TELECOM Digest OnLine - Sorted: Re: WU History

Re: WU History
31 Oct 2005 09:55:45 -0800

David Josephson wrote:

> 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."

> 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.

But the question is if WU was able to get down the number of leased
lines as they hoped to. I believe their effort dated from the early
1960s, long before divesture and break up.

Is a CLEC a long distance carrier? Anyway, WU might have used Bell
lines but it did not use Bell services. In other words, Bell did not
switch the call or do anything with other than provide a steady
physical path. WU subscribers did not use their Bell telephone to
connect to WU lines, they used special sets directly provided by
Western Union on a wholly separate network. This is not the same
arrangement as today.

[private wire services contraction?]

> 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).

Today's Western Union is in money transfers by individuals. I think
this service is wholly separate than that serving banks and
corporations and never included that. I wonder what happened to the
private line business WU serving corporations. In essence, WU was
competing with Bell for long haul private line service, WU had its own
microwave and later satellites. Presumably WU was able to underprice

>> 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.

I'm not sure what and why you describe is bad business on private
networks. What should WU have done instead?

I am also surprised that a circuit is still in service especially with
1960s equipment. The maintenance alone on such equipment is more
costly than modern electronics, and the circuit is probably very slow
by today's standards.

> There is an interesting history at ...

Thanks for the reference.

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