunications and its evolution as an industry.
Wallsten, S. (2001). Ringing in the 20th Century: The effects of state monopolies, private ownership, and operating licenses on telecommunications in Europe, 1892-1914. Social Science Research Network.
Weber, J. H. (2008). The Bell System divestiture: Background, implementation, and outcome. Federal Communications Law Journal, 61(1).
Photo: Study of telephone poles. U.S. Library of Congress Prints and Photographs Division.