Origin of the PTTs
European Supplier
– Felten & Guillaume, Haller and TeKaDe
– Siemens & Halske
– LM Ericsson
– International Telephone and Telegraph
Development in the USA
– Western Union
– AT&T and Western Electric

Development of early Telecommunication Industry

With the invention and development of telegraphy in the middle of the 19th century, companies for the operation of telecommunications equipment as well as a supplier industry for terminals and network infrastructure gradually developed. Telecommunications existed in the form of mail services even before telegraphy. This was established very early on and developed into a national postal offices.

Origin of the PTTs

Telecommunications began with the organization of mailings. Up until the Middle Ages, mail was sporadic and uncoordinated. Organization started with the dawn of modern times at the end of the 15th century. In the Holy Roman Empire of German Nations, posts where set up, where courier riders could change their horses. By changing horses it was possible to speed up the transmission of mail. At the beginning of the 16th century, the Lombard Frans von Taxis was commissioned to organize the postal service in the German Empire. Until 1867, the Thurn and Taxis family managed the complete postal system in Central Europe. It can thus can be regarded as the oldest telecommunications company.

The German states initially began to organize their own postal services. However, this was stopped in 1597 when the German Emperor Rudolf II declared the postal system to be the sovereignty of the empire with the „Post Regal“. Thurn and Taxis received the postal system as a „fiefdom“ from the Emperor.

In 1646, the Young State of Prussia broke the state monopoly of the postal system and organized the postal system itself. This Prussian postal system grew with the power of Prussia and competed with Thurn and Taxis system, until 1867 when the Turn and Taxis Family sold its company to Prussia. Since then, the postal system has been firmly under the administration of the German Reich.

Post riders or postillions used a horn to announce their arrival. For that reason the Post Horn became the sign for postal services e.g. for the German Post.

The advent of telegraphy in the mid-nineteenth century was quickly recognized as a new form sending messages and was therefore merged with the postal service by the state. Ever since, post stations and post offices were natural places where “telegrams” could be sent. When the telephone was finally introduced in Germany in 1877, it was immediately seen as an extension of telegraphy and placed under the state monopoly. Attempts to gain a foothold in Germany, for example through the American Bell Telephone Company, failed. Post, telegraphy and telephony remained a state monopoly.

The telegraph and the telephone were regarded as further telecommunications services and thus, like the mail, fell under state control.

Other European states followed the Prussian/German model. This is how the national PTTs (Post Telegraph Telephones) came about. The monopoly remained with the states until the 1980s and 1990s. PTTs were often regulators and operators of telecommunications at the same time. They obtained their infrastructure from newly emerging supplier companies. PTT preferred national suppliers.

European Supplier of Infrastructure and User Equipment

The emerging telegraphy required equipment and material to set up and operate the connections. These were the telegraphs, which generated and received signals, and wires for transmission.

FELTEN & GUILLAUME, HALLER UND TEKADE

One of the oldest companies in telecommunications was the Cologne company Felten & Guillaume. As early as the Middle Ages, the Felten family manufactured ropes for shipping and mining. At the beginning of the nineteenth century, Karl Guilleaume married into the Felten family and the company Felten & Guillaume was born. The wire rope was invented in the Harz Mountains in 1834 and revolutionized mining. Four years later, F&G began producing wire ropes and improved them noticeably. 1850, Guillaume realized that wire rope could be of great use as a wire for telegraphy. A year later a cable from F&G was used to connect England to the continent. In the second half of the nineteenth century, F&G was instrumental in the „wiring“ of Germany. First for the telegraph, later also for the telephone network.

In 1875, when telephones became known in Germany, the German technician Friedrich Heller founded an electrotechnical factory in Bavaria to manufacture telephones. His main customer was the state of Bavaria, where he built large parts of the telephone network. In addition to telephones, he also built the first switching systems. In 1904, however, Heller ran into financial problems and was bought by F&G. The construction of telephones and switching systems continued under F&G. In 1912, F&G decided to spin off the Nuremberg (Heller) works as a separate company. The Süddeutsche Telefon-Apparate-, Kabel- und Drahtwerke AG was formed. Towards the end of the 1920s, this became TeKaDe. TeKaDe obtained a license for the „Liebenröhre“, the German amplifier tube. TeKaDe quickly became a manufacturer of electronics, not only for telecommunications but also for radio receivers.

Siemens und Halske

As early as 1847 Werner Siemens founded the Siemens & Halske Telegraphen Bauanstalt. This soon made Siemens the main supplier for telegraphy in Germany. However, Siemens soon founded branches abroad and thus became one of the first multinational corporations. E.g. Siemens reached a milestone in the construction of the Indo-European telegraph line in the late 1860s. This line, built by Siemens, stretched from London to India and was commissioned by the Indo-European Telegraph Department in England. After construction, Siemens was also responsible for maintaining the line. In 1874 a cable built by Siemens was laid across the Atlantic and was the first viable cable of its kind. It was still in service until 1931

As soon as the telephone was popularized by Alexander Graham Bell in 1876, Siemens began to build and improve telephones. Siemens benefited from the fact that Bell did not have a patent in Germany for his telephone. Siemens soon expanded its business to also build and sell switching systems. They became the preferred supplier of the newly formed German Empire. Siemens tried to continue to be internationally active. So they had a branch in England that manufactured devices. For political reasons, however, they could not be active everywhere in Europe. Shortly before the First World War, Siemens-Halske developed its own automatic exchange. During the World War 1, Siemens lost many of its foreign branches, for example in England and Russia. After the war, the company was forced to focus primarily on the German market.

LM Ericsson

In 1976 a Swedish Engineer named Lars Magnus Ericsson started a small company in Stockholm. Actually it was more a small workshop. Ericsson had previously worked in telecommunications and had worked in various European companies, including Siemens & Halske in Berlin. In 1976 the Bell telephone became known in Sweden. Similar to Germany, the Bell telephone was not patented in Sweden. Ericsson developed its own improved telephone, as did Siemens at the same time. He was able to offer it cheaper than Bell Telephones and soon found first buyers. But Ericsson was not only building telephones, he also created switching systems. Initially, Ericsson focused on the Swedish market, but was already facing competition there and the market wasn’t big enough either. Therefore he expanded to the entire Scandinavian market, to Russia and above all to Great Britain. In 1900 Ericsson made only 5% of its sales in Sweden and 20% in Scandinavia. 50% of sales came from the UK. The UK had no British manufacturers of telephone systems. There was also great activity in Russia. From the very beginning, Ericsson was an international company with many foreign branches and soon also production facilities abroad. The main positive aspect of this was Sweden’s neutral position at the turn of the century and in the period before World War I. For example, Ericsson was able to get an order for switching systems in France because France absolutely did not want to work with Siemens&Halske.

Like Siemens, Ericsson also developed an automatic switching system in 1913. At the beginning of the 19th century there were only four companies that could offer automatic systems. Western Electric, Autelco (the company that took over and built the Strowger system), Siemens & Halske and finally LM Ericsson.

INTERNATIONAL TELEPHONE AND TELEGRAPH (ITT)

In 1920, a new player entered the field of telecommunications. There were two brothers who actually ran sugar cane plantations in Puerto Rico. Their names were Sosthenes Behn and Hernan Behn. Rather by accident, they became the owners of two telephone companies in Puerto Rico and Cuba. They therefore formed a company which they called International Telephone and Telegraph. They expanded to Spain in 1923 where they founded the national telephone operator Telefonica, a company that still exists today. However, they managed a big coup with the takeover of all foreign branches of Western Electric in 1926. In one fell swoop they became a direct competitor of Siemens & Halske and Ericcson in Europe and worldwide, except in the USA where Western Electric held the monopoly. They also possessed the technology for automatic telephone switching. In 1930, ITT bought two German electrical companies, Standard Electricity Company (SEG) and Mix & Genest. The standard electricity company had substantial know-how in telecommunications. The core was Standard Elektro Lorenz, which, alongside Siemens & Halske, had long been building telegraph systems in Berlin. Standard Elektro Lorenz was active for a long time, even after the World War II, almost independently, but belonged to ITT.

ITT was about to buy Ericsson in 1932 as well. In fact, they owned the majority of the company through a coup with an entrepreneur called Ivar Kreuger. However, the takeover did not materialize because Sweden did not allow ownership of Swedish enterprises by a foreign company. It wasn’t until 1960 that Ericsson was able to free itself from its dependency on ITT.

Developments in USA

The United States took a different approach in the deployment of telecommunication. Although the post office had been regulated centrally by the Post Office Department since 1792, telegraphy was not assigned to the post office and remained in private hands. After the introduction of telegraphy with the Morse system, many companies came up that initially operated a single telegraph line. Finally, with the help of the US Congress, these systems could be standardized in such a way that they could work together. In the end, especially one company gradually began to take over the smaller operators. That company was Western Union.

Western Union

Western Union was initially one of the small operators of a single line when it was founded in 1851. It gradually took over all the small operators in the western United States. Western Union built the first transcontinental telegraph line and achieved the first West to East transmission in 1861. In 1866 it took over its last two major competitors. Since then it had a virtual the monopoly on telegraphy in the United States.

In 1877 Western Union received an offer from Alexander Graham Bell to buy the telephone patent for $100,000. Western Union refused. Later, the company recognized the importance of the telephone and began developing telephone systems themselves. However, they failed because they could not get around Bell’s telephone patent and went out of the telephone business. While Western Union retained its telegraph monopoly, its business continued to decline. Today, Western Union only operates a money transfer business.

AT&T und Western Electric

1877 Alexander Graham Bell founded the Bell Telephone Company. The company built phones and accessories and rented them out to various private companies. Two years later, Bell Telephone took over Western Union’s existing telephone businesses. Finally in 1882, Bell bought Western Electric, which had previously built equipment primarily for Western Union.

In 1882, Bell Telephone founded AT&T with the goal of creating a long-distance network in the United States. By the end of the 19th century, all of the Bell Telephone Companies were trading under the AT&T name. AT&T became the most powerful telecommunications company in the world. Not only did it operate local telephone networks, it also owned and operated the long-distance connections and built all the telephones.

When the Bell telephone patent expired, several competing companies tried to enter the telephone market. At first they managed to establish themselves here and there. However, AT&T would not allow connection to its network, especially into the long-distance network. As a result, the newcomers were always at a disadvantage and had to give up.

AT&T extended its dominance even further. For example, they bought the patents for the new amplifier tubes, which they then use exclusively for their transmission networks. They became so powerful that in 1913 they tried to take over Western Union the only other provider of telecommunication services. However, this was prohibited by the supervisory authorities, who feared AT&T would have a complete telecommunications monopoly.

At the beginning of the 20th century, Western Electric also started to built switching systems in addition to telephones. Shortly before the World War I, they also had developed automatic switching devices and started to replace manual switching.