Rural Telephone Bank Shuts Down Today

As of Monday afternoon, the Rural Telephone Bank will be no more.

The government-established bank was operated by the U.S. Department of Agriculture (USDA) and pumped $100 billion into rural telecom investments, said Thomas Dorr, under secretary for the USDA’s rural development program.

Dorr spoke at the National Telecommunications Cooperative Association (NTCA) meeting in New Orleans on Monday.

The federal government in May 1971 established the Rural Telephone Bank, or RTB, so telecom companies and cooperatives could borrow money for infrastructure. It became a true example of a public-private partnership, said Dorr, thanks to a capital structure that allowed for mixed federal and private ownership.

But times, they have a-changed. Evolution within the financial system and the prevalence of private lenders have made the RTB obsolete, said Dorr.

The government has been working since 2005 to dissolve the RTB. President Bush proposed the move in early 2005 and the bank’s board of directors in mid-year acted on the idea.

The RTB has funded buildouts such as a recent $8.75 billion project in the south. The Santa Rosa Telephone Cooperative in Vernon, Texas, in 2003 borrowed the money to connect nearly 3,000 customers, deploy more than 60 new route miles of fiber and copper cable, and upgrade equipment and buildings. The cooperative serves 17 counties, two of which are in Oklahoma.

NTCA www.ntca.org
USDA www.usda.gov

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