BT Group


BT Group plc is a British multinational telecommunications holding company headquartered in London, England. It has operations in around 180 countries and is the largest provider of fixed-line, broadband and mobile services in the UK, and also provides subscription television and IT services.
BT's origins date back to the founding in 1846 of the Electric Telegraph Company, the world's first public telegraph company, which developed a nationwide communications network. BT Group as it came to be started in 1912, when the General Post Office, a government department, took over the system of the National Telephone Company becoming the monopoly telecoms supplier in the United Kingdom. The Post Office Act of 1969 led to the GPO becoming a public corporation, Post Office Telecommunications. The British Telecom brand was introduced in 1980, and became independent of the Post Office in 1981, officially trading under the name. British Telecom was privatised in 1984, becoming British Telecommunications plc, with some 50 percent of its shares sold to investors. The Government sold its remaining stake in further share sales in 1991 and 1993. BT holds a royal warrant and has a primary listing on the London Stock Exchange, and is a constituent of the FTSE 100 Index.
BT controls a number of large subsidiaries. Its BT Business division supplies telecoms services to corporate and government customers worldwide, and its BT Consumer division supplies telephony, broadband, and subscription television services in the United Kingdom to around 18 million customers.

History

Electrical telegraphy

A number of privately owned electrical telegraph companies operated in the United Kingdom of Great Britain and Ireland from 1846 onwards. Among them were:
The Telegraph Act 1868 passed the control of all these to the Postal Telegraphs Department of the newly formed General Post Office. The Telegraph Act 1869 granted the GPO a monopoly over communications.
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. It was confirmed in 1880 that the 1869 Act included telephony even though the telephone had not been invented when the Act was first conceived. In 1882, 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. The GPO's main competitor, the National Telephone Company, emerged in this market by absorbing other private telephone companies. It controlled most of telephony in Britain before the 1880 ruling on the Telegraph Act 1869 mandated a nationalised service – which was instated in 1911 prior to the absorption of the NTC into the GPO in 1912.
The trunk network was unified under GPO control in 1896 and the local distribution network in 1912. A few municipally owned services remained outside of GPO control. These were Kingston upon Hull, Portsmouth and Guernsey. Hull still retains an independent operator, Kingston Communications, though it is no longer municipally controlled.
The assets of the National Telephone Company were acquired by the UK Government to form Post Office Telephones in late 1911. Post Office engineers in the inter-war period had considerable expertise in both telecommunications and hearing assistive devices. Transistors were invented by Bell Telephone Laboratories in the US in 1948, however it was not until the mid-1960s that a transistorised oscillator was introduced to make the calling sound on a telephone in the UK.

Post Office Telecommunications

In 1969 the GPO, a government department, became the Post Office, a nationalised industry separate from government. Post Office Telecommunications was set up as a division of the Post Office, in October 1969. The Post Office Act 1969 was passed to provide for greater efficiency in post and telephone services; rather than run a range of services, each organisation would be able to focus on their respective service, with dedicated management. By law, the Post Office retained the exclusive right to operate the UK national telecom network,.
The 1970s was a period of great expansion for the Post Office. Most exchanges were modernised and expanded, and many services, such as STD and international dialling were extended. By the early 1970s, subscribers in most cities could dial direct to Western Europe, the US, and Canada; by the end of the decade, most of the world could be dialled direct, and the Post Office had launched Confravision, an early videoconferencing system linking studios in multiple cities. The System X digital switching platform was developed, and the first digital exchanges began to be installed. The Post Office also procured their own fleet of vans, based on the Commer FC model.
Post Office Telecommunications researched and implemented data communications using packet switching in the 1970s, resulting in the EPSS, International Packet Switched Service, and Packet Switch Stream.

British Telecom

In 1979 the Conservatives decided that telecommunications should be fully separated from the Post Office. The British Telecom brand was introduced in 1980. On 1 October 1981, this became the official name of Post Office Telecommunications, which became a state-owned corporation independent of the Post Office under the provisions of the British Telecommunications Act 1981. In 1982 BT's monopoly on telecommunications was broken with the granting of a licence to Mercury Communications.

Privatisation

On 19 July 1982, the Government announced its intention to sell shares in British Telecom to the public. On 1 April 1984, British Telecommunications was incorporated as a public limited company in anticipation of the passing of the Telecommunications Bill. This Bill received royal assent on 12 April as the Telecommunications Act 1984, and the transfer to British Telecommunications plc from British Telecom as a statutory corporation of its business, its property, its rights and liabilities took place on 6 August 1984. The remainder of the statutory corporation British Telecom was dissolved in 1994.
Initially all shares in the new plc were owned by the Government. In November 1984, 50.2% of the new company was offered for sale to the public and employees. Shares were listed in London, New York, and Toronto and the first day of trading on was 3 December 1984. The Government sold half its remaining interest in December 1991 and the other half in July 1993. In July 1997, the new Labour Government relinquished its Special Share, retained at the time of the flotation, which had effectively given it the power to block a takeover of the company, and to appoint two non-executive directors to the Board.
The company changed its trading name to "BT" on 2 April 1991. In 1996 Peter Bonfield was appointed CEO and chairman of the executive committee, promising a "rollercoaster ride".

Diversification

In the early 1980s, BT Merlin was established as a business unit of British Telecom, at first to sell products such as phone systems to small businesses. In 1983, the growing "office automation" market was addressed through Merlin-branded desktop computers made by ICL, with built-in modems to communicate over the phone network. Later products included the Merlin Tonto – developed by ICL from the Sinclair QL home computer – and the Merlin M4000, a rebadged Logica computer.
In the 1990s, BT entered the Irish telecommunications market through a joint venture with the Electricity Supply Board, the Irish state owned power provider. This venture, entitled Ocean, found its main success through the launch of Ireland's first subscription-free dial-up ISP, oceanfree.net. As a telecoms company it found much less success, mainly targeting corporate customers. BT acquired 100% of this venture in 1999.
Over the period 1980 to 2000, BT and other providers adopted Internet product strategies when it became commercially advantageous.

Attempted global alliances

MCI

In June 1994 BT and MCI Communications launched Concert Communications Services which was a $1 billion joint venture between the two companies. Its aim was to build a network which would provide easy global connectivity to multinational corporations.
This alliance progressed further on 3 November 1996 when the two companies announced that they had agreed to a merger, creating a global telecommunications company called Concert plc. The proposal gained approval from the European Commission, the US Department of Justice, and the US Federal Communications Commission and looked set to proceed.
However, in light of pressure from investors reacting to the slide in BT's share price on the London Stock Exchange, BT reduced its bid price for MCI, releasing MCI from its exclusivity clause and allowing it to speak to other interested parties. On 1 October 1997, Worldcom made a rival bid for MCI which was followed by a counter-bid from GTE.
BT sold its stake in MCI to Worldcom in 1998 for £4,159 million. As part of the deal, BT also bought out from MCI its 24.9% interest in Concert Communications, thereby making Concert a wholly owned part of BT.
The reaction to the failure of the deal in the City of London was critical of then Chairman Iain Vallance and CEO Peter Bonfield, and the lack of confidence from the failed merger led to their removal.

AT&T

As BT owned Concert in 1994, and still wanted access to the North American market, it needed a new partner. An AT&T/BT option had been mooted in the past, but stopped on regulatory grounds due to their individual virtual monopolies in their home markets. By 1996, this had receded to the point where a deal was possible, and a deal was consummated in 1998.
At its height, the Concert managed network was extensive. Although Concert continued signing customers, its rate of revenue growth slowed, so that in 1999 David Dorman was made CEO with a brief to revive it.
In late 2000, the BT and AT&T boards fell-out, partly due to each partner's excess debt and the resulting board room clear-outs, partly due to Concert's extensive annual losses. AT&T recognized that Concert was a threat to its ambitions if left intact, and so negotiated a deal where Concert was split in two in 2001: North America and Eastern Asia went to AT&T, the rest of the world and $400M to BT. BT's remaining Concert assets were merged into its BT Ignite, later BT Global Services group.