British Telecommunications, BT

History

According to BT's own history pages BT is the world's oldest telecommunications company. Its origins date back to the first telecommunications companies in the United Kingdom. These being the telegraph companies of the time. Among them was the first commercial telegraph service, the Electric Telegraph Company, introduced in 1846. But they also included:

  • British and Irish Magnetic Telegraph Company
  • British Telegraph Company
  • London District Telegraph Company
  • the United Kingdom Telegraph Company

As these companies amalgamated and were taken over or collapsed, the survivors were eventually transferred to state control under the auspices of Telegraph act of 1868 where their control was passed to the newly formed GPO (General Post Office)'s "Postal Telegraphs Department".

With the invention of the telephone by Alexander Graham Bell in 1876 the GPO began to provide telephone services from some of its telegraph exchanges. But telephone services (as of 1878) was also provided by private sector companies such as the National Telephone Company (NTC). The situation became even more complex from 1882 when the Postmaster-General, Henry Fawcett started to issue licences to operate a telephone service to private businesses and the telephone system grew under the GPO in some areas and private ownership in others. During this period the GPO's main main competitor emerged as the National Telephone Company which grew its market share by absorbing other private telephone companies.

In 1896 the GPO took over the trunk telephone service from the NTC though a few municipally owned services such as Kingston upon Hull, Portsmouth and Guernsey remained outside GPO control. Yet, in 1912 the GPO became the monopoly supplier of telecommunication services as the GPO took over the whole private sector telephone service in the UK (apart from the few local authority services already mentioned).

GPO Logo
GPO — General Post Office — logo

The idea of converting the Post Office into a nationalised industry rather than a government department was first raised as early as 1932 in a book published by Lord Wolmer called Post Office Reform. Also in 1932, the Bridgeman Committee was formed, 'to enquire and report as to whether any changes to the constitution, status or system of organisation of the Post Office would be in the public interest'. The Committee's report was rejected. Further attention was not given to the subject until 1961 — but once again the proposals were simply shelved.

In March 1965, the Postmaster General of the time, Anthony Wedgewood-Benn, wrote to the Prime Minister proposing that studies be undertaken aimed at converting the Post Office into a nationalised industry. A working party was established to look into the advantages of such a change and to consider the problems which might arise. The findings were favourable enough for the Government to establish a Steering Group on the Organisation of the Post Office. After some initial deliberations that the business should be divided into five divisions - Post, Telecommunications, Savings, Giro and National Data Processing Services - it was eventually decided that there should be one corporation split into two divisions: Post and Telecommunications.

As a result of 1969's Post Office Act the GPO, which had been a government department, was fully nationalized as the Post Office with Post Office Communications as one of its divisions. But the new Post Office Communications division retained its telecommunications monopoly.

In 1977, the Carter Committee Report recommended a further separation of the two main services and for their relocation under two individual corporations. The findings contained in the report led to the renaming of Post Office Telecommunications as British Telecom in 1980, although it remained part of the Post Office.

BT Corporate Logo, 1980-1991
BT Corporate Logo, 1980–1991

The British Telecommunications Act, 1981 transferred the responsibility for telecommunications services from the Post Office, creating two separate corporations. At this time the first steps were taken to introduce competition into the UK telecommunications industry. In particular, the Act empowered the Secretary of State for Trade and Industry, as well as British Telecom, to license other operators to run telecommunications systems. Additionally, a framework was established which enabled the Secretary of State to set standards with the British Standards Institution (BSI) for apparatus supplied to the public by third parties, and had the effect of requiring British Telecom to connect approved apparatus to its systems.

The introduction of competition to the telecommunications market had begun and a phased programme of liberalization was inititated in 1981 and in 1982 BT's monopoly on telecommunications was broken, with the grant of a licence to Cable & Wireless through it's subsidiary, Mercury Communications.

Final privatization of British Telecom ocurred in 1984 with the passing of the Telecommunications Act, 1984. As such the business operations of British Telecom were transferred to British Telecommunications plc on the 6th August 1984. At this time more than 50% of the shares were sold to the public and the remainder held by the government. The act also allowed for some deregulation of British Telecommunications Plc which allowed it to enter into new joint ventures and, if it so decided, to engage in the manufacture of its own apparatus.