TELECOM Digest OnLine - Sorted: Re: Western Union History

Re: Western Union History
29 Jun 2005 06:21:17 -0700 wrote:

> They were a long distance carrier at one time, complete with 10XXX
> code. I used them a time or two, and I believe I knew of a business
> that was pic'ed to them, probably through a reseller.

Yes, they were. I do remember some advertising, but IIRC it was
rather short lived. But what happened?

Jim Haynes wrote:

> I composed the following a few days ago and was going to take it to
> private email, which bounced. So here it is.

Thanks for making your post public. You make a lot of good points and
others should have the chance to read it.

> One could say that Western Union's goose was cooked when they were
> offered the chance to buy the Bell patents and turned it down. Of
> course it was a perfectly reasonable decision for them. ...

At the time they made the decision, the telephone had a long way to go
technically before it would become widespread.

Companies make buy/don't buy decisions like that all the time.
Usually what is brought doesn't offer very much.

> I presume AT&T didn't "really" violate any agreement with W.U. when it
> introduced TWX. Otherwise W.U. could have sued an won.

It may have been a handshake verbal agreement, not a formal one.
Obviously not enforceable, but not necessarily ethical for AT&T.

> Following the tenure of Newcomb Carlton, Vail's hand-picked successor
> at W.U., the company seems to have gone through a long period of
> lackluster leadership. One who is more interested in business than I
> could see who were the directors at the time and perhaps what their
> motives were.

Oslin doesn't seem to think too much of WU's leaders through those
years. In contrast, AT&T tried to have strong leadership oriented
toward innovation and growth. I sense the ex-railroad leaders of WU
were more of a "this is our service, take it or leave it". (Not all
RR mgmt had that attitude--many were quite progressive.)

> Seems like I read somewhere that W.U. was once offered the opportunity
> to buy Teletype and turned it down. They didn't want to be in the
> manufacturing business.

Again that is a decision companies make all the time. IBM varied over
the years between making some components and farming them out. IBM
had a lot of trouble with buying vaccum tubes in its early days --
radio tubes just weren't up to digital needs. IBM considered making
their own and experimented with this; they developed better tubes.
But they decided to show the existing makers what could be done and
bought from outside. (Note -- it took MANY years until transistors
were cheaper than tubes).

> The merger with Postal is portrayed as being both government mandated
> and as being on terms very costly to W.U. If this is true then it is
> another instance of the government hobbling a company that was not in
> very good shape to begin with. ...

I think that is a very important point. Many people think that
because AT&T was a regulated common carrier it would be 'guaranteed'
nice profits. We see by the WU example and the railroads that being
in that status is by no means any guarantee. Excessive and ridiculous
govt regulation ruined the railroads. It was one thing to force
providing a subset service at below cost "for the social good", but
another to make the whole enterprise run at below cost.

> W.U. got into the microwave business, which provided a lot more
> bandwidth than they needed. For whatever reason they were not able to
> sell their excess bandwidth to the TV networks. Maybe they didn't
> have the capital to serve the places the networks wanted to go; and
> again AT&T had the economy of scale to their advantage. W.U. could
> have done what MCI later did, selling bandwidth in competition with
> AT&T on high-traffic routes. AT&T put MCI through a bruising legal
> fight on that one, and maybe W.U. didn't have the stomach for it. And
> then W.U. was a member of the club of common carriers, while MCI was
> an outsider trying to get in.

I tend to agree that as a regulated common carrier, WU didn't want to
try to push into AT&T's as MCI did. The govt probably would've hit WU
hard. But I wish I knew more about their microwave system -- what it
did for them and what it didn't.

> The government forced W.U. to divest their cable business.

Which seems unfair.

> W.U. operated a lot of local telegraph offices long after they had
> ceased to pay for themselves. In some cases the FCC required the
> company to keep the offices open. W.U. should have had a plan to
> convert them to contract agencies; although the best way to do this
> would probably involve having the agencies use TWX.

I suspect it was both FCC and unions that forced the local offices to
stay open. Ironically, I am not aware of any pressure on the Bell
System to provide or not provide public business offices.

> 've always wondered if perhaps W.U. was too New York centric in its
> management attitudes. ...

Interesting point.

Thanks again for your response.

I'm coming to the conclusion that (1) Western Union's management and
staff was old and tired, perhaps because of seniority, unions, and
cutbacks. In a declining business, the best or younger people pick up
and go elsewhere, the lesser or older ones stay. If you were a bright
person in 1970, my guess is that a Western Union facility might have
seen a little stale compared to the rest of the world (though they
were developing computer systems, see below). (2) WU technically kept
missing the boat, being in the wrong place at the wrong time with the
wrong technology, as described above.

Being kind of a traditionalist, I have patronized a lot of organizations
"past their prime" and it's very sad to see a once proud thriving
company now tired and tattered -- literally and figuratively.

I've talked about this a lot on this newsgroup because I've seen some
old proud companies (like IBM and Verizon) rebuild themselves and stay
healthy yet others decline and die. I find WU of interest because
despite being very old, it was in a very thriving field -- data

> [TELECOM Digest Editor's Note: I always thought most of the smaller,
> less profitable Western Union offices were run as contract agencies;
> the 'agent' (or person who put up the money to pay the rent on the
> location, the phone bills and the payroll) was also the person who got
> the twelve to eighteen percent commission Western Union paid on
> 'sent paid' and 'received collect' traffic through the office.

In 1980 WU had both contract agents and local offices. The local
office in one small city was a dumpy little place with some frames and
a single Teletype in the back. In 1980 the bulk of their business was
money transfers.

The contract agents didn't need a Teletype for that, they merely used
an 800 number to call WU and WU used WATS lines to call out. Agents
had a password card called "BINGO" to validate a money transfer.
Basically in that time most WU activity was operators taking requests
for money transfers either directly from customers or agents, entering
them into the computer, and another operator passing the information
along by voice. There was a little Mailgram and traditional service.
Most traditional telegrams were read over the phone by another agent.
I think back then a Telegram had a formal status to it similar to a
Certified Letter; that is, it constituted a legal notice; I don't know
if that status still exists for any Telegrams sent today.

Businesses were still using Telex to some extent, esp for overseas
work where telephone still cost a lot of money.

Post Followup Article Use your browser's quoting feature to quote article into reply
Go to Next message: William Warren: "Re: Using comcast to Host Web Site"
Go to Previous message: W Howard: "Re: DSL Speed"
TELECOM Digest: Home Page