The State as Netwatcher
netcom.se
EXCERPT:
"Another key factor was that the government, the parliament (Riksdag), and the Kungliga Telegrafverket (the state telegraph agency, which had been formed in 1853) initially remained passive. When the telephone was introduced, there was already a widespread international telegraph network.
Telegrafverket did not see the telephone as a competitor. Telephone calls were something appropriate for local communication. For great distances, a telegraph was needed. However, Telegrafverket did build a few small, local telephone systems, mainly for the needs of government agencies.
When some private telephone companies wanted to build regional telephone lines, Telegrafverket tried to prevent them, at first with limited success. In 1888, Telegrafverket proposed a special telephone tax to finance the losses in its telegraph business that it believed telephony was causing. The Riksdag and the government rejected this proposal. In the same year, though, Telegrafverket did achieve an important political victory. SAT had applied for permission to build a telephone line linking Stockholm, Gothenburg, Malmö, and Sundsvall. Telegrafverket protested and won the government’s support. SAT’s application was turned down, and Telegrafverket received permission and funding to build a line between Stockholm and Gothenburg. In conjunction with this, Telegrafverket also established a general telephone network in the capital.
Around the year 1890, Telegrafverket [??] changed its strategy: to achieve total control over the telecom system by buying up the private operators. With this, Telegrafverket won quick victories everywhere in Sweden except Stockholm. SAT had quickly passed Stockholm Bell and become the dominant operator. In 1888, SAT had bought a majority stake in Bell and integrated the two networks. So, for the next 30 years SAT and Telegrafverket struggled over who would determine how the telephone system in the capital would be organized.
The number of subscribers in the two networks continued growing a pace, and Stockholm maintained its position as a leading city in international comparisons of telephone density. Competition curbed prices and spurred product development, for example so that several types of subscriptions were offered.
At the turn of the century, Telegrafverket had 55,000 subscribers, most of them outside Stockholm. SAT had 25,000 subscribers in the capital. Private networks outside Stockholm were almost nonexistent at that point.
SAT had the biggest local network in Stockholm throughout this period, but Telegrafverket controlled the regional trunk lines. Discussions were held time and time again on interconnection, in other words, allowing one network’s subscribers to reach subscribers in the other network. Interconnection was even achieved during some periods, especially because of pressure from the Stockholm City Council as well as the government and Riksdag. In conjunction with this, the Stockholm market was divided up between the two telecom operators. They also discussed on a number of occasions whether Telegrafverket might purchase SAT. But this was long rejected by the Riksdag.
On June 5, 1918, after lively debate the Riksdag finally allowed Telegrafverket to purchase AB Stockholm Telefon, which SAT had been called since 1908. An important reason for the Riksdag’s decision was rising costs brought about by the world war, during which the government’s financial position deteriorated. The government and the Riksdag wanted to raise telephone tariffs generally in Sweden and in particular in Stockholm. Telegrafverket had been forced to keep prices lower in the capital than in the rest of Sweden because of competition.
After Telegrafverket bought AB Stockholm Telefon, the networks were quickly integrated, and telephone tariffs in Stockholm were raised to the same level as those in the rest of the country. Although no legal monopoly was established, the acquisition marked the end of more than 25 years of tough competition and the dawn of an era that would extend more than 60 years, characterized by a de facto state monopoly.
Telephony and the Swedish model
The change of the guard in telephony coincided in time with the emergence of a new Swedish social order: the Swedish model. The 1920s were marked by a double power shift among the Swedish elite. In the business world, an older generation of merchant capitalists was replaced by a new generation of industrial capitalists. In politics, the labor movement took power from the conservative civil service class to man the state bureaucracy.
The organizational philosophy of the Swedish model was borrowed from modern American big industry, where men such as Frederick Winslow Taylor and Henry Ford were preaching the gospel of professional management, economies of scale, and standardization. Added to these was a distinctive characteristic of Swedish social development for the previous 500 years, namely a relatively high degree of consensus.
This organizational philosophy would greatly impact the new Swedish telephone system. The main player was Televerket (the old Telegrafverket that had changed its name in 1953), managed by engineers and civil servants. It worked closely with LM Ericsson, a prominent Swedish industry based on innovation. With extensive political consensus, a professionally managed, standardized telephone system was created to make the most of economies of scale. This telephone regime was successful in building up and developing the telephone system in Sweden and laying the foundation for a major export industry. |
