A BRIEF HISTORY OF THE SAND CREEK COMMUNICATIONS COMPANY AND DISCUSSION OF CURRENT ACTIVITIES

The Company was organized November 16, 1907 as The Sand Creek Telephone Company. At that time, there were 92 stockholders. Two shares of stock were sold to each of these stockholders.

The first stockholder’s meeting was held January 13, 1908. At the director’s meeting that month, C. L. Tufts was hired as manager with a salary of $2 per day. In February 1908, Ed Tuttle was hired to operate the Company’s switchboard. The switchboard was located in his home and he was paid $20 per month.

Lines were put up to Fairfield, Weston, Seneca and Jasper. Free exchange lines to Ogden, Clayton and Lyons, Ohio and toll lines to Adrian were added in the first two years.

On July 29, 1912, the Company borrowed $850 at 6% interest from William Anderson to buy an office from C. M. Stockwell and Lena Tolford.

Byron Livesay became the new manager on January 13, 1913. Byron was a director for nine months before he became manager. L. W. Harwood, grandfather of Larry Wilt, the Company’s present president, was a director from 1909 to 1910, Elmer Sparhawk, grandfather of Robert Hinsdale, the Company’s former president, served as director, secretary and treasurer from 1915 through 1920 and from 1924 to 1955.

In 1915, Byron Livesay was hired to tend switchboard, settle with other companies and collect toll calls. He also continued as manger at $550 per year.

On November 28, 1919, the Company was given authority to increase its capital stock from $3,000 to $10,000, par value at $12.50 per share.

In 1924, a Ford car was purchased for the Manager. In 1924, the Company borrowed $850 for improvements to the office. In 1930, Mrs. L. C. (Mary) Keenan was recognized for 10 years of service as switchboard operator. In 1931, Mrs. Veda Spencer became the new switchboard operator. L. C. Kennan was director from 1931 to 1932 and again from 1944 through 1978.

In 1933, salaries were cut 20% and all rates were reduced 371/2% if bills were paid on time.

L. C. Baker was secretary from 1936 to 1950. In 1938, Marian Miles became switchboard operator and Roy Miles was the new manager working with Byron Livesay (his father-in-law) who had served 23+ years. In 1948, Ann Pearcy became switchboard operator and office manager and served 36 years through 1984.

Wesley (Moe) Pearcy was manager for 28 years from 1948 until 1976. At that time, their son, Neil Pearcy, became plant manager. George Kunze came on the board in 1950, and served as secretary until his death in 1987. Other directors during the past 45 years were Bert Moore, Levi Shumway, Wayne Clark, Norman Myers, Arnold Simpkins, Timothy Pickard and Ardyth Hinsdale.

In 1957, a new central office was built 1 ½ miles south of Sand Creek, so it would be centrally located in the area for new Dial Telephone Board for which the Company borrowed $85,000 from Stromberg-Carlson.

In its early years, the Company grew slowly as the villages in its service area grew and more people saw the need of a telephone. In 1967, the Company borrowed $100,000 for more board and cable in a period of growth. In 1969, the Michigan Public Service Commission ordered United Telephone Company of Ohio, Lyons Exchange, to sell their phones in Fairfield Township to Sand Creek Telephone Company. This added 70 phones at one time. Also about this time many city people began moving out into the country, buying an acre, building a new home and still working in town. As a result, the number of Company customers grew to about 900.

Then the bomb fell. Fairfield Township adopted an ordinance saying that you had to have 10 acres of land on which to build a home. Madison Township got tough on restrictions for mobile homes and the result was that the Company was very slow in reach the 1,000 subscriber mark.

In 1980, an addition was made to the Company’s central office building to store trucks and equipment. In 1986, a new Northern Telecom DMS 10 Digital Switch was purchased for which over $400,000 was borrowed from Adrian State Bank. By this time, all new and reinstalled phones were made modular for connection to the inside wire. Seventy five percent of all protectors were gas and a quarter of these were interface devices. All new phones are sold to the customer. The only phones that are rented are the phones that were in place in customers’ homes. An all buried cable system (except for about 50 customer service drop wires) was completed in 1989/1990.

Neil Pearcy came to work at Sand Creek Telephone Company in 1975 and in 1976 became the Company’s Outside Plant Manager. He served in this position through 2002. Neil came to the Company after many years of telephone plant experience with G.T.E. in southeastern Michigan. John Griffith was Neil’s assistant for the entire time.

In 1985, Margie Gallatin replaced Ann Pearcy as office manager. Philomena Williams and Kathleen Myers were part time office workers at that time.

In the early 1990’s, the Company entered into a partnership with Century Cellunet (now part of Alltel) to provide cellular telephone services in Rural Service Area 9 (which covers the southern tier of counties in Michigan and includes the Company’s service area).

The outside cable plant has been extensively reconstructed in recent years and aerial plant has been replaced with buried cable to the extent possible. Buried plant requires less maintenance expenses. Premise protectors on service drops have been replaced with modular protectors to provide greater ease of maintenance.

Deregulation and competition have brought many challenges and opportunities for the Company. The Company’s service area is primarily residential in nature so it does not face substantial loss of revenues from activities by bypass the local telephone system. Employees are trained to install and maintain new types of customer equipment. Equipment sales to residential customers are limited because of low cost competition. The Company currently maintains a supply of quality telephones for sale at reasonable amounts for those customers who wish to continue to obtain their equipment thought the Company. Sales of telephone equipment to date have been a very minor source of revenue for the Company. The Company also offers maintenance for inside premises wiring and will install wiring in buildings.

A new electronic digital switching center was installed and cut over in the fourth quarter of 1994. This switch was needed to provide special dialing plans to work into the telephone network. This switch also has SS7 capabilities; providing new features, such as caller identification and multiple other services.

The Company purchased an acre of land on the southeast corner of Gorman Road and Sand Creek Highway in Sand Creek in anticipation of building a new business office in 1994. On August 2, 1994, the official ground breaking was held and construction started shortly thereafter. Siler & Associates were the architects and Ralph Poe Construction was the general contractor. On Monday, March 20, 1995, the new office officially opened for business. An open house for stockholders and the general community was held on Saturday, May 6, 1995 to show the new work place. The old business office was sold.

In 1995, the Company installed fiber-optics links between the Sand Creek High School and its elementary school. This provided the schools with voice and data communications through their computer and through a link with the Intermediate School District access to educational resources on the internet.

On March 31, 1996, Sand Creek Communications Company was formed to provide a more flexible structure for participating in the business opportunities arising from deregulation and technological advances both within and beyond the Company’s exchange area. Shareholders of Sand Creek Telephone Company received equivalent shares of Sand Creek Communications Company stock and Sand Creek Telephone Company became a wholly owned subsidiary of Sand Creek Communications Company.

Other companies in which Sand Creek Communications Company has taken a partnership position are Cass Cellular Limited Partnership (providing cellular telephone services to Rural Service Area 9) and Cass Internet, L.L.C. Cass Internet, L.L.C. was formed in December 1995 with three other local telecommunications companies in southern Michigan to provide internet services under the name Cassnet. By 2002, this company had approximately 2,089 subscribers.

In 1996 through 1998, new growth in home building required the Company to expand its service plant including installation of fiber-optic cable and addition of pair gain equipment to provide increased capacity over existing cables.

In the fourth quarter of 1998, Sand Creek Communications Company formed a new subsidiary. This new company, Sand Creek Toll Service Company, is reselling toll through Great Lakes Comnet Incorporated, of which Sand Creek Communications Company is a shareholder.

In 1999, a Total Service Long Run Incremental cost study was performed. This was needed in order to comply with the MTA (Michigan Telecommunications Act) which required all LEC’s (Local Exchange Carriers) to provide local service for not less than what it cost to produce that service. The study resulted in a $4.83 monthly increase for all residential subscribers.

Also in 1999, the Company produced a manual that states strict policies and procedures to govern electronic surveillance activities with law enforcement agencies. This was required by CALEA (Communications Assistance for Law Enforcement Act) that is a FCC (Federal Communications Commission) order in which all LEC's have to comply. This order also made it necessary to upgrade the Company's central office switching equipment. New software was installed during the fourth quarter of 2000.

Growth in telephone plant and equipment continues through the present time. The Company Began providing DSL internet service in its exchange through Cass Internet, L.L.C. in 2002. By 2002, Sand Creek Toll Service Company was providing toll service to over 40% of the potential subscribers within the Sand Creek exchange.

2003 added expanded local calling to Morenci, Hudson and Blissfield.

The Company has always put profits back into improvements. Our managers Dennis Yenor (Plant) and Harvey Souders (General Manager) are doing an exceptional job for us. In recent years there have been many problems and challenges with deregulation and from expanding to provide new types of services. Our management team has attended many meetings in order to keep the Company and their knowledge of the industry up to date.