British Telecom was founded early in the eighteen hundreds as an amalgamation of several private, commercial telegraph companies. It was nationalised as “Post Office Telecommunications.” At the time this made sense since the telegraph system was run in conjunction with the Post Office, i.e. a telegraph would still have to be delivered.
When the telephone system was first implemented it was under the control of the Post Office and some smaller private companies. Of these the National Telephone Company was the largest. However in about 1896 the Post Office took over almost the entire private sector. Since it was still government owned it was granted a complete monopoly on telecommunications in 1912. There were a few exception, the notable one was the city, Kingston-upon-Hull (usually just “Hull”), where the council provided the telephone service until recently (1998)when it was sold into privatisation. That said, the council are still majority shareholders.
Apart from some minor suggestions in a book by Lord Wolmer, “Post Office Reform,” which presenting a few arguments for changes to the system, there were no major re-shifts until 1964 when it was split into two departments, Telecommunications and Post. This lead to the Post Office Act of 1969 in which it became a public corporation. It had the exclusive privilege of running all the telecommunication systems in the country.
In 1980 the two departments were separated even more. Post Office Telecommunications became British Telecom. Although for approximately one year it remained part of the post office. Then, in 1981 it was finally separated from the Post Office. It became under almost direct control of the Secretary of State and another company was allowed to set up, Mercury Communications. This was the first competition the company had faced in around a century.
In July 1982 51% of British Telecom was sold as shares to investors. In 1991 the company was fully privatised when the government sold most of its shares, gaining five billion pounds and losing 25.8% of the company. However the 1984 act had also removed the company’s right to monopoly, this enabled other companies to set up .
On the 5th of march 1991 the government declared its “White Paper Competition and Choice: Telecommunications Policy. It ended the duopoly between British Telecommunications and Mercury Communications and made the policy fairer by allowing Independent companies to buy up large telecommunications capacity and sell it to business of home users. However this policy also enabled British Telecommunications to alter its prices as much as it liked.
In early April 1991 the company began a year long reorganisation known as the “Project Sovereign initiative.” The company claimed to be meeting its customer’s needs and the Project’s slogan was “The Customer is King.” The company also re-named its trading name to BT and allowed it to expand into foreign markets.
In the summer of 1994 BT and MCI Communication Corporation, which was the second largest long distance communications company in the USA combined their resources and launched a joint company named Concert Communication Services. By the end of 1996 BT and MCI were supplying services to 3,000 multinational companies and had more than $1.5 billion in contract revenue. In November 1996 a merger was announced, they planned to be merged into Concert plc.
However WorldCom also bid for MCI and BT decided to sell its shares in MCI to WorldCom. This made them $7 billion. Although there was also at this time a counter bid from GTE, that ultimately failed. BT made $2 billion profit on it’s original investment in MCI and $485 severance fee for the end of the merger.
Deals done with AT&T between 1998 and 2000 resulted in a 50:50 venture which was also named Concert. It was designed for the specific use of multinational companies. But also met the demands of smaller businesses and Individuals.
April 2000 saw the launch of BT Retail, BT Wholesale, BT Ignite, BT Wireless, and of course the ISP we all know and love, Btopenworld. They also launched, Yell, a directory for the boom of e-commerce and also Yellow pages, the directory of companies. The venture was designed to give BT a foothold in every use of telecommunications. BT sold Yell in May of the same year for £2.14 billion and launched its mobile business formally known as BT wireless as mm02 and demerged from BT so it could sell it’s shares separately.
BT is now structured so the BT Group plc is a holding company for all the esparto businesses using the BT name. Currently these are BT Retail, BT Wholesale, Btopenworld and BT Global Services. This allows each company to focus on it’s own goals and maximise it’s own profit without its money being funnelled into another less successful sector. BT does not have a monopoly anymore but still controls the largest amount of British telecommunications since it is so versatile. It sets the score for other companies to beat, and also has almost complete say of the prices, allowing it to charge whatever it wants to. For the company, this only allows more success.
This writeup is written as a response to Wertperch’s comment that there are no, non-ranting, historical factuals on this subject. Well, now there are.
Sources: Own knowledge
http://www.btplc.com/Corporateinformation/BTArchives/History.htm
www.asc.org.uk/Events/Sep03/Abstract/Hughes.htm
www.net4nowt.com/comments/967019129,80678,.shtml