The Evolution of Small Business Telephone Systems in the UK - 30/9/10
Posted by Kevin Box on Thu, Sep 30, 2010 @ 03:55 AM
The evolution of the telephone for businesses is a fascinating story, so we’ve done our research and bring it to you here.
In the Beginning
When telephones first started to be used for business in the UK, private companies provided the service. Then in 1912, the Post Office, which was a government department, took over. This meant that Postmaster General, a member of the cabinet, ran this government department.
At this early stage in business phones, choice of phone systems was limited entirely to by the Post Office (GPO).
Technology
Telecoms was all about high quality engineering from the start. Business structures were about delivering a quality engineering solution first and foremost and customer choice in telephone systems didn’t really exist as a concept. After all you don’t choose what tracks the railway runs on. This ethos delivered telephone systems in the time scale that suited the Post Office. The supply of phone systems and the technology was driven by the level and direction of investment that the government chose to put into it. Because the Post Office was a government department, decisions re investment in a new telephone system needed to be made just as they would for a new road network.
Telephone systems developed from a manual service where you lifted the receiver off-hook and asked the operator to connect the call to your number. Provided that the number is in the same central office, the operator connected the call by plugging into the jack on the switchboard corresponding to the called customer's line. If the call was to another central office, the operator plugged it into the trunk for the other office and asked the operator answering to connect the call.
Automatic exchanges were introduced from the start of the Post Office takeover.
Early exchanges used motors, shaft drives, rotating switches and relays – that is electromechanical switches. The Post Office adopted the Strowger system for exchanges with rotating shafts being the standard from 1922.
The Strowger system uses a series stepping switch to ratchet up one level for each pulse in the each digit and then to swing horizontally in a contact row with one small rotation for each pulse.
Eventually in 1959 STD (subscriber trunk dialling) was introduced and it was possible to dial directly to other exchanges.
Throughout the period cable technologies improved and cables became smaller. More and more cables were laid including many on the sea bed to connect more and more countries. In 1962 the first commercial communications satellite “Telstar” was launched.
In 1966 the first fully operational production electronic telephone exchange, a TXE2 reed relay exchange opened: the Plessey 5005 (TXK1) crossbar exchange. The TXE4 electronic exchange, a development complementing the TXE2, was introduced from 1976 to take over from crossbar the provision of large exchanges.
During the 1980s and 1990s the TXE and TXK families of electronic and electromechanical exchanges were gradually replaced with System X and System Y digital exchanges in a £20 billion investment programme. The UK network became totally digital on 11 March 1998.
Privatisation
In 1981 the Post Office finally separated with telephone systems being operated by the newly named British Telecommunications.
In a parallel development, telephony in the British Empire had largely been handled by a company called Cable and Wireless, which was nationalised in 1947 as the UK operations transferred to the Post Office. When the new Conservative government came into power in 1979 they had a privatisation agenda and privatised Cable and Wireless. In 1981 they granted it a licence to operate a UK telecommunications network. It branded this network Mercury.
As a state monopoly, the only systems that could be connected to the network were those supplied and operated by British Telecom. If you wanted a phone system you had what British Telecom would let you have.
In 1982 British Telecom still only allowed the four British 
manufacturers (STC, GEC, Plessey, and Thorn-Ericsson) to supply its twenty five types of phone through them, and not independently.
From 1982 onward new telephone sockets were introduced and it was then possible to plug in your own phone.
In 1984 the government sold 51% of British Telecom in a privatisation exercise. A duopoly was thus created regulated by the regulator Of Tel (which later became OfCom). OfTel placed extensive restrictions on BT’s ability to charge for its services.
ISDN was introduced in 1986 as a communications standard to provide digital telephone services over the standard network giving users an additional set of services including DDI numbers.
BT Group plc
In 1991 the government enabled independent retail companies to bulk buy capacity and resell it. As part of this deal British Telecom took the opportunity to rebrand as BT Group and use its greater freedom to expand abroad.
The subsequent years have seen BT Group gradually being forced to give up ever more of its remaining monopoly in return for ever more freedom to charge what it feels the market can bear. Today it still holds the monopoly for land lines over the last mile.
2001 saw the launch of Carrier Pre-Selection (CPS) - the ability to route calls to an alternative network without the need of an access code whilst 2002 saw the introduction of wholesale line rental.
In 2005, BT agreed with Ofcom to help create a more open regulatory framework including a major restructure of BT. It created Openreach which is responsible for managing the UK access network on behalf of the telecommunications industry.
BT also took the opportunity to set up BT local business: a network of 77 local franchises which interface with businesses.
21CN
In 2005, BT announced 21st Century Network (21CN) project. It is the network transformation project to Internet Protocol (IP) system. As well as switching over the PSTN, BT will deliver many additional services over their new network, such as on-demand interactive TV services.
Fixed Line Equipment
The years since privatisation have seen a move away from BT supplied equipment towards more independent PBX (private branch exchange) suppliers providing PBXs with ever more sophisticated feature sets. It has become common for telephone wiring within a building to carry VoIP signals either on their own network or integrated with the computer network.
Mobile
In 1985 Cellnet was formed as the BT mobile phone network (with Securicor as a partner). At the same time Racal won a licence to operate in the UK and formed Vodafone. Meanwhile Mercury formed One to One in 1993.
The 1990s saw wild expansion by mobile operators world wide with ever more expensive deals as companies were sold for ever more money. At one point Vodafone had a P/E ratio in excess of 100!
The auction of 3g licences in 2000 serves as a defining moment as the apex of the dotcom madness when anything to do with telecoms was astronomically expensive. The current mobile operators were cemented in their places.
Cable
In the early eighties the government awarded cable TV licences, which also allowed the carrying of telephony. Throughout the 1980s and early 1990s cable infrastructure was rolled out as streets throughout the UK were dug up. The cable companies all struggled as take up never reached the desire levels and eventually through a series of complex mergers and deals Virgin Media have ended up owning both all of the network and a massive debt.
The Internet and Dot Com Boom
The 1980s saw the establishment of the various technologies and companies that were to develop through the 1990s as the concept of the Internet in particular and communications in general gripped the world as being the way that future commerce would explode.
Written by David Hill, Chairman, Cloud Net