Alltel Corporation is a wireless communications company that began as a technical service provider to small-town Arkansas telephone companies in 1943 and evolved into one of the largest telecommunications companies in the world. Before its merger with a private equity firm and the acquisition of most of its assets by Verizon Communications in 2008, Alltel operated one of the largest wireless networks in the United States and served more than 13 million customers in thirty-four states. Three generations of the founding family led the company, based in Little Rock (Pulaski County), for sixty-five years until the merger.
Brothers-in-law Hugh Randolph Wilbourn Jr. and Charles Beverly Miller, both of Little Rock, went to work as construction crewmen for Southwestern Bell Telephone Co. in 1934. Over time, they received training in the management, engineering, and customer-service aspects of the phone business, and they went into business on their own in Little Rock in 1943. They helped more than a hundred rural telephone companies around the state with everything from setting poles to upgrading switching equipment. In 1945, they opened a storefront in the Hillcrest district of Little Rock, first as Communications Repair Service and later as Allied Telephone and Electric Co. The business sold electrical appliances in the front of the building, and the company enabled Wilbourn and Miller to buy telephone equipment wholesale.
Their first chance at success came when they were maintaining the lines and switching equipment for a tiny telephone system, the Grant County Telephone Co. Wilton R. “Witt” Stephens, the financier and gas developer, had bought the company for $25,000 in 1942, mainly so that he could run a line to the family farm in Prattsville (Grant County) and talk to his mother from his home and office in Little Rock. He hired Wilbourn and Miller to maintain the system in exchange for keeping the earnings. Tiring of the constant complaints from their 275 customers and the meager earnings, Wilbourn and Miller visited Stephens to tell him they wanted to end the arrangement. As they were leaving, Wilbourn asked Stephens if he would sell the company. Stephens took them back to his office and wrote the contract. He sold his stock for $40,000 on credit without a down payment and with one condition—that they never raise his mother’s monthly bill. Some years later, they borrowed money from Boatmen’s National Bank in St. Louis, Missouri, to repay the balance.
The telephone company had supplied old hand-cranked magneto telephones, and the lines were often attached to fenceposts and tree trunks, so any storm was likely to disrupt service. Over the next two years, they rebuilt the lines, installed modern switching equipment, and replaced the magneto phones with a common battery.
During the next two decades, their work with most of the independent telephone companies paid off in the same way. Customers in the tiny exchanges were perpetually unhappy because they knew their service was two decades or more behind that of their relatives in the larger cities around the state (who had enjoyed dial service in some instances since the 1930s). During World War II and for a few years afterward, the requisition of resources for the war made wire and other materials so scarce that the companies could not improve their systems. After the war, Wilbourn and Miller saw an advertisement in the Arkansas Gazette inviting bids on surplus military communications equipment—many miles of copper cable and other supplies—at the Arkansas Ordnance Plant in Jacksonville (Pulaski County). They got the contract and the only ready stockpile of cable and communications equipment in the state for years.
Independent companies also found it difficult to get loans to upgrade their equipment. Wilbourn and Miller complained to their congressman, Representative Wilbur D. Mills, that the high interest on bank loans made it hard for independents to get affordable financing to expand and improve their systems. The result was an amendment in October 1949 to the Rural Electrification Act (REA) to extend the REA’s low-interest loans to rural telephone companies as well as electrical cooperatives.
One by one, as they found themselves without successors or unable to get loans to finance or manage the sweeping technological changes in the industry, the owners of small phone companies sold out to Wilbourn and Miller, who bought all the exchanges of the Southwest Arkansas Telephone Co., the Felker Telephone and Oil Co. at Mulberry (Crawford County), the Quitman Telephone Co., and others across the state. They had acquired so many exchanges by 1954 that they formed Allied Telephone Co. as a holding company. Miller and Wilbourn got pilot’s licenses and two small aircraft and divided the state between them. They bought their first sizable market in 1957, the Home Telephone Co. at Fordyce (Dallas County).
They were not reluctant to borrow money. By 1970, Allied’s long-term debt totaled $26 million, of which $15.9 million was the principal on REA mortgages. Between 1960 and 1974, Allied added at least one new company a year. In 1964, it ranked among the nation’s top 125 independent telephone companies but did not serve a city as large as 5,000. It added Crossett (Ashley County) in 1965 and Boone County, which included Harrison, in 1971.
Miller died in 1962, and his son, Charles W. Miller, took his place. Wilbourn’s son-in-law, Joe T. Ford, joined the company in 1959 as a Yellow Pages advertising salesman. The son of the state’s longtime state education commissioner, Arch W. Ford, and a budding politician (he served sixteen years in the state Senate), Ford would lead the company through its vast expansion in the 1980s and 1990s.
In 1961, Allied became the first telephone company in the United States to supply customers with direct long-distance dialing for station-to-station, person-to-person, collect, and credit-card calls. It was installed at Fordyce and linked the city to outlying towns. It was the first company in Arkansas to install a centralized automated switchboard system for a business and the first to install push-button phones. In 1964, it made mobile phones available for the first time. But it was the company’s innovation with fully automated long-distance dialing that earned it a national reputation and a long and bitter battle with American Telephone and Telegraph (AT&T).
In church one Sunday in 1962, Wilbourn dreamed up a scheme to eliminate operators altogether for long-distance calling. After writing the formula on an offering envelope, he went on to perfect it and get the Kellogg Laboratories to manufacture the device, which he called Telfast. The device would drastically reduce AT&T’s long-distance revenues and improve Allied’s. AT&T first blocked calls from the Allied exchanges, and the dispute raged through state and federal regulatory agencies and state and federal courts for years. After seven years, Wilbourn and AT&T settled. Allied scrapped its invention and its $18.4 million antitrust suit, and AT&T sold the small company 129 miles of toll lines, a microwave system, carrier channels, and long-distance terminating equipment. The company’s toll revenues rose sixty-one percent the next year.
Allied began acquiring exchanges in other states in 1967, first in Missouri and then in Oklahoma, Texas, Kentucky, Tennessee, and California. In 1974, Allied had 142,000 telephones, compared with Bell’s 119 million, but its stock was selling at an earnings multiple nearly twice that of AT&T’s, and it had become the eleventh-largest independent company in the country. The company had moved in 1963 from offices near the Little Rock airport to a building on Cantrell Road in Little Rock, near where its sprawling campus would be built two decades later. In 1977, it became the first phone company in the country to offer local digital telephone service.
In 1983, Allied, by then under the leadership of Joe Ford, merged with the nation’s fifth-largest independent phone company, Mid-Continent Telephone Co. in Ohio. Mid-Continent also had been in the vanguard of communications technology. The new company was called Alltel. Little Rock would soon become the national headquarters.
The government-ordered breakup of AT&T and deregulation of the communications market gave independents like Alltel both opportunities and new competitive risks, and the technology revolution—chiefly fiber optics and wireless—produced spectacular growth for the next two decades.
Before the merger, Mid-Continent had experimented with fiber optics, which would carry many times the traffic of copper cable with less interference. Like Allied, it also was examining the prospects of entering the bidding for cellular markets, although no one in 1983 realized the full potential of wireless. Alltel’s first big venture into wireless was launched in 1985 in Charlotte, North Carolina, where it won seventy percent ownership. Alltel opened its first wireless retail store in 1993 at Jonesboro (Craighead County), and in 1997 it merged its old wireline business and its booming wireless network into one organization. In 1990, it had acquired Systematics, Inc., which performed digital data processing for banks and other financial institutions. Systematics, which was founded in Little Rock in 1968 by investor Jackson T. Stephens, became the base of Alltel Information Services.
Scott T. Ford, Joe Ford’s son, became president in 1997 and oversaw the spectacular round of acquisitions and growth over the next ten years. In 1998, Alltel merged with 360 Communications of Chicago, Illinois, the nation’s second-largest publicly traded wireless company, which added 2.6 million customers in fifteen states. Other mergers and acquisitions followed in rapid succession: Standard Group, Inc., of Georgia; Aliant Communications of Nebraska; Liberty Cellular of Kansas; SBC Communications of Louisiana; Cellular XL in Mississippi; U.S. Cellular; Verizon local-access lines in Kentucky; First Cellular of Southern Illinois; Palmetto MobileNet of North and South Carolina; Midwest Wireless of Minnesota; and wireless assets of GTE, CenturyTel and U.S. Cellular. Alltel became a wireless-only company in 2006 by selling off its landline operations to Valor Telecom; this new company was named Windstream Communications with headquarters in Little Rock. By 2009, Alltel’s annual revenues had soared to nearly $10 billion.
Following a trend in the telecommunications business to go private, Alltel’s shareholders agreed in May 2007 to be bought out by TPG Capital and GS Capital Partners, the private-equity division of Goldman Sachs, for $27.5 billion. The Federal Communications Commission (FCC) approved the merger that fall. Scott Ford continued as the president and CEO. Fortune magazine ranked Alltel as one of the nation’s fifty most admired companies.
In June 2008, TPG and Goldman Sachs reached agreement with Verizon Wireless for Verizon to buy the equity in Alltel for $5.9 billion. Based on Alltel’s debt of $22.2 billion, the transaction amounted to $28.1 billion. The FCC approved the merger in November, and the merger closed on January 9, 2009. Hundreds of mid-level employees in Little Rock lost their jobs or had to relocate to other cities. The 18,000-seat arena in North Little Rock (Pulaski County) known as Alltel Arena became Verizon Arena in 2009.
The acquisition left some Alltel wireless properties independent. Allied Wireless Communications sells Alltel Wireless services to about 800,000, mostly rural, customers in six states, not including Arkansas. It is the country’s ninth-largest wireless telecommunications company.
For additional information:
Manthey, Tony. “Allied Lives on in Allied Wireless.” Arkansas Democrat-Gazette, October 23, 2010, p. 53.
———. “Today Alltel Goes Private, Signing off from NYSE.” Arkansas Democrat-Gazette, Nov. 16, 2007, p. 1 and 8.
Patten, David A., and Jeffrey L. Rodengen. The Legend of Alltel. Fort Lauderdale, FL: Write Stuff Enterprises, 2001.
“A Tiny Rival Sues AT&T on Dialing.” New York Times, June 19, 1965.
Little Rock, Arkansas