A Brief History of Canadian Valley Telephone Company

In 1927, Orlean H. Smith, an Oklahoma A&M-educated Choctaw farmer, bought the Canadian telephone exchange for $300, complete with a manual switchboard and magneto telephones. Canadian was one of the largest agricultural shipping points in the Choctaw Nation. It had five cotton gins and two block-size department stores. Orlean brought his new bride, Lillian L. Smith, the daughter of renowned Dr. Ledgerwood of Tishomingo, Oklahoma, home to Canadian in a covered wagon. Lillian kept the books while their two teenaged daughters, Kaloolah and Armina, operated the switchboard from the front room of their home. This type work done by females was opposed by the local Baptist preacher, who believed the children’s morals would be damaged — and, the neighbors feared the electricity would prevent proper development. While the women attended to the switchboard and bookkeeping, Orlean maintained the outside plant and operated the family farm. Everyone in the Smith family had a part.

In 1929, Crowder, a small town just south of Canadian, was growing faster than ever. With a population of 1,500, two hotels, an ice plant, a Dr. Pepper bottling plant, a bank, and the Southwestern Bell Telephone Company, Crowder still greatly depended on revenue generated by two intersecting railroads, the Katy and the Fort Smith & Western. But as the Great Depression began to unfold, Southwestern Bell lost every single customer in the entire Crowder exchange. So, in 1929, Mr. Smith bought the Crowder exchange from Southwestern Bell for salvage.

During the Great Depression, the small-farm basis of the region’s economy gradually withered away. Many families moved to California, while others were lured away by defense work during World War II and Korea. But the Smith family survived and strived on with the phone business. Even with the huge population loss, the toll (long-distance) business greatly increased. Unfortunately, however, the Bell system kept virtually all the toll revenue. At one time, Bell actually charged the local systems for the privilege of making long-distance service available to their local customers. The situation got so bad that following World War II, some independent companies refused to provide long-distance service within their franchise. By the early ‘50s, the Bell system began to permit the independents to keep a larger share of the toll revenue that their customers generated, but continued to hold local companies responsible for all unpaid bills.

In the summer of 1957, Charles Smith, an OSU graduate as well as a graduate of several U.S. Army Signal schools, returned home from duty with the Army Signal Corps in Alaska. While there, Charles had been assigned the responsibility of maintaining all of Alaska’s toll lines except those on the Keni Peninsula. His area of responsibility ran from Northway on the Canadian border to the Port of Valdez, and from Anchorage to Fairbanks on the edge of the Arctic Circle. Upon his return, his father, Orlean, asked for his help with building a desperately needed pole line between Canadian and Crowder.

For years, the poor communities and the company had been living out of desperation. As a result, good equipment and trained workmen were out of the question. Tools consisted of some very basics and a quarter-ton pickup truck that wouldn’t stay in high gear. Building a multi-circuit open wire line or hanging lead cable would have been ridiculously impractical and expensive; therefore, Army Surplus field cable was used for the talking circuits, and strands of steel wire (available for 2 cents per pound) were used for the supporting strand. Although unorthodox, this equipment worked so well it was not replaced until ten years later.

The old ground-return system, commonly used in early rural telephony, used only one conductor from the switchboard to the customer’s phone and depended on driven ground rods at both locations to complete the circuit. This was upgraded with metallic, two-wire circuits and common battery. In a ground-return system, the batteries used to power the circuit were located at the telephone, however a common battery system located the power source at the switch. The existing manual cord board was not equipped for common battery. This was overcome by inserting four 1_-volt dry-cell batteries into each subscriber’s circuit. A ground-return system also required the use of magneto telephones for signaling the operator. The magnetos were turned with a small crank on the side of the telephone. The phones were big, bulky, ugly, and very expensive. To complete the upgrade, we used a Western 302 circular dial telephone. The customer would dial “0”, instead of turning the crank, to signal the operator.

In 1959, the U.S. Army Corps of Engineers provided a construction map of Lake Eufaula. Initial surveys had begun several years earlier, but it is a 43-mile-long and 43- mile-wide reservoir, so surveying took a lot of time. The map indicated that most of the construction projects necessary to complete the lake were to be located in our franchise area and would take five years or more to complete. For the first time, we could see a significant market developing.

With improved telephone service and growing demand, the need for automatic switching also increased. Unfortunately, the cost of dial switching was far greater than our economy could afford. We explored every possibility without positive results until we met John West, a talented central office mechanic, from Sulphur, Oklahoma. He had already built two other dial switches, so there was no question about his ability to do the job. He agreed to build the switch from scratch, if our company would provide the general labor and transportation. Armed with the map, improved revenues, and John’s agreement, we went looking for a loan. The bank we had always used made demands that did not fit our business plan, so we approached the State National Bank of Eufaula. The Eufala bank agreed to finance the switch, and the local lumberyard financed the new dial building. We supplied the labor.

The equipment was acquired from various military bases that had been closed after the Korean War. This equipment was scheduled to be destroyed, but the telephone maintenance personnel couldn’t bring themselves to destroy that which they had always protected. When we found the equipment we needed, much of it still in its original crates, we rewarded the yard boss with a fifth of the very best whiskey and a few dollars to help us load up and get out the gate. By the time we put the switch on-line, business was increasing even faster than predicted. Mechanical equipment was never trouble free, but our switch worked exceptionally well.

Relocating the roads, bridges, and railroads turned the tiny exchange into the communications hub for most of the lake-generated construction, but the more long-distance traffic that was generated, the greater the percentage Bell demanded. Like almost every other small independent phone company, we were on “average schedule”, but we were far from average.

At about this time, a federal state park with an 18-hole golf course and a 210-room luxury hotel named Arrowhead Lodge was established near Canadian. Arrowhead Lodge and the park required more phones than the rest of our exchange combined. Automatic Electric loaned the money and provided the equipment to meet this new demand. The hotel and park project also made it possible for Crowder and Canadian to support a water system.

Even with all the new growth, the Rural Electrification Administration (REA) telephone program refused to consider our loan request until 1968 because REA considered us too small to sustain the necessary overhead. A chance meeting with Mr. Vearity, a prominent lawyer and survivor of the “Batan Death March”, changed everything. Thanks to his letter on our company’s behalf, REA loaned us enough money for a new dial switch, a new business office, and operating capital to rebuild and expand service to every potential customer within the exchange. All the existing cable was retained, and all the outside cable was buried so that the entire system was one-party and storm-proof.

During the time of the REA loan negotiation, a regional telephone company had offered to buy us out. We turned the offer down but used their equipment inventory to establish the value of the retained plant. This was a bona fide offer that could not be disputed, so the company’s net worth was accepted as substantially higher than it would otherwise have been.

With city water in both exchanges, a new telephone system, a new four-lane highway, Arrowhead Lodge and the park, and many miles of lakeshore, the exchanges prospered. The Lake Eufaula development was completely redefining our local area and breathing new life into our struggling economy.

After beginning with “cigar box accounting” (receipts kept in a box) in the early days, bookkeeping grew in sophistication after the company became incorporated in 1963. Under REA guidelines, bookkeeping became a number-one priority. Telephone accounting is extremely difficult for people unfamiliar with it, and we were no exception. Then, John Staurulakis, Inc., an industry cost consultant, guided us out of the average settlement system and into cost accounting. Wow, that was not for the fainthearted.

Southwestern Bell was required by law to accept cost accounting, but they fought it every inch of the way. Although we had been “on cost” for several years, by the summer of 1975, Bell was keeping so much of our revenue that we were flat broke. When Southwestern Bell finally accepted the results of our cost study, it owed us $155,000 in back pay and $ 6,000 per month ongoing. This was a bitter pill for Bell to swallow, and it continued to fight these added costs so hard that by 1979, it was again required to make a $150,000 lump-sum payment. (Although this account may seem to be extremely anti-Bell, it is intended to simply recount the facts).

We used that lump-sum payment to build a cable TV system in the two towns and the lake developments. We knew even then that cable TV in a small market was not much of a moneymaker, and we have never been disappointed. However, cable TV greatly improved our communities’ marketability, and this in turn improved our telephone market. We soon grew from 550 to 800 customers, and we have continued to grow about as fast as we can handle the business.

In 1987, Canadian Valley Telephone Company joined with six neighboring independents to form “OK Cellular” to serve RSA 6. The cellular business required OK Cellular to build cellular towers throughout RSA 6, an area equal to 1/3 of eastern Oklahoma. These towers had to be linked together, so we put a new fiber-optic network in place. We used this same network to launch our long-distance operation. Even after the cellular operation was sold, the fiber-optic network and the long-distance company continue to expand. Today, it extends from Mannford, south to Durant, and east and west from Tulsa to Oklahoma City. Just as Canadian Valley Telephone Company brought the first modern telephone service to our communities, OK Cellular brought wireless telephony to this rural region five years before any of the major companies even made an appearance, and by 1999 had 20,000 customers.

In the fall of 1991, Charles Smith became extremely ill and was no longer able to manage the company’s day-to-day operations; therefore, he called on his son, Orlean M. Smith, to take over management. A management graduate of the University of Oklahoma, Orlean was at the time production manager of the Wrangler Plant in Seminole, Oklahoma.

In 1994, we bought the franchise to sell Direct-TV programming and equipment in five counties. The new business was very challenging but was instrumental in getting our company to where it is today. In 1998, with approximately 2,000 Direct-TV subscribers, we received an offer to sell the business. We were not looking to sell, but after several days of discussion we decided to accept the offer. The profits enabled us to expand the services provided within our telephone service area.

Throughout the ‘90s and into the new century, Canadian Valley Telephone has continued to automate all its records and maps and has become an Internet service provider. We have installed fiber-optic cable throughout the exchange, and high-speed Internet access is now available, or soon will be, even to our most remote customers. When this project is fully implemented, all our customers will have available to them as many megabytes and as many TV channels as they may require.

Even with all the changes the telecommunications industry has brought our way, we have adhered to our policy of going all-out to serve. In 2001, the region experienced a huge ice storm. For 15 days, many of the towns and all of the rural areas were without power or water, and many roads were closed. Due to the lack of water, even McAlester Regional Hospital had to send its patients to other cities for medical care. Despite the conditions, Canadian Valley Telephone Company kept phones working throughout the crisis. This required traveling to Dallas, Texas several times over icy roads to purchase generators, and scheduling employees to work seven days per week, even through the holidays. When the disaster was over, our company was deluged with thank-you notes and loads of sweets as tokens of appreciation from our customers.

Today, the company has more than 1,200 telephone customers, 500 Internet subscribers, and a growing number of high-speed Internet customers. Cable TV has grown to about 620 subscribers and is expected to expand dramatically when digital services are fully implemented. Demand for all services increase as high-speed, digital service is expanded throughout the territory. All key employees are technically qualified and periodically receive refresher training. The four members of our management team are university trained professionals and have more than 100 years of combined experience in telecommunications management. This is our home, and we strive to provide the very best!