TELECOM Digest OnLine - Sorted: WU History

WU History

David Josephson (
Sat, 29 Oct 2005 23:16:09 -0700

Replying to a post from Lisa Minter, hancock4 wrote (in part)

>> "Although the number of leased wires has not been reduced in absolute
>> terms, today their proportion has decreased to about 60%. S. M. Barr,
>> Western Union vice-president in charge of planning, expects this
>> percentage to drop to 40% in the next few years, hopes to get the
>> proportion of leased facilities down to 20% eventually."

> Did they get the reduction they forecast? The expense of leased lines
> was a big problem for Western Union in the 1970s. I heard they were
> mostly dependent on AT&T even then.

And it became a real bear of a problem (among others) in the 80's
before and after the Bell breakup. They were in essence a CLEC before
Judge Green made it feasible for CLECs to exist.

>> -Private Expansion- But it does expect its private wire services to
>> expand greatly. Here, particularly, Western Union's new facilities
>> will be of help in solving communications problems for private
>> customers. Western Union already has a good deal of savvy when it
>> comes to tailoring a special system to a customer's needs. Abou
>> 2,000 companies in the U.S. -- among them U.S. Steel, General
>> Electric, Sylvania, and United Air Lines -- have private
>> communications networks leased from Western Union. And its bank wire
>> service interconnects 213 banks in 55 cities with pushbutton
>> switching.

> So, did this service -- where the money is -- expand or contract in
> the 1960s? Obviously eventually it contracted. Why?

Did it really? That service remains today, Western Union Financial
Services was the only profitable piece of the company and was sold to
First Financial of Atlanta in 1994 for about $1.2 billion. (The
present owner, First Data, merged with First Financial the next year
in a deal worth $7 billion).


>> -Government Contracts- Part of the load the new microwave system will
>> carry is already under contract. The U.S. Air Force hired Western
>> Union to build an automatic system of data and message handling that
>> will interconnect all domestic Air Force bases. The combat and
>> logistics network (COMLOGNET) [1] also costs, coincidentally, $56-
>> million and will be operated by Air Force personnel. Western Union
>> also built for the Air Force an international automatic switching
>> telegraph network, [2] which was completed last May, and has put in a
>> high-speed weather map facsimile system for the Strategic Air Command.
>> In addition, it built a nationwide weather map facsimile system for
>> the Weather Bureau that serves several hundred points.

> Again, this is good business. What happened to the government
> contracts?

My guess, from looking at one of these contracts for the installation
and operation of a private analog telemetry circuit for the Air Force,
is that WU didn't understand how to make money on private
networks. They were careful to charge a lot up front, and actually
sold the terminal and enroute microwave equipment to the government as
part of the deal. This particular circuit was to be shut down this
year (2005) but I believe is still in operation, with no provision for
replacing the equipment, some of which is the original gear from the
mid 1960's. If this contract is indicative of their business acumen,
it's no wonder that it was hard for them to stay afloat.

There is an interesting history at ...

David Josephson

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