Deutsche Telekom Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Formed in 1996 from the Deutsche Bundespost (German Federal Post Office), Deutsche Telekom is the largest telecommunications company in Germany and also in the European Union. When it was controlled by Deutsche Bundespost, the telephone service in Germany had been part of the state-owned monopoly that also controlled the postal services.

After the establishment of the first telephone services in the United States, it was not long before the first telephone network was established in Germany. In 1880 the first telephone exchange in Germany was built in Mulhouse, in Alsace, then a part of Germany but now a part of France. The builders wanted to get a government permit to start operations, but the authorities in Berlin did not want a telephone service in Mulhouse before there was one in the German capital, so Berlin quickly opened its exchange in January 1881, initially with eight subscribers. The exchange had capacity for 99 people, and they were dubbed by the press the “99 fools.” However, by May 1882, there were 699 subscribers, and the service grew rapidly after that, with the Berlin Boerse (stock exchange) having a large number of lines for its brokers to use.

The Reichspost—which also ran postal services— also continued with the telephone service, and by 1888 the Berlin Telephone Exchange was able to claim that it had more telephone connections than any city outside the United States. Two years later, a public “pay phone” was established in each of the 10,000 local post offices. The service became better during World War I with the increased use of military engineers, and was also adapted and improved after the war by the Inter-Allied Control Commission.

During the 1920s and 1930s, the telephone system continued to grow, with international calls possible, some by radio. It was even possible—at a cost—to telephone zeppelins such as the Hindenburg. During World War II, the Germans connected conquered territories in eastern Europe to their telephone network. However, much of the phone system in eastern Germany was destroyed in late 1944 and 1945, although many lines survived—a Soviet soldier was able to telephone the Berlin Bunker where an astonished Josef Goebbels answered the telephone.

After the war, the system was repaired and much of the network in Berlin and in many other cities were working reasonably well by the end of 1945. There were then two systems in operation, one covering West Germany and West Berlin, and the other for East Germany. There were also separate networks established by the Americans and the British, but these were quickly merged with the West German system. In spite of the Cold War, it remained possible to telephone from West Germany to East Germany and vice versa, but there were occasional technical difficulties. Nevertheless, the system did work well and with the unification of Germany on October 3, 1990, the two systems were both held under Deutsche Bundespost, although moves were already afoot to split the postal and telephone services of the company, as had happened in so many other countries in the world.

In 1996 Deutsche Telekom was privatized, but the German government has continued to hold a stake in it. The expectation was that the new company would be able to raise capital more easily and be more efficient. Instead, with privatization, the government was forced to break the telephone carrier’s monopoly; this led to some 1.5 million customers leaving them for rival companies in 2005 and 2006. As a result, Deutsche Telekom shed 30,000 workers as its stock price fell dramatically. At the height of the speculative fever, shares went as high as €100, but later fell to €12, and in August 2008 they were trading at €10.97.

Bibliography:

“Deutsche Telekom—Bad Connection,” Economist (v.387/8575, 2008);
Christian Hilpert, Strategische Perspektiven die Deutsche Telekom im deregulierten Marktumfeld [Strategic Perspectives on the German Telecom Deregulated Market Environment] (VDM Verlag Dr. Müller, 2007);
Gerhild H. M. Komander, 1881: Berlins erstes Telefonbuch (Story Verlag, 2006);
Eli Noam, Telecommunications in Europe (Oxford University Press, 1992);
“Research and Markets Ltd.; Germany Has Europe’s Largest Telecom Market, Supported by a Large and Affluent Population,” Computers, Networks & Communications (August 18, 2008).

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